Revelations from the "Governmental Dysfunction" in Southeast Asia

Wei Jianing

Chinese Economy, 1999, vol. 32, issue 1, 56-62

Abstract: Just as people were celebrating the "East Asian miracle" and affirming the role of "government action" (>i>zhengfu zuoyong>/i>), a financial storm broke out in 1997 that started in Southeast Asia, spread to Northeast Asia, and is affecting the rest of the world. Therefore, some people on the international scene have begun to query the East Asian model whereby governments play a leading role, and some people even maintain that the "East Asian miracle" has never existed and that "failure of government" is the fundamental reason for the present financial crisis. Actually, when we encourage the development of a market economy, we frequently mention its fairness and emphasize one of its featuresâequitability. However, we often overlook another of its aspectsâthat the superficial equitability of the market conceals actual inequitiesâlatecomers often find themselves at a disadvantage. In circumstances whereby the developed countries and transnational corporations have already achieved absolute supremacy, the newer developing countries cannot get on their feet unless there is government action. Of course, after getting on their feet, they may fall down again, but without government action the developing countries would never be able to get on their feet! The essential thing is that after standing up with the assistance of government action, we must promptly change our "posture," our center of gravity, and voluntarily cede our position to market regulation; otherwise we are likely to fall down again. In that case, what revelations do we derive from the "governmental dysfunction" in Southeast Asia?

Date: 1999
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