Economics introduction

Economics introduction Over the last quarter of century the East Asian economies of Taiwan, Korea, Hongkong, Singapore, Malaysia, Thailand and Indonesia, also known as Tiger countries, have grown twice as fast as the rest of East-Asia, roughly three times that of Latin America and South Asia and five times that of Sub-Saharan Africa.

They also significantly outperform industrialist Western economies and the oil rich Middle East. Between 1960-65 real per-capita income increased more than four times in the Tiger countries and more than double in the South-East Asian newly industrialized economies (NIEs).
The area is fast becoming part of the new centre of gravity of the world economy. The economic status achieved by the Tiger countries in the region is remarkable and it has become almost fashionable to regard them as the most dynamic part of the world.

In any study of the economies of the Tiger countries distinction has to be made between (a) growth with due regard to equity and growth and (b) growth with exclusive emphasis on economic development. For the most part the Tiger countries of the region have rejected the latter and embraced the former approach. The question arises ; why are some countries notably the Tigers, so much more economically successful than the other developing countries? Why have these countries achieved what has been called an economic miracle? Why has the adoption of capitalism and market-oriented strategies meant more equity, less poverty, and better health and education for the poorest sections of the population?

In large measure the Tigers achieved high growth by getting the basic rights. Private domestic investment and rapidly growing human capital were the principal engines of the growth. High level of domestic saving sustained the high investment levels. Agriculture, while declining in relative terms, experienced rapid growth and productivity improvement. Population growth rates declined more rapidly than in other parts of the developing world. And, some of these economies also got a head start because they had a better educated labour force and a more effective system of public administration.

Fundamentally a sound development policy was a major ingredient in achieving rapid growth. Macro-economic management was exceptionally good and provided the essential framework for encouraging private investment. Policies to increase the efficiency of the banking system, and to make it accessible to small savers, raised the level of voluntary savings. Education policies that focussed on primary and secondary schools generated rapid increase in labour-force skills. Agricultural policies stressed productivity and did not tax the rural economy excessively. All the Tigers kept price distortions within reasonable limits and were open to foreign ideas and technology.

In most of these economies, in one form or another, the government intervened systematically through multiple channels to foster development. But in some cases the development of specific industries, policy intervention took many forms. Targeting and subsidizing credit to select industries, establishing farms and industry of specific export targets, developing export marketing institutions and sharing information widely between public and private sectors.
The Tiger economies have also been successful in ensuring that the benefits from this growth reach down to different segments of the society thus ensuring maximum income distribution. Human welfare improved greatly as a result of rapid, shared growth. Population growth rates declined rapidly. Life expectancy increased from 56 to 71 years’from 1960 to 1990. The proportion of people living in absolute poverty declined. A host of other social and economic indicators also improved markedly.

The success story of the Tiger countreis has many lessons for Bangladesh, as also for many other developing countries. The subject work attempts to recommend course of action in meeting the challenges for sustained economic growth as well as poverty alleviation.
The present study surveys the main economic issues confronting the Asian Tiger countries and deals with broad economic issues. And chapter 3 analyses the policies and strategies pursued, chapter 4 surveys the strategic decisions taken by the Tiger governments while chapter 5 is dedicated to case studies of two selected countries and finally, chapter 6 gives the recommended lessons for Bangladesh.

In the process of writing different books, economic surveys, journals, strategic periodicals written on economic issues, national dailies, and seminar papers were consulted as listed in the bibliography. I like to express my profound gratitude to Mr. M. Anis Ahmed, Member Directing Staff (Economy) and Brigadier Mohammad Zakir, Director Research National Defence College, Islamabad for their kind guidance and advice. My thanks are also due to the library officer and the Library Staff of National Defence College for their assistance.

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