Industrial development in Singapore, Taiwan, and South Korea

Any attempt to compare the economic development of different countries is hazardous. Every country has developed within its own confines — subject to its own endowments and structural characteristics. There is no all-encompassing framework within which the paths of different countries’ development can be meaningfully compared. An attempt to learn from the development experience of other economies with a view to formulate prescriptive policies is obviously all the more inconceivable.

Nevertheless, there is good reason why Singapore, Taiwan, South Korea, and Hong Kong — commonly known as Asia’s Newly Industrialized Economies (NIEs) — have customarily been analyzed together under the same category. All four economies, despite their size differences, started to embark on a sustained growth path around 1960. In the last four decades, the four economies exhibited the highest growth rates in Asia. In addition, all four economies grew through substantial industrialization with a distinct bias towards export promotion. And all four economies spent heavily on education.
Beneath the commonality of strong inclination toward industrialization, export, and education, there lie substantial differences among the growth experiences of the four economies. For example, Singapore relied heavily on foreign direct investment for technology transfer and job creation. Taiwan relied, *by contrast, on returned engineers from the US for quick coupling with advanced technology businesses, while South Korea depended on government direction and subsidies to quick industrialization.

This book is written by four Hong Kong economists. The motivation for writing it is two fold. First, there is a relative lack of a systematic study of the industrialization experiences of the Asian NIEs in the economics literature. Second, there is an on-going debate that Hong Kong needs to revive its industrial sector to maintain overall growth, and that the government ought to assume a more active role in effecting re-industrialization, particularly in the area of technology promotion. The government did concede to the call for more industrial subsidies in a broad sense, although to date there is still no guiding principle as to where to draw the line between the subsidizable and the non- subsidizable. There is increasing pressure on the government to do more, and the government has no line of ideological defense beyond a “muddling-through” approach. If this book turns out to offer partial help in throwing the whole matter of industrialization into its proper perspective, then all of the efforts would have completely paid off.