But How Did They Develop ?

By: Bikal Dhungel

These days, politicians and public intellectuals give examples of Singapore, Taiwan, Malaysia, South Korea, Botswana etc to tell that they have achieved solid economic development just in one generation. South Korea, as poor as Mozambique in 1950s is now a high income country and a large exporter of electronic goods. These few countries are ideals, a proof that market economy has won against other models. However, only few give hints about what they actually did to make this possible. There are several books and papers related to it but even they are criticized to be biased by other scholars. Opinions might differ but the aim of this article is only to highlight some of the very basic policies that were taken.

• They lowered controls on foreign trade
  
• Market entry barriers were reduced or removed for private firms
  
• Privatize state firms and ensure a fair competition.
  
• Remove all structural constraints for the firms and help them integrate with the global economy.
  
• As private firms do not have capacity to get all information, the state took the role to collect information. This was normally done by central bureau of statistics or other research institution.
  
• Many such institutions were created to help the economy.
  
• Governments gave their best to maintain macroeconomic stability.
  
• Saving rate was increased or high saving was encouraged. Sometimes even by sacrificing the consumption of today for the sake of tomorrow.
  
• Resource allocation was fully left to the market to regulate.
  
• Knowledge was acquired internationally, they were refined with the local context and used locally.
  
• They followed the rule of comparative advantage, which means, imported what the rest of the world knew better or could do better. However, some countries supported home firms in the first phase by import restriction or by using other tools so that they can learn and go to gain efficiency.
  
• Credible and capable government in all level was installed.
  
• Strategic Integration if not fully open to trade
  
• Send the people to study in well known universities with government scholarships but force them to return and do something for the home country.
  
• Bring experts of each sector to rule that sector but closely monitor them.
  
• Ensure the stability of financial sector and prohibit the capital outflow.
  
• Bring an intelligent technology policy, financial policy, competition policy and accounting standards.
  
• Build infrastructures especially transportation system and focus first on strategically important regions or regions where there are reserves of natural resources.
  
• Keep the agriculture sector but make it efficient.
  
• Promote small and middle scale enterprises.
  

These were some policies that all high-growth countries shared. An important thing is also that no country were a democracy, they were all some sort of dictatorships. It is time consuming in a democracy to to pass law and implement it. For least developed countries, freedom and democracy also get misused. Singapore's Lee Kuan Yew even jailed journalists, many people who opposed his styles and brought harsh rules for example a fine for spitting in the public, a ban on chewing gum, compulsory flush in public toilets etc. Malaysia's Mahathir Mohammad was blamed for too much nepotism i.e. Major sectors were controlled by people who were near to him.But his argument was, let people make profit, and even they are only concentrated on profits, at the end of the day, this will also help the society. Lee Kuan Yew ignored the ideas of Human Rights, though he was well aware of it, he was a Cambridge educated man. His arguments were again, to gain something, you have to sacrifice something or give up something. To gain economic growth, he had to give up personal freedom and sometimes had to intervene in people's private life. But it has been proved that he did it for the sake of Singapore, for the good of future generation, his children and grand children. When we see the example of China today, China is harsh too.When it wants to build a road, it builds and noone will block the process of building. In other countries where freedom and democracy predominates, this is difficult. Exactly due to this reason, the growth of India has been slower than that of China. A huge discussion sparks from here if democracy is good for least developed countries. No doubt that dictatorship is worse but how about moral dictatorship like that of Lee Kuan Yew ?

In addition to this, education policy, and health policy were reformed first. The chief of government also remained the chief of economy and health ministry. These two things are most important. If the health of nation is poor, it can never build a nation. So, health is important. Then when education comes in, it will give a huge boost to human development. A highly qualified productive workforce is the backbone of economic growth.

These were few things done by countries that achieved rapid development. We have to bear in mind that this might not be the best medicine for other countries. Policies cannot simply be copied and pasted. Even though it worked in some countries, there is no guarantee that it will work everywhere. Differences in culture, differences in environment and differences in many other factors will determine. Best practices should be adopted from the whole world but there should be a feasibility check every time before mistakes are done. A country is not a lab. One cannot do an experiment in it. But learning from others mistakes and others success is a key factor.