How Asia Works

How Asia Works by Joe Studwell is an account of economic developement and history in Asia. It focuses on a several key economies including Japan, Taiwan, Korea, Malaysia, the Philippines, Indonesia and finally to China. It discusses economic history and the sequencing of events that led to the success and failurs of different countries in Asia. The author draws conclusions about the right ingredients for economic growth in the modern era given the various lessons one can learn from Asian examples. The author breaks the book into 4 categories- Land, Manufacturing, Finance and finally China.The author starts by discussing Land and agriculture. He starts out by making the observation that the highest efficiency in produce per square meter for agriculture occurs through home farming and that economies of scale might exist from a cost perspective given the cost of labour but does not mean that aggregate produce would be highest if we all farmed. He then discusses how farming in history has been dominated by landlords and the business of farming within a landlord system by rent seeking behaviour that does not sufficiently invest in land improvement. He finally concludes that when human capital is cheap gaining productivity by eradicating rents and equalizing ownership of farm land increases productivity and moves people up the income curve allowing for the first stage of economic growth. Studwell then goes on to discuss how this general idea was understood and implemented in Japan, Korean and Taiwan and in particular how their experiences led to yield improvements. It also discusses how these principles were not followed in Philippines and other parts of south east asia and how the differences in land policy were the first fundamental hurdle for economic developement to take off.The author then moves on to manufacturing and discusses the concept of infant industries. He discusses the origin of the idea and how creating barriers to entry was understood to be a necessary part of fostering domestic industry. The need to create a system of carrots for successful ventures and sticks to punish failures was shown to be an integral part of successful development policy and the differences between Korean and Malaysia is used as an example to show how competition was needed to keep entrepreneurs more honest. Focusing on exports is shown to be a key to forcing companies up technology curves and putting them in a competetive landscape to perfect the growth process and that preferential credit was a means to facilitate projects like this. Having industrial policy is shown to be more effective when looking at the differences between Korean and Taiwan as an example.The author then goes on to finance. Having finance controlled by industrial policy rather than nepotistic interests is quite obviously shown to have major impacts on the quality of investment. Southeast asia and crony capitalism are given as examples of how credit was funelled into asset gathering instead of broadening productive capacities. The differences in experience between Indonesia and Korea are given as examples to think about. The liberalization of finance is also discussed and the merits of liberal capital flows vs closed capital accounts are detailed and the author argues that in developement having control over the flow of capital in and out of the country can have massive benefits especially when those flows are hot money.The author finally discusses China and where it fits in. Its similarity on industrial policy to north asia and taiwan is shown and its history of encouraging state upstream industries to continue to compete and stay competitive is discussed. The author also discusses the failure to reform the agricultural side of the economy and how that is a long run problem that needs to be solved for China to be able to escape the middle income trap. The limits of supporting upstream and midstream activities is discussed and the need for capital allocation to start flowing towards creating consumer brands is considered. The author covers the successful parts of China's growth model as well as the limits of it and considers other asian countries lessons to be heeded.This is a combination of history and economic policy lessons as a function of that history. It is coherent, interesting and insightful. One finishes it believing that free market capitalism too is dependent on institutional arrangement and market structure. The need to adapt developement strategy to the stage of economic developement is currently in is given to be of critical importance. This reads well and illuminates developent in Asia to the reader. It contains anecdotal stories and economic interpretation. It caters to a wide audience and can be appreciated on many levels.

