TY  - JOUR
AU  - Rodrik,Dani
TI  - Getting Interventions Right: How South Korea and Taiwan Grew Rich
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4964
PY  - 1994
Y2  - December 1994
UR  - http://www.nber.org/papers/w4964
L1  - http://www.nber.org/papers/w4964.pdf
N1  - Author contact info:
Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu
M2  - featured in NBER digest on 1995-03-01
AB  - Most explanations of Korea's and Taiwan's economic growth since the early 1960s place heavy emphasis on export orientation.  However, it is difficult to see how export orientation could have played a significant causal role in these countries' growth.  The measured increase in the relative profitability of exports during the 1960s is too insignificant to account for the phenomenal export boom that ensued.  Moreover, exports were initially too small to have a significant effect on aggregate economic performance.  A more plausible story focuses on the investment boom that took place in both countries.  In the early 1960s both economies had an extremely well- educated labor force relative to their physical capital stock, rendering the latent return to capital quite high.  By subsidizing and coordinating investment decisions, government policy managed to engineer a significant increase in the private return to capital.  An exceptional degree of equality in income and wealth helped by rendering government intervention effective and keeping it free of rent seeking.  The outward orientation of the economy was the result of the increase in demand for imported capital goods.
ER  -