Factors Behind the Asian Miracle: Entrepreneurship, Education, and Finance

Posted: 24 Nov 2009

See all articles by Richard R. Nelson

Richard R. Nelson

Columbia University - School of International & Public Affairs (SIPA)

Howard Pack

University of Pennsylvania - Management Department; University of Pennsylvania - Business & Public Policy Department

Date Written: 2003

Abstract

An explanation is sought for the Asian economic"miracle" that occurred between the 1960s and 1990s. Theories about theeconomic growth can be divided into two groups. Accumulation theories stressthe role of investments in moving the inputs and outputs along their productionfrictions. Assimilation theories stress the entrepreneurship, innovations, andlearning that were needed to master the new technologies adopted from the moreadvanced industrial nations, with investment in human and physical capital asnecessary, but not sufficient. The components of the two groups of theories arecompared, considering their views on entrepreneurial decision-making, thenature of technology, the economic capabilities of the work force, and the roleof experts. The evidence supports the assimilationist theories. A simple evolutionary model is proposed, in which development takes placethrough the shifting of resources from one technology (craft) to another(modern). Expansion of physical and educational capital per worker is essentialto adoption of modern technology. The vigor of entrepreneurship determines therate of assimilation of modern technology. Both large investments in humancapital and forceful entrepreneurship were key and complementary ingredients inthe Asian miracle. Without the expansion of human capital, aggressiveentrepreneurship would have been stymied; without aggressive entrepreneurship,returns to human capital investment would have been low. (LMH)

Keywords: Regional development, Assimilation, Economic development, Economic models, Transition economies, Educational background, Human capital, Evolution model, Capital investments, Economic theory

Suggested Citation

Nelson, Richard R. and Pack, Howard, Factors Behind the Asian Miracle: Entrepreneurship, Education, and Finance (2003). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1510582

Richard R. Nelson (Contact Author)

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

Howard Pack

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

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