unctad.org | COMMENTS AT THE UNCTAD TRADE AND DEVELOPMENT BOARD ON THE EAST ASIAN DEVELOPMENT EXPERIENCE
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COMMENTS AT THE UNCTAD TRADE AND DEVELOPMENT BOARD ON THE EAST ASIAN DEVELOPMENT EXPERIENCE

TAD/INF/NC/96_25
15 October 1996

Intergovernmental discussions at the UNCTAD Trade and Development Board on economic interdependence showed broad interest in and general support for UNCTAD´s analysis in the Trade and Development Report,1996 of the successful experience in East Asia and policy lessons that can be drawn from it. The debate in plenary, which began on 11 October and concluded today, was enriched by detailed presentations of individual experiences by countries from that region.

In summarizing the comments made, Mr. Roger C. Lawrence, Deputy to the Secretary-General of UNCTAD and Director of the Division on Globalization and Development Strategies, identified three categories of response. Some scepticism was expressed, especially by Latin American countries, not so much on the general usefulness of drawing lessons from the East Asian success, but rather on the fact that the policies used by these countries for rapid industrialization might be applicable elsewhere. Others were intrigued by specific points in the East Asian experience, which they considered could be useful in devising their own development strategies. A third category of response consisted of broader statements made by the African countries inviting the UNCTAD secretariat to pursue the effort of bringing the East Asian experience to other developing countries.

Following are a range of views expressed in the plenary debate, which focused on the role of the State in the East Asian economies and on the possibility for other countries to pursue similar, export-oriented industrialization in the new trading environment.

Mr. Thomas Hanney (Ireland), speaking on behalf of the European Union, saw a substantial overlap between the classical structural adjustment agenda and the identified common features in the Asian success story. Both agreed that the private sector should be centre stage in the growth process, that there should be macro-economic stability, efficient public services and infrastructure, priority on human resource development, and discipline on fiscal deficits. The main economic differences between the two strategies related to protection against imports and governmental dirigisme. The latter, which consisted of picking winners among new industries and supporting them, was a difficult and dangerous game to play, according to the European Union. It could only be successful if there were favourable combinations of disinterested governance, analytical skills, clear-sighted policy-making, and good luck. Some Asian governments had been able to encourage competitive new heavy industries to grow rapidly from scratch, while others had wasted millions on failed ventures, Mr. Hanney added.

Ambassador Munir Akram of Pakistan, speaking on behalf of the Asian Group, felt that the dynamism of the East Asian miracle called into question the universal applicability of the neo-classical approach of the World Bank which gives supremacy to the structural adjustments and development policies promoted by the World Bank and the IMF and where the individual economic agents merely respond to the prevailing incentive structure. The Trade and Development Report had made a useful contribution in that it had gone beyond such traditional argument, in various respects. First, by emphasizing the need to establish a dynamic interaction between exports and investment. Secondly, by showing the importance of mobilizing and of making full use of natural resources and abundant, unskilled labour; and of continuously upgrading the industries and moving up the technological ladder. Thirdly, by pointing to the challenges for government policies involving new forms of interventions to support a dynamic process of development. However, many questions still needed to be answered before successful attempts could be made to replicate the experience of East Asian economies. These related to the vulnerability of countries highly dependent on foreign direct investment (FDI), the more restricted role that government policies could now play due to bilateral and multilateral obligations to liberalize investment and trade, and the strongly regional nature of the East Asian experience.

Ambassador Eumelio Caballero of Cuba, speaking on behalf of the Latin American and Caribbean Group, expressed agreement with the Trade and Development Report on the urgency of reforming the planning and institutional framework of development policies in many developing countries. He felt that many interventionist policies applied in East Asia in the past were probably not feasible for other developing countries in the current international situation. Hence, the need arose for an alternative development strategy, taking into account the real possibilities for each economy given its level of development, as well as national and regional characteristics. He pointed out that Chile had been able to maintain growth rates comparable to those of East Asian countries, while maintaining macro-economic stability. He suggested that a case-study be carried out in order to single out useful aspects of Chile´s experience which could be applied to other countries in the region, especially in the field of investment promotion. While acknowledging the central importance of national macro-economic adjustment, he underlined the need for adequate international support.

For Mr. Lahcen Aboutahir (Morocco), speaking on behalf of the African Group, it was very difficult to be hopeful regarding the possibilities for the African continent to achieve economic and social development, given the negative net external financial flows experienced by the region. The effects of the slight improvement in commodity prices in 1995 had been largely offset by two interdependent factors, lack of access to international capital markets and high debt service payments. These two problems had been compounded by a decline in official development assistance and by unstable foreign exchange markets. Bolder measures were urgently needed to solve the debt problem of African countries. UNCTAD was fully qualified to help African countries draw lessons from the South East Asian development experience in which the State and regional dynamics had played an important role. South-South cooperation could help to compensate for the problems of slow growth in the North and lack of access to export markets there.

Mr. Tang Yufeng (China) agreed with the assertion in the Trade and Development Report that exports to, and investments from, developed countries had been an important driving force for East Asian economic growth. However, there was now a trend towards intensified protectionism in major developed countries, which would harm the interests of developing countries, but eventually those of developed countries as well. It was imperative that each country formulate policies for economic and social development in accordance with its own national conditions. The differences in the levels of economic development should be recognized, so as not to force developing countries to remain in lock-step with developed ones in the process of liberalization of trade and investment.

Mr. Youri Afanassiev (Russian Federation) stated that his country was stepping up foreign economic policy in the East Asian region. UNCTAD´s analysis of the East Asian experience showed the active role played by the State and development policies which were market-compatible rather than market-oriented. An essential component had been the reduction of technological dependence of the region on the industrial North. State institutions had played an important role and flexible protection had been applied to FDI in the initial stage of industrialization. Mr. Afanassiev though it might be useful to explore to what extent the development formula applied in East Asia could be used as a catalyst for the economic integration process in the former USSR area. Furthermore, much attention had been given to the reasons for success, while it might also be useful to examine problems and obstacles to future development.




For more information, please contact:
Yilmaz Akyüz, Macroeconomic Section
Division on Globalization and Development Strategies
T: +41 22 907 5841
F: +41 22 907 0274
E: yilmaz.akyuz@unctad.org
or
Carine Richard-Van Maele, Press Officer
T: +41 22 907 5816/28
F: +41 22 907 0043
E: amanda.waxman@unctad.org.



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