Industrial Policy in Asia

Kuchiki Akifumi

No 128, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper examines three types of industrialization that have occurred in East Asia: the Japanese, Chinese and generic Asian models. Industrial policies in Japan and the Republic of Korea (ROK) initially protected local companies from foreign investors by imposing high tariffs on foreign investors. But Japan began introducing liberalization policies to attract foreign direct investment (FDI) in the 1960s, and the ROK began to welcome foreign technology in the 1970s. Meanwhile, the governments of the ASEAN countries and Taiwan established export-processing zones (EPZ) to invite FDI by offering preferential treatment, such as tax deductions and exemptions. China adopted similar industrial policies and also established EPZs, attracting the capital and know-how of multinationals and thereby strengthening the international competitiveness of local enterprises. This paper reaches the following three conclusions. First, it would have been difficult for East Asian countries to grow without FDI. Second, central governments were a crucial factor in these countries' growth strategies. Third, EPZs offering preferential treatment can effectively enhance aggregate growth in developing countries, and the Asian experience shows that this strategy can be applied to other countries that satisfy certain preconditions.

Keywords: Industrial policy; Export-processing zones; Foreign direct investment; Government intervention; Market competition; Priority production method; Production rationalization method; Import-substituting industrialization; Export-oriented policy; East Asia; Southeast Asia; Japan; South Korea; China; Foreign investments; Exports; 産業政策; 輸出加工区; 外国直接投資; 政府介入; 市場競争; 傾斜生産方式; 生産合理化計画; 輸入代替工業化; 輸出指向政策; 東アジア; 東南アジア; 日本; 韓国; 中国; 国際投資; 輸出 (search for similar items in EconPapers)
JEL-codes: G18 O14 R11 (search for similar items in EconPapers)
Date: 2007-10-01
New Economics Papers: this item is included in nep-sea and nep-tra
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Citations: View citations in EconPapers (2)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 128. 2007-10-01

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