Abstract
In recent years, the increasingly prosperous East Asian economies of Japan, Hong Kong, Singapore, Korea, and Taiwan have been hailed as models of achievement for other emerging economies. While a number of explanations may be offered for East Asia's economic success, many observers are convinced that an outward-looking development strategy, particularly a dynamic export sector, has been a crucial ingredient. To varying degrees, East Asian economies have maintained an outward-orientation through interventionist, yet "market friendly," policies involving some use of export promotion, selective import barriers, and industrial policies. These interventionist aspects of trade policy in East Asia have had great appeal to a number of more recently emerging economies. How essential were these interventionist elements to East Asia's growth success? Can this approach be replicated by other countries, particularly in the current international environment? This Letter discusses the reasons that greater openness can be conducive to growth and the benefits and costs of interventionist government policies in East Asian economies. It also reviews the lessons of the East Asian experience for other developing countries.