Learning economic lessons from Asia | The Enlightened Economist

The Enlightened Economist reviews Joe Studwell’s book, How Asia Works: Success and Failure in the World’s Most Dynamic Region. He highlights three key steps:

  1. land reform, where large plantations are broken into smaller — and surprisingly more productive — family-owned farms;
  2. export subsidy of key domestic manufacturing industry, rather than protectionism through creating barriers to imports; and
  3. control of large-scale, high-end financial services while extending the scale of low-end consumer and small-business finance.

Read more at Learning economic lessons from Asia | The Enlightened Economist.

Middle-income traps in Asian countries | FRBSF

Excerpt from a paper by Israel Malkin and Mark M. Spiegel at the Federal Reserve Bank of San Francisco. The two believe that China’s richest provinces, Beijing and Shanghai, are experiencing a slow-down in GDP growth (per capita) as they experience a classic middle-income trap, while China’s poorer provinces continue to experience high GDP growth rates.

What evidence exists for middle-income traps in a group of Asian economies that, like China, experienced episodes of rapid growth? We pool data for Hong Kong, Japan, Korea, and Taiwan from 1950 to 2009……. growth of these economies slowed markedly after they reached middle-income status.

Growth rates for these economies are highest just below the $10,000 per-capita-income level and then slow down rapidly as income increases. …..[the] economies grew on average at a 4.8% rate when per capita income reached $17,000, down from a high of 7.2% at the $7,800 level.

Interestingly, the middle-income trap appears to arise in Asia at lower income levels than has been found for broader groups of emerging-market economies. It may be that large Asian countries with relatively low prevailing wages cause the dynamic of the middle-income trap to shift. In Asia, countries may begin to become uncompetitive for certain labor-intensive activities at lower income levels than in other parts of the world……

via FRBSF Economic Letter: Is China Due for a Slowdown? (2012-31, 10/15/2012).

Slower Growth in Asia Brings Down Stocks – NYTimes.com


Published: August 13, 2012

Stocks fell Monday as evidence piled up that the global economic slowdown was hurting Asia.

Japan’s economy grew in the second quarter at a 1.4 percent annual rate, slower than many analysts had expected. Last week, China released dismal figures on retail sales and exports in July. Traders were disappointed that Beijing failed to introduce stimulus measures over the weekend……

via Slower Growth in Asia Brings Down Stocks – NYTimes.com.