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Protectionism in East Asia did help very capital intensive industries (automotive, chip fabrication, ship building etc) to grow during its infancy. But I doubt

by jsnk 10y ago

Protectionism in East Asia did help very capital intensive industries (automotive, chip fabrication, ship building etc) to grow during its infancy. But I doubt that if this is fundamentally the right way to look at why economic miracle happened in East Asia. There has never been shortage of protectionist economies. In fact this was the norm for centuries all around the world and certainly in East Asia. What was it about post WWII that was so special that actually had impact on the economy? [Edit] And let's not forget about North Korea. North Korea surely had the most protectionist economy in the world. It has shielded its own corporations from the hardships of global competition, and yet we never saw companies like Hyundai, Daewoo or Kia in North Korea.

manmal 10y ago
If you mean "what was so special about post WWII that the US succeeded by being laissez-faire" - then I'd argue that WWII was what happened. With Germany and Japan destroyed, the US had an advantage. Call it unfair or not. Germany looks very healthy now, with their focus on industry.
- danielam 10y ago
  The funny thing about Germany now is that it's actually in a bit of a bind because its prosperity is perilously linked to export. The reason Merkel is so aggressive about maintaining the integrity of the EU is largely because Germany needs the free trade zone, common currency, etc to keep its export-driven market running (not to mention favorable access to cheap labor to its east). The author emphasizes the dangers of over-dependence on import, but the opposite is likewise true. Interestingly, when the 2008 recession hit, Poland was the only country in the EU left with positive growth and this is largely attributed to the strong domestic market that made it more resistant to failure in foreign markets.
aomurphy 10y ago
There's certainly never been a shortage of protectionist economies, it's pretty much the default of countries for obvious reasons of protecting vested interests. The best explanation I've ever read for the rise East Asian export economies post WWII is in the book "How Asia Works" [1]. The title is a little misleading, it's only about East and SE Asia, but it has a good broad overview of what made Japan, Taiwan, South Korea, and China all rapidly industrialized 1945+, and why South East Asia (particularly Malaysia) failed. The main thrust of the argument is that markets need to be protected but also forced to export. Whether this is through tight currency controls (to get foreign currency you have to export), government support, or government force (Park arrested South Korean businessmen, and released them only when they agreed to focus on export). And ruthless culling of companies that failed in the global market. You also need very disciplined land reform, to create the initial capital generated by intense land use by small farmers - many SE Asian nations failed to do this, and South Korea, Japan, and Taiwan were all quite successful [2]. China is more muddled, but they also had a strong focus on exports and government support for that. Exports are important, as otherwise protected companies stagnate and become uncompetitive, reliant on government support. With a focus on exports, countries can use their local market as a test bed and a market to build up to exporting to richer countries. What I'd really like is a good overview of ISI policy in the successful East Asian Countries versus Latin America which has an even longer history of ISI. [1] http://www.amazon.com/How-Asia-Works-Joe-Studwell/dp/0802121322 http://www.amazon.com/How-Asia-Works-Joe-Studwell/dp/0802121... [2] To an extent too succesful: Japan spends a lot of money today protecting inefficient small farms created by land reform. But it's a small price in comparison.
hackaflocka 10y ago
Education, innovativeness, willingness to absorb others' innovations, love of science. When I read "Made in Japan" -- I saw all of these as contributors to the Japanese miracle. It wasn't so much (to me anyway) that the Japanese economy had protection, but that the Japanese people were so darn innovative that they couldn't be stopped. The other East Asian countries share many of the Japanese traits (even if not all).
abalashov 10y ago
I don't think the essence of the German-Asian argument (to use the author's framing), or, for that matter, the "third way" championed by the Asian Tiger economies, is so much protectionism--though protectionism is undeniably crucial--as a certain degree of state-guided capitalism. This is covered by the "process vs. result" part of the article. In the Anglo-American view, there are two possibilities and two possibilities only: (1) unbridled laissez-faire capitalism with a minimum of regulation, and (2) Soviet-style central planning. In reality, there's a fairly smooth continuum of in-between options, where the power and dynamism of markets can be harnessed but still subordinated to broad development goals and national macroeconomic priorities.
Spooky23 10y ago
> What was it about post WWII that was so special that actually had impact on the economy? Lots of special things in post WW2. - Europe was bombed and smashed into oblivion. - A whole generation of English, French, Austrian, German, and Russian workers and professionals who would have been at career peak were instead in graves under WWI battlefields of France and Eastern Europe. - Colonial empires imploded. - The US had unprecedented leverage over most of the world diplomatically and commercially.

