The impressive economic performance of many Asian economies over the past three decades is by now an old story. The growth of per capita GDP averaged over 4 percent in China and the major East Asian economies between 1960 and 1994, compared with less than 2 percent in other developing economies and 2.7 percent among the industrial countries. East Asia stands out as the only region where living standards are catching up with those in industrial countries, while other parts of the develping world seem to be struggling either to tread water or to fall further and further behind (table 1).
The exemplary performance of many East Asian economies has been the basis for a large and varied literature, much of which explores reasons for the persistently high growth, and draws lessons for other countries that would like to follow suit. A surprising aspect of this literature is its lack of agreement on fundamental aspects of the performance record which analysts seek to explain. Is the basis for East Asian growth the maintenance of high rates of physical and human capital accumulation over a number of decades—a willingness to make the sacrifices of current consumption necessary to invest for the future? Or has the key been the less-costly approach of adopting existing technologies of more advanced economies, perhaps associated with increased capital accumulation along the way?