TFPG Controversies, Institutions, and Economic Performance in East Asia

Dani Rodrik

No 1587, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The controversy over the appropriate partitioning of East Asian growth into accumulation versus technical change has overlooked a fundamental indeterminacy in measurement. As a result, we cannot rule out the possibility that East Asia has in fact experienced a tremendous amount of technological progress of the labour-saving kind. Second, an index of institutional quality (drawn from work by Knack and Keefer (1995) and Easterly and Levine (1996)) does exceptionally well in rank-ordering East Asian countries according to their growth performance. A parsimonious specification containing only initial income, initial education, and institutional quality accounts for virtually all of the variation in the growth performance in the region, even when institutional quality is instrumented. Finally, the experience of Hong Kong, which has had a flat investment ratio since the 1960s, is consistent with the idea that making the transition from a low-investment economy to a high-investment economy requires a hands-on government.

Keywords: East Asia; Growth; Institutions; TFP (search for similar items in EconPapers)
JEL-codes: F43 O30 O47 O53 (search for similar items in EconPapers)
Date: 1997-03
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Chapter: TFPG Controversies, Institutions and Economic Performance in East Asia (1998)
Working Paper: TFPG Controversies, Institutions, and Economic Performance in East Asia (1997)
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