Conclusion: Issues for the Twenty-first Century

Common Development Patterns

There has been a lot written about an East Asian model of development, featuring various state intervention investment decisions, selective protectionism, corporatist labor policies, and initial concentration and labor-intensive industrial exports, high rates of reinvestment, and suppression of consumer demand in the short run.

Unusually large amounts of rural industry played an important role for an unusually long time in Japan into the 1940s, in Taiwan into the 1980s, and in Chinese township and village enterprises even today. What is unusual is not merely the physical fact of rural industry but the continued valorization of workers having one foot in the countryside.

In China, this is expressed in the regime's current motto that people should leave the farm but not the village. One also sees an emphasis on relative resource-saving, especially land- and energy-saving strategies, and a kind of labor-intensive production in which workers tend to move among multiple tasks rather than organizing work on an assembly-line basis. These two strategies can, of course, be found outside East Asia.

In fact, many of these strategies seem to continue development patterns that I argued earlier were common to cores around the world before the resource bonanzas accompanying the great divergence inflected some though not all Western development paths.

This set of characteristics that I've mentioned can fit together with the ones usually emphasized by people talking about the "East Asian model," with, for instance, worries about shortages of primary products reinforcing the state's desire to manage foreign exchange, promote exports, and rein in consumer spending. But they don't have to—and in fact during certain periods, such as Japan from the 1920s to the 1940s, and China for much of the Maoist period—the state intervention in investment, control of labor, deliberate dampening of consumer demand, et cetera, that many people see as central to East Asian development have gone along with very capital-intensive, resource-gobbling development paths, as those states pursued heavy industrialization with a strong military bent, emphasizing strategic industries in which they could not have competed for international markets (partly because of limited resource endowments), but in which they felt they had to have a presence for military reasons. Japan's push to build autos, airplanes, et cetera in the 1930s would be one example in which the desire to have certain industries in order to compete militarily with the U.S., U.S.S.R., et al. and assure access to strategic resources in the long term just exacerbated the shortage of strategic resources in the short term, increasing for instance Japan's need for rubber and petroleum, which it doesn't have at home. This led to a more aggressive military posture and so on, in a tragic spiral toward war.

The construction of a hydroelectric station in Tibet (c.1974)

Only the post-1945 order, in which the U.S. military umbrella assured Japan, South Korea, and Taiwan access to primary products, obviated that combination of policies for them. And with leadership worries about whether adequate resources and markets can be found abroad to continue the pattern of growth that has been established over the last twenty years along its eastern coast, China today remains, I think, poised between these strategies, with considerable effort these days going into plans for state-directed, indeed often military-directed, development of western China, based heavily on capital intensive extractive industries: mining, lumbering, hydro development, et cetera.

A Tradition of Interconnection

The Beijing government, like its Qing predecessors, used to feel that stability in the far west of China often called for cultural conservatism and thus caution about rapid economic change there. But that long-standing paternalism, for better or worse, has now yielded to a notion that first of all, the East needs the resources, and it is much better to get them from the west than to import them from an increasingly scary world market; and secondly, that only rising living standards can make people in western China forget separatist politics, and that China as a whole just can't afford to leave resources unexploited.

In a sense, they are now betting that karaoke bars will do what the People's Liberation Army alone cannot do, and make people forget they are Tibetan or Muslim or whatever. Han immigration, which is supposed to bring needed skills and capital, is now being encouraged in many places where it was long discouraged, leading locals to worry about being submerged by ambitious, culturally different immigrants who have more in common with the government than they do. The birth-control policy is now being applied quite harshly to many previously exempt minorities.

And a number of places previously off limits are being built up very rapidly. Many Chinese are now evoking the American West as an example of successful development, kick started by extractive industries and massive government intervention. And the American West is probably the most positive example at their disposal. And even that is hardly a reassuring one for, say, Tibetans, Xinjiang Muslims, or environmentalists.

Whose Great Miracle Is It? [VIDEO]

TRANSCRIPT: The East Asian path that I've tried to sketch dates to the sixteenth century, not just the late nineteenth (century). It's worth remembering that it accounted for most of the world's economic growth in the early modern period. The great miracle of the early modern period was not the European miracle. It was the East Asian miracle of slowly growing, improving standard of living, with enormous population growth.

And if the world had ended in 1820, our world economic history would have been largely about East Asia, with a little chapter at the end saying, "Oh yeah, and far off in the west, these British folk, have actually managed to get an even better increase in per capita consumption, but they're so tiny, who cares?"

If the world ended in 1945, of course, the story would be much more the one most of us grew up with, dominated by the European miracle. But now of course, in 2003, it's shifted yet again, and it's worth remembering that that East Asian path, in a fusion with various Western-derived elements, has again accounted for most of the world's growth in the last few decades.

Its lesser resource intensity also still has something to recommend it. Rather than pigeon-holing it as "the East Asian miracle," while labeling the main variant of the North Atlantic path simply "development," without a regional modifier, I'd suggest we need an economic history that treats these paths more equally, and that also recognizes their long-standing interconnections.

But the strategy that has worked along the China coast in the last two decades is in some sense "East Asian." The irony is that the most likely alternative may have Western antecedents, but they are hardly liberal ones. And they entail staggering risks for returns that probably won't match those in the Americas, Australia, or even the Urals.