Extending the East Asian Miracle: Microeconomic Evidence from Korea

Eric Zitzewitz and

EZ

Eric Zitzewitz Massachusetts Institute of Technology

Martin Neil Baily

Martin Neil Baily Senior Fellow Emeritus - Economic Studies, Center on Regulation and Markets

Discussants: Barry P. Bosworth and

Barry P. Bosworth Nonresident Senior Fellow - Economic Studies

Larry E. Westphal

LEW

Larry E. Westphal

Do THE ECONOMIES OF East Asia need to undertake fundamental economic reform to resume a path of strong economic growth? This vital question, posed in the wake of the economic crisis of 1997, has divided both economists and policymakers. The case against major structural reform begins with the dramatic growth of these economies over the past twenty years. For example, Korea, the focus of this paper, has transformed itself into a major economic power, exporting cars and semiconductors to the world and quintupling its GDP per capita between 1970 and 1995. East Asia’s achievement is all the more remarkable given that most developing countries have achieved very little development and have fallen further behind the advanced economies. Indeed, East Asia has been used as an example to understand how other countries could achieve more rapid economic development and convergence.