Public Policy and Development Strategy East Asia Vs. Latin America

Tutorial Essay
Brett Fischmann (1155065694)

Public Policy and Development Strategy

        When examining late developing countries, newly industrialized countries are generally considered to be a part of one of two groups1. The first of these two groups is Latin American countries such as Brazil, Argentina, and Mexico, which are (generally speaking) known to have developed through policies of import substitution and self-reliance. This is sharply contrasted with East Asian newly industrialized countries, which used policies of export-led growth beginning in the 1950’s in order to achieve development-oriented goals4. While these contrasting policies are at the forefront of debate among political economists, another difference between the two regions that has garnered much attention is the difference in whether industrialization was largely attributable to changes in government policy that supported domestic industry, as was the case for many countries in East Asia, most notably Korea. In addition to these ideas, others have been introduced that suggest development was largely due to other factors, such as nature of agrarian reform and its effect on equity and growth and crossover between agricultural and industrial sectors in development strategies 3. While these ideas all seem to have valid points that offer insight into what conditions are necessary for growth, there is no single “best” strategy or policy for development. However, there are conditions that must be met in order for a country to implement an export-led growth strategy (the strategy used by most East Asian countries) that ultimately leads to economic development. This explains why some countries were able to develop while others were not, and demonstrates that under the proper circumstances, both the free market and development strategies and policy intervention can offer the best basis for long-term economic development.

        To examine exactly how the free market has offered a strong basis for economic growth, one needs only to look at the three development trajectories outlined by Stephen Haggard1. While it seems as though Brazil and Mexico have successfully industrialized through import substitution, their growth is not as considerable when compared to countries such as Korea and Taiwan, which initially attempted import substitution but later graduated to export-oriented strategies, and Singapore and Hong Kong, which developed almost entirely through export led growth. Given their geographical locations, Singapore and Hong Kong had considerable advantages as port destinations, but their growth rates demonstrate that export-led growth with an emphasis on lack of policy intervention prove most conducive to long-run economic growth.