by jsnk 10y ago

manmal 10y ago

If you mean "what was so special about post WWII that the US succeeded by being laissez-faire" - then I'd argue that WWII was what happened. With Germany and Japan destroyed, the US had an advantage. Call it unfair or not. Germany looks very healthy now, with their focus on industry.

danielam 10y ago
The funny thing about Germany now is that it's actually in a bit of a bind because its prosperity is perilously linked to export. The reason Merkel is so aggressive about maintaining the integrity of the EU is largely because Germany needs the free trade zone, common currency, etc to keep its export-driven market running (not to mention favorable access to cheap labor to its east). The author emphasizes the dangers of over-dependence on import, but the opposite is likewise true. Interestingly, when the 2008 recession hit, Poland was the only country in the EU left with positive growth and this is largely attributed to the strong domestic market that made it more resistant to failure in foreign markets.

aomurphy 10y ago

There's certainly never been a shortage of protectionist economies, it's pretty much the default of countries for obvious reasons of protecting vested interests. The best explanation I've ever read for the rise East Asian export economies post WWII is in the book "How Asia Works" [1]. The title is a little misleading, it's only about East and SE Asia, but it has a good broad overview of what made Japan, Taiwan, South Korea, and China all rapidly industrialized 1945+, and why South East Asia (particularly Malaysia) failed. The main thrust of the argument is that markets need to be protected but also forced to export. Whether this is through tight currency controls (to get foreign currency you have to export), government support, or government force (Park arrested South Korean businessmen, and released them only when they agreed to focus on export). And ruthless culling of companies that failed in the global market. You also need very disciplined land reform, to create the initial capital generated by intense land use by small farmers - many SE Asian nations failed to do this, and South Korea, Japan, and Taiwan were all quite successful [2]. China is more muddled, but they also had a strong focus on exports and government support for that. Exports are important, as otherwise protected companies stagnate and become uncompetitive, reliant on government support. With a focus on exports, countries can use their local market as a test bed and a market to build up to exporting to richer countries. What I'd really like is a good overview of ISI policy in the successful East Asian Countries versus Latin America which has an even longer history of ISI. [1] http://www.amazon.com/How-Asia-Works-Joe-Studwell/dp/0802121322 http://www.amazon.com/How-Asia-Works-Joe-Studwell/dp/0802121... [2] To an extent too succesful: Japan spends a lot of money today protecting inefficient small farms created by land reform. But it's a small price in comparison.

hackaflocka 10y ago

Education, innovativeness, willingness to absorb others' innovations, love of science. When I read "Made in Japan" -- I saw all of these as contributors to the Japanese miracle. It wasn't so much (to me anyway) that the Japanese economy had protection, but that the Japanese people were so darn innovative that they couldn't be stopped. The other East Asian countries share many of the Japanese traits (even if not all).

abalashov 10y ago

I don't think the essence of the German-Asian argument (to use the author's framing), or, for that matter, the "third way" championed by the Asian Tiger economies, is so much protectionism--though protectionism is undeniably crucial--as a certain degree of state-guided capitalism. This is covered by the "process vs. result" part of the article. In the Anglo-American view, there are two possibilities and two possibilities only: (1) unbridled laissez-faire capitalism with a minimum of regulation, and (2) Soviet-style central planning. In reality, there's a fairly smooth continuum of in-between options, where the power and dynamism of markets can be harnessed but still subordinated to broad development goals and national macroeconomic priorities.

Spooky23 10y ago

> What was it about post WWII that was so special that actually had impact on the economy? Lots of special things in post WW2. - Europe was bombed and smashed into oblivion. - A whole generation of English, French, Austrian, German, and Russian workers and professionals who would have been at career peak were instead in graves under WWI battlefields of France and Eastern Europe. - Colonial empires imploded. - The US had unprecedented leverage over most of the world diplomatically and commercially.