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The Role of Government in East Asian Economic Development: Comparative Institutional Analysis, edited by Masahiko Aoki, Hyung-Ki Kim and Masahiro Okuno-Fujiwara (Oxford University Press, Oxford, 1997), pp. xxii + 419, ISBN 0 19 829213 9, US$85, Hardback.
The literature on Asia's phenomenal economic success is huge, advancing various explanations ranging from market mechanisms, the strong role of the State, to the relationship between growth and socio-economic, political and institutional changes, involving the transformation of class structures of society. Liberal market economists or neoclassical theorists represented by economists like B alassa (1981), Krueger (1990) and Riedel (1988), among others, have attributed the rapid economic growth of Asia's newly industrializing countries (NICs) to the pursuit of export-oriented industrialization (EOI) along with policies that favour market orientation and minimal State intervention. The World Bank, a champion of the neoclassical school, expands on the above view. It believes that 'effective but limited government activism' is one of the most important factors contributing to the success of the so-called HPAEs or high-performing Asian economies of Korea, Singapore, Taiwan, Hong Kong, China, Indonesia, Malaysia and Thailand (World Bank 1994: 1-26). It argues that in the market-friendly strategy, 'the appropriate role of government is to ensure adequate investment in people, provide a competitive climate for private enterprise, keep the economy open to international trade, and maintain a stable macro -economy' (World Bank 1994: 10). It further asserts that 'governments are likely to do more harm than good, unless interventions are market friendly, and that attempts to guide resource allocation with non-market mechanisms have generally failed to improve economic performance'.
While the neoclassical approach attempts to explain the rise of the Asian economy in terms of the shifting patterns of comparative advantage and its management, a new breed of scholars, known as statists, began to look into domestic political processes and structures in East Asia in relation to its rapid economic growth. In spite of the considerable debate about the character of the post-war East Asian States, the common consciousness of the literature is perhaps most evident in its view on State dominance in State - society relations.
Largely influenced by Gerschenkronian theory on the role of the State in European latecomers or late- industrializing countries of France, Germany and Russia (Gerschenkron...