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International Policy
April 1997
Faltering East Asian Tigers	Until about seven years ago, it looked like the East Asia economies of Japan, Taiwan, South Korea, Hong Kong and Singapore -- with others close behind -- were an invincible economic miracle. Then Japan fell prey to its own interventionist policies and has been trying to reform and recover ever since. International economic analysts are now opening wondering if other high-flying economies in the region are on the verge of losing their edge. Singapore, Thailand and South Korea have all seen their growth rates fall. Other countries like Indonesia and China have deep structural and economic problems that limit their growth potential over the medium term. The East Asian states have followed export-oriented growth strategies -- suppressing domestic consumption, restricting foreign access to markets, and banning or strictly limiting foreigners from portfolio investment, all the while encouraging manufacturers to target foreign markets. Since such policies are largely those of planned economies -- with government exercising enormous control over investment and industrial policy -- they have become the root cause of Asia's problems today. Since they are dependent on exports, East Asian economies can be devastated by a recession in Europe or America. Trade experts say that the countries must shed their false enchantment with centralized economic direction. That would allow firms to begin serving and relying more heavily on domestic markets -- which would be a healthy sign. Source: Walter Russell Mead (World Policy Institute), "East Asia Needs a New Growth Strategy," Wall Street Journal, April 18, 1997.