International Growth Linkages: Evidence from Asia and the OECD
NBER Working Paper No. 4245 (Also Reprint No. r1887)
This paper first shows how the convergence model generally applicable to the OECD and in augmented form to global samples fails to reflect the post-1960 experience of the Asian economies, and then considers some of the factors explaining the differences. Investment rates in physical capital appear to be more important in explaining growth differences among the Asian economies, while education matters less. Various measures of openness to imports contribute importantly to explaining relative growth rates in Asia, with the more open economies generally having significantly faster growth rates, even after allowing for differences in investment rates. After allowing for differences in openness and investment rates, there also appears to be a trade-off between democracy and growth, with the initially less democratic Asian countries having faster subsequent growth, leading eventually to increasing effective demand for democratization.
Published: NBER - Ease Asia Seminar on Economics, Volume 3 Macroeconomic Linkage: Saving, Exchange Rates and Capital Flowsedited by Takatoshi Ito and Anne O. Krueger University of Chicago Press; November 1993