Must-Read: Learning Economic Lessons from Asia: “Studwell… conclude[s]… successful economic development… follow[s]…(2013):
…(1) An initial land reform… family-based labour on small farms has proven a far better footing than greater use of capital equipment at large scale for improving productivity…. In addition, the increased incomes of largely rural populations are vital for growing the domestic market for manufactures…. Land reform is politically difficult… needs to be accompanied by… extension support, rural credit and infrastructure investment.
(2) The next stage is to grow domestic manufacturing… [via] ‘industrial policy’… much subtler than the [mere] use of trade barriers… (i) a willingness to use government funding to support domestic manufacturers until they reached a scale that would make them globally competitive… (ii) opening domestic markets to imports of key inputs for exporters….
(3) The third stage extending the role of financial services, while keeping finance on a short leash…. Any economist who thought globalisation was a turbulent but broadly good thing (this includes me) surely has to accept that there was too much liberalisation of cross-border portfolio flows, and that emerging economies should keep the ability to control these flows in their policy armoury….
It’s a model of tying together historical knowledge, empirical evidence and analysis. It is also a good complement to Justin Yifu Lin’s The Quest for Prosperity: How Developing Economies Can Take Off, which sets out a Chinese policy maker’s perspective…