Tfpg Controversies, Institutions, and Economic Performance in East Asia

43 Pages Posted: 1 Jul 2000 Last revised: 5 Oct 2010

See all articles by Dani Rodrik

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: February 1997

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 labor-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.

Suggested Citation

Rodrik, Dani, Tfpg Controversies, Institutions, and Economic Performance in East Asia (February 1997). NBER Working Paper No. w5914. Available at SSRN: https://ssrn.com/abstract=225695

Dani Rodrik (Contact Author)

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