Original link: https://ljf.com/2022/08/17/1118/
Lecture 5 “The East Asian Miracle” and Alternative Development Strategies
I. Existing Explanations of the “East Asian Miracle”
(1) Cultural determinism
(2) Influence of the Cold War
(3) The theory of market economy
(4) The theory of government intervention
(5) Theory of export-oriented economy
2. Proposition of the theory: viability and comparative advantage
(1) Concept and model
– Viability. Viability refers to the ability of a normal operation and management enterprise to expect to obtain acceptable normal profits without the support and protection of external forces in a free, open and competitive market. “Freedom” refers to the freedom to enter and exit the market, “open” refers to the connection between domestic and foreign markets, “competition” refers to no monopoly, “normal operation and management” means that there is no problem in operation and management, and “normal profit” refers to the market can Accepted average profit.
(2) Optimal industrial structure and policy burden
Before 1978, the economic scale of Liaoning Province ranked fourth in the country, second only to the three municipalities directly under the Central Government. It is because the industrial products that serve as its pillars all have monopoly prices, and the prices of input factors are relatively low, so the financial taxation and other aspects are relatively low. Can be ranked in the forefront of the country. However, with China’s accession to the WTO, in addition to maintaining low interest rates, the prices of various factors have been liberalized. Under this situation, the heavy industry in the Northeast cannot survive. Industrial Zone” plan.
(3) Improvement of factor endowment structure and comparative advantage development strategy
(4) Comparative advantage strategy and market mechanism
(5) The role of the government in the comparative advantage strategy
In the process of economic development, the role of the governments of developing countries and developed countries may be very different in countries that are also based on the market system. For developed countries, as long as the market mechanism can function normally, the government, in addition to maintaining social order, providing public goods, and overcoming externalities, should have the functions of a “minimum government”, and it will have no effect on the economy. The less intervention, the better; but “smallest government” is not the best choice for developing countries. The reason is that developed countries are already at the forefront of the world’s technological boundaries, and their products and industrial structures are also of the highest level. Under such circumstances, whether it is a country or an enterprise, it is very difficult to ask questions such as where is the next goal of industrial upgrading, where will the next technological innovation appear, and what will be the next product that will be widely sold? It is foreseeable that the eight immortals of enterprises can only be allowed to cross the sea, each showing their magical powers, and relying on their own judgment to explore, most of them fail, and a few companies succeed, and economic development depends on these two successful companies. Having an information advantage leaves little room to play a role.
But for developing countries, most of the industries and technologies to be developed at present are already existing in developed countries, and almost all the developed products have already been produced or are still being produced in developed countries. Therefore, developing countries can learn from the development experience of developed countries and introduce their technologies, which is the so-called late-mover advantage of developing countries to catch up with developed countries.
Since this development path of developing countries has brought great predictability, the government has the ability and necessity to play an appropriate role in certain aspects.
The second role of the government is coordination, which is embodied in three aspects: First, industrial upgrading and technological innovation require new investment, which not only involves investment in production itself, but also includes many complementary investments, such as raw materials, Parts, etc. If these investments are not in place, it will have an impact on industrial upgrading. At this time, the government needs to coordinate among relevant enterprises. Second, the upgrading of industrial, product and technological structures in developing countries will inevitably be accompanied by external problems that many enterprises cannot internalize, such as financial structure, labor education level, and construction of transportation infrastructure. These externality problems are difficult for any single enterprise to internalize, and can only be solved by the government’s role. Third, industries with comparative advantages are bound to have profits. Especially when the profits are high, companies are likely to rush on them. The bubble of the Internet industry at the beginning of this century is largely this rush behavior. resulting in excess investment. If the government has the relevant information of the industry in advance, it can avoid this phenomenon by formulating appropriate industrial policies.
The last role of the government is to make external compensation to enterprises, which must be premised on. The government can formulate some industrial policies based on the information collected, but there is no guarantee that these industrial policies are correct. If the government’s industrial policy fails, the companies that take the lead in responding to the government’s policies will lose money or even go bankrupt. This bankruptcy actually provides a useful message for other businesses in the market to avoid the same investment activity. If the industrial policy is correct, the first enterprises to invest in accordance with the industrial policy will be successful, and this success will attract more enterprises to invest, market competition will increase, and the profits of the first enterprises to invest will be diluted. Therefore, regardless of success or failure, Provide useful information for the whole society.
All in all, there is an obvious technological gap between developing countries and developed countries. As long as this gap is fully utilized to reduce the cost of technological innovation and accelerate the pace of technological innovation, developing countries can take advantage of the latecomers. Governments in developing countries can play an appropriate role through information collection, coordinated industrial policies, and external compensation to enterprises, so as to make better use of late-mover advantages to improve the competitiveness of domestic enterprises, accelerate capital accumulation and industrial, Technical structure upgrade. At the same time, any role the government plays must be premised on following the country’s factor endowment structure and comparative advantage, neither blindly pursuing speed nor completely copying foreign experience, but also maintaining a competitive market to ensure price sensitivity.
(6) Comparative advantage strategy and export orientation
(7) Reflection on reality
3. Answers to some questions
In fact, independent innovation and technology introduction are neither superior nor inferior. The goal of comparative advantage strategy is to pursue high efficiency, capital accumulation and economic growth. Imported technology is cheaper and more profitable than independent innovation, so it is better to choose imported technology; when there is no ready-made technology to introduce or the cost of introduction is too high, then independent innovation is better.
Economics is an explanatory discipline. When we do research, the most important thing is to figure out a causal relationship based on complicated phenomena, so that it has explanatory significance for reality and can guide actions. Because of this, special attention should be paid when encountering a comprehensive theory of the “Shiquandabu” style, because such theories often have the disadvantage of not distinguishing between cause and effect, and it is easy to lead actions astray.
Porter’s theory can actually be summarized into two points: one is to follow the development of comparative advantages, and the other is the size of the domestic market. Of these two points, it is more important to follow the comparative advantage, because in an open market, the development of the comparative advantage can take the whole world as a market. Take Nokia in Finland as an example. Although Finland has a population of only more than 5 million, it does not prevent Nokia from being more competitive than Motorola in the same field, because Finland and the United States are both developed countries and have the ability to develop international markets. Develop and grow yourself.
4. Conclusion
For developing countries, catching up with developed countries is the goal of development. In order to better promote this process, developing countries must change their traditional development thinking, start from the exogenous causes that determine endogenous phenomena, and change the direct goal of narrowing the industrial/technological gap with developed countries to narrowing and developing The main target is the price difference of the country’s factor endowment structure, and it will develop in accordance with its comparative advantages on the basis of a market economy. At the same time, the government will play a greater role in “making the best use of the situation” than the governments of developed countries, and provide enterprises with information, coordination and overcoming externalities. Provide good services, create a good external environment, and promote overall and healthy economic growth. Developing countries can take advantage of the gap with developed countries in factor endowment structure and technological industry level, take advantage of latecomers, accelerate economic development, and catch up with the income level of developed countries within one or two generations.
To be continued
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