Capitalist Development and Economism in East Asia The four Asian “dragon” economies have been widely studied in recent years, as investigations seek to disclose the secret of their rapid growth. Despite this, it is still unclear why other economies that shared the features of the East Asian countries have failed to develop with similar speed and success. Taking a conceptual approach, this book studies the economic development of the four East Asian economies since 1950. The author summarizes and reconsiders many of the arguments and findings that supported and explained the economic “miracles” of Hong Kong, Singapore, Taiwan, and South Korea, analyzing the relationship between economic development, growth, and political economy. The author puts forward a development paradigm, economism, that consolidates the key features of these economies into the following areas of concern: • capitalism • poverty reduction vs. income equality • growth vs. distribution • foreign investment and trade • role of the government • a pro-growth regime. The paradigm provides a conceptual framework for the discussion and understanding of the “dragon” economies, as well as a guide for the development of other economies. This pioneering book will stimulate further analysis of East Asian development. It will be an essential read for scholars of East Asian economics, and for all those interested in modern economic development. Kui-Wai Li specializes in the areas of financial and economic development, industry, and trade, and has worked as a consultant to international institutions, foreign governments, and business. He visited Yale University and attended an executive program at Harvard University in 2000 and 2001 respectively. His research focuses on China and Asian economies, and his refereed articles have appeared in various journals. Routledge Studies in the Growth Economies of Asia 1 The Changing Capital Markets of East Asia Edited by Ky Cao 2 Financial Reform in China Edited by On Kit Tam 3 Women and Industrialization in Asia Edited by Susan Horton 4 Japan’s Trade Policy Action or reaction? Yumiko Mikanagi 5 The Japanese Election System Three analytical perspectives Junichiro Wada 6 The Economics of the Latecomers Catching-up, technology transfer and institutions in Germany, Japan and South Korea Jang-Sup Shin 7 Industrialization in Malaysia Import substitution and infant industry performance Rokiah Alavi 8 Economic Development in Twentieth Century East Asia The international context Edited by Aiko Ikeo 9 The Politics of Economic Development in Indonesia Contending perspectives Edited by Ian Chalmers and Vedi Hadiz 10 Studies in the Economic History of the Pacific Rim Edited by Sally M. Miller, A. J. H. Latham and Dennis O. Flynn 11 Workers and the State in New Order Indonesia Vedi R. 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Jomo, Greg Felker and Rajah Rasiah 23 Technology, Competitiveness and the State Malaysia’s industrial technology policies Edited by K. S. Jomo and Greg Felker 24 Corporatism and Korean Capitalism Edited by Dennis L. McNamara 25 Japanese Science Samuel Coleman 26 Capital and Labour in Japan The functions of two factor markets Toshiaki Tachibanaki and Atsuhiro Taki 27 Asia Pacific Dynamism 1550–2000 Edited by A. J. H. Latham and Heita Kawakatsu 28 The Political Economy of Development and Environment in Korea Jae-Yong Chung and Richard J. Kirkby 29 Japanese Economics and Economists since 1945 Edited by Aiko Ikeo 30 China’s Entry into the World Trade Organisation Edited by Peter Drysdale and Ligang Song 31 Hong Kong as an International Financial Centre Emergence and development 1945–1965 Catherine R. Schenk 32 Impediments to Trade in Services: Measurement and Policy Implication Edited by Christopher Findlay and Tony Warren 33 The Japanese Industrial Economy Late development and cultural causation Ian Inkster 34 China and the Long March to Global Trade The accession of China to the World Trade Organization Edited by Alan S. Alexandroff, Sylvia Ostry and Rafael Gomez 35 Capitalist Development and Economism in East Asia The rise of Hong Kong, Singapore, Taiwan, and South Korea Kui-Wai Li 36 Women and Work in Globalizing Asia Edited by Dong-Sook S. Gills and Nicola Piper 37 Financial Markets and Policies in East Asia Gordon de Brouwer 38 Economic Development in South East Asia Dependency and the automotive industry Jason Abbott 39 Law and Labour Market Regulation in East Asia Edited by Richard Mitchell, Sean Cooney and Zhu Ying Capitalist Development and Economism in East Asia The rise of Hong Kong, Singapore, Taiwan, and South Korea Kui-Wai Li London and New York First published 2002 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2003. © 2002 Kui-Wai Li All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Li, Kui-Wai. Capitalist development and economism in East Asia: the rise of Hong Kong, Singapore, Taiwan, and South Korea/Kui-Wai Li. p. cm. Includes bibliographical references and index. 1. Income distribution – East Asia – Case studies. 2. Investments, Foreign – East Asia – Case Studies. 3. East Asia – Economic policy – Case studies. 4. Capitalism – East Asia – Case studies. I. Title. HC460.5 .L53 2002 338.95–dc21 2001048175 ISBN 0-203-16654-X(cid:13)Master e-book ISBN ISBN 0-203-26130-5(cid:13)(Adobe eReader Format) ISBN 0–415–26873–7 (Print Edition) To foes, friends, and family