Richard Stubbs: Rethinking Asia’s Economic Miracle

Rethinking Asia's Economic Miracle(Palgrave MacMillan, 2005)

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Stubbs’s thesis is simple: that one of the key drivers of Asia’s economic growth has been not free market economics, not Confucian values, not the developmental state, not Japanese or American hegemony, but war, both hot and cold.

Stubbs takes seven countries – South Korea, Japan, Taiwan, Hong Kong, Singapore, Malaysia and Thailand – and surveys the development of their economies since the middle of the twentieth century.

His thesis is at its most persuasive in the first 30 years of his survey. Briefly, the second world war destroyed the old order in the countries. Infrastructure was devastated, but so were the pre-existing hierarchies and vested interests who might have resisted change (such as land reform) in the post-war world. But green shoots would not have sprouted from the wilderness without the rise of communism. The Korean War was “a gift of the gods” for Japan — turning it into a supply and manufacturing base for the US Army1. Enhanced commodity prices boosted Singapore, Thailand and Malaysia, thus providing unexpected wealth to win the hearts and minds of the people in the battle against communist guerrillas. And the triumph of Mao drove the losers (and their loot) to Taiwan and other refugees (and their capital) to Hong Kong.

The ongoing communist menace thereafter had two key impacts: a strengthening of state power in the seven frontier states as governments fortified themselves against internal and external threats, while massive US aid helped to build up both state (adminsitrative and security) and physical (communications, power) infrastructure.

The next outbreak of fighting also paradoxically boosted the regional economy: South Korea, for example, was directly compensated in hard currency for providing up to 50,000 troops to support the US war effort in Vietnam, while more indirectly South Korea, Taiwan and others found in the US military procurement process in Vietnam a ready market for their manufactures.

In the US retrenchment following the Vietnam War Stubbs tacitly admits that his thesis is spent. In the post-Vietnam era, Japanese foreign direct investment grew in importance relative to direct US aid as a stimulant to the regional economy. Finally, as the cold war came to an end, it was the questionable US-led pressure for free-market reforms which created some of the conditions for the regional crash known locally in Korea as the IMF crisis.

For the earlier years covered by Stubbs’s book, is his thesis fully established? For South Korea, “war”, and the ongoing threat from north of the DMZ, was undoubtedly a contributing factor in terms of dollar inflows. But equally or more important was the iron leadership from Park Chung-hee (the developmental state argument) and the energy and endurance of the Korean people themselves – which does not appear on Stubbs’s list of growth drivers. As one anonymous Korean business executive puts it in Tariq Hussain’s book Diamond Dilemma,

There is one simple reason for our success: people. Following the war, people were driven by hunger – hunger for wealth, hunger for success and willing to make sacrifices.

While war as an exclusive cause of the Asian economic boom is by no means established, its importance as a contributing factor in the earlier decades is well documented in this book. In addition, Stubbs provides an interesting perspective and very lucid historical account of regional political and economic development in the second half of the last century.

  1. In Prime Minister Yoshida’s words, according to JP Bowen in The Gift of the Gods: The impact of the Korean War on Japan. []

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