A great book. Great storytelling in the model of Michael Lewis. A few parts dragged, but it was definitely a refreshing view of why growth succeeded in northeast Asia but not in southeast. The author, by his own admission, spent little time talking about the politics and how to build the necessary consensus to move from through each of the stages (e.g., from feudalism to land reform, from an agriculture focus to export-oriented and protectionist manufacturing, to largely free market). As he notes, foreign occupiers drove many of the changes in post-war Japan and Korea and totalitarian regime drove it in China. Clearly at each step, vested interests will oppose changes, as we saw most clearly in the Philippines. Another book examining the situation from a political perspective would be interesting. For example, what is needed to overcome a state mired in crony capitalism? Is the situation different in countries that are blessed with lots of oil, gas, and precious minerals? I originally learned about this book from Bill Gates' review of it asking about its relevance to Africa, which depends heavily on extraction industries. Those countries are prime candidates for agricultural revolution if kleptocrats and tribal extremists can be overcome

The title, How Asia Works, is misleading. I downloaded a sample of this book because I expected it to be an explanation and analysis of the Asian work ethic. To my pleasant surprise, it is about why the East Asian economies of Japan, Korea, Taiwan and China have achieved high levels of economic development in a very short time while the economies of Southeast Asia--the Philippines, Indonesia, Malaysia and Thailand--have been much less successful. I have lived and worked in Asia for 21 years and I found this book to be one of the most insightful easy-to-read books on economic development that I have read in 30 years.Joe Studwell is an economic journalist who has spent many years covering countries in the region. He has a free-flowing narrative that is entertaining and compelling, interwoven with details and anecdotes on the economies of each of the 8 countries. This is not an academic work. There are no charts or tables and statistics are incorporated into the text. He cites many sources to support his points but these are mainly confined to end notes.Studwell identifies three key sets of policies responsible for the development success of the Northeast Asian economies--agricultural land reform, a development policy strongly focused on manufacturing and control of financial policy to support the two. He evaluates the history of policies and performance of each of the eight countries on the basis of these three development criteria and explains why each of the four Northeast Asian economies succeeded and the Southeast Asian countries have not.Joe Studwell is very critical of development economists and the prescriptions of the IMF and the World Bank in particular. Although these criticisms are justified to a large extent, I felt that the were overstated. Development economists are hardly unanimous on the path to achieve economic development. The debate has raged for 60 years or more and Studwell, to his credit, has made a thoughtful contribution.A shortcoming of the book, which Studwell readily acknowledges, is that it does not investigate the path forward after a country has achieved high levels of per capita income. Japan's economic malaise of the past 20 years is a case in point. The economic development policies that served Japan well over the past 60 years may no longer be suitable for the world's third largest economy. Korea, Taiwan and China will face similar challenges.I strongly recommend this book to anyone with an interest in economic development in general and, specifically, in the implementation of development strategies in East and Southeast Asia.

O livro aborda as razões pelas quais os diversos países asiáticos tiveram resultados diferentes na corrida na direção ao desenvolvimento econômico e social. A análise é bem detalhada, mas em linhas gerais as diferenças de resultado podem ser atribuídas à (1) efetiva reforma fundiária, privilegiando a agricultura de pequena escala e mais intensiva em mão-de-obra, (2) redistribuição de riqueza e melhoria da arrecadação derivadas da reforma fundiária, (3) política industrial para forçar os industrialistas a focarem na exportação, e (4) investimento em educação.

The book delivers as promised. There's a lot of factual information and historical explanations on the success or failures of different areas of Asia.If you get this book, you'll be thoroughly educated.

I was a late reader of this excellent book, which provides a clear overview of what worked (and what dit not) in Asian national development strategies. Some critics say that the author takes in little consideration topics such as institutional theory, which, on the opposite, I consider a positive feature of the book: so much has been written about the role of institutions in shaping development paths that it would have been redundant to include this point of view in the book.

Really enjoyed reading this book and opened my eyes on the various different governmental policy successes and failures that shaped how Asian countries are now like today. Particularly liked how the author used snippets of his trips to some of these places, it really helped visualize what he is describing. Definitely a must read if you want to learn and understand why countries such as South Korea, Japan and China developed so successfully to where they are now today, but countries such as the Philippines, Indonesia and Thailand really lagged behind and stalled since the end of WW2.

Muy bien explicadas