The Asian model of development has been lauded for its central role in the Asian miracle. However, the same model of development has been heavily implicated in the occurrence of the Asian financial crisis. It is, therefore, an intriguing issue when one contemplates whether this model is good enough for developing countries or not. This paper looks into whether the Asian model of development which was heavily dependent on industrial policy can be emulated by developing countries or not.
The Asian model cannot be adopted
First, the sociopolitical circumstances of Asia at the time of the miracle differ significantly from those of present-day developing countries (Cline 85). Inasmuch as democracy was not fully practiced at the time and governments ran the Asian way, democracy is a necessity in the modern world. Industrial policy might struggle to get ground in democratic states. Moreover, the Asian countries, especially japan and China had large local population hence their dependence on the local market for progress. Most developing countries have inadequate local market for their goods and usually depend on the export market.
Additionally, the principles of international trade have evolved greatly ever since. The formation of WTO and the other conclusions of the Uruguay cycle prohibit some of the practices that were suggested by industrial policy. Practices like placement of barriers to imports so as to promote local firms are deemed wrong by current WTO directives hence making industrial policy and the Asian development model to have no place in the current economy.
The fact that the previously beneficial Asian model of economic development has been implicated in the occurrence of the Asian crisis makes the model to be a bad one for developing countries and one which does not have any good parts that be adopted in current times (Cline 84). The model led the government into giving loans to some non-productive firms which did not manage to repay the loans hence the financial crisis. Moreover, an in-depth analysis of the situation shows aspects that cannot be seen from the outside, for instance, the model led to the imbalanced development of firms where some industries developed at the expense of some others which might have been better development opportunities.
The Asian model can be adopted
The fact that the Asian model of development was successful means that it had some good aspects which can be adopted to improve the economies of developing countries. First, the model emphasized on development of local firms. Development of local firms is a necessity if the economies of developing countries were to become better. Even though barriers to importation can have implication to the WTO, there is need to protect local firms from unfair international competition by all means.
Moreover, the Asian model emphasized on independence, creativity, and innovativeness. Developing countries are in dire need of those three factors. Even though most developing countries do not have sufficient local markets, subsidization of goods and the production of goods that are useful locally can help them to achieve some level of independence. Creativity and innovativeness are required so as to enhance the volume of productivity and to produce more advanced goods or to adopt international technologies without being thought of as reinventing the wheel.
Conclusion
From the discussion above, it is evident that adoption of the Asian model of development will spell more hell than joy for the developing world. The Asian model of development and industrial policy are highly flawed strategies whose adoption can be catastrophic for the developing world. The few advantages offered by this strategies do not justify their adoption in full or in part by developing countries.
Work Cited
Cline, William R. “Can the East Asian model of development be generalized?.” World development 10.2 (1982): 81-90.
