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East Asia's growth performance highlights the benefits of pursuing an outwardoriented trade strategy. This paper discusses the nature of the development policies followed by economies in the region and the lessons for other emerging countries. While these policies in some cases did involve government intervention and protectionism, East Asia's success is more attributable to "neutral" export promotion and a "market friendly" approach encouraging industries that could most successfully compete in world markets.
EAST ASIA has been the fastest growing area in the world for the past three decades. The economies of Japan and the Newly Industrializing Economies (NIEs) of Hong Kong, Singapore, Korea, and Taiwan have been hailed as models of achievement for other emerging economies. Many factors have been identified as the cause of East Asia's relative success -- outward orientation, high saving and investment rates, macroeconomic discipline, and other good public policies -- although the relative weight of each in explaining the region's success is still a matter of considerable debate (World Bank, 1993; Rodrik, 1996). However, no matter how the relative weights are assigned, the experience of East Asia, supported by recent research on growth, has convinced many observers that an outward-looking development strategy, particularly a dynamic export sector, is conducive to growth.
East Asian economies did not adopt greater outward orientation according to a common model or blueprint. In fact, only Hong Kong and Singapore have adopted totally free trade policies, with virtually no tariff or nontariff barriers. To varying degrees, the other NIEs and countries in the region adopted interventionist although "market friendly" policies, involving some use of export promotion, selective import barriers, and industrial policies. These interventionist aspects of trade policy in East Asia have had great appeal to a number of more recently emerging economies. How essential were these interventionist elements to East Asia's growth success? Did countries in the region grow despite this policy? Can this approach be replicated by other countries, particularly in the current international environment?
This paper discusses why greater openness can be conducive to growth. It also discusses the nature of the trade policies followed by Asian countries and the extent to which the interventionist approach helped foster growth. Lastly, it discusses the lessons of the East Asian experience for other developing...