Myth of Asian Miracle
Critical Analysis of a Paper by Paul Krugman
The phenomenal growth in the East Asian countries and China during the 1980s-1990s startled the western world. Were they going to overtake the developed economies of the western countries was the question asked in the economic circles. Stanford economist Paul Krugman [1] wrote a controversial article, 'The Myth of Asian Miracle' in November / December 1994 issue of 'Foreign Affairs'.
In this article he compared the rapid growth of the 'Asian Tigers' to the economic development of the former USSR during the 1950s and 60s. He argued that consistent economic development requires increased input of resources as well as increase in output per unit of input, which comes from increase in efficiency and technological advancement.
Krugman argued that rapid development of the U.S.S.R. was due to increased input of resources, controlled economy and a rise in education level of the workforce due to emphasis on education. He argued that while Soviet Union was able to increase the input of resources, she was unable to improve the second critical factor, increase in output per unit of input, resulting in a miserable failure of the U.S.S.R.
The controversy of his paper came from drawing a parallel between the rapid developments of Soviet economy in 1950s-60s and the fast economic growth in some of the ASEAN countries and China during the 1980s and 1990s. This term paper takes a critical look at the points put forward by Krugman.
Critical Analysis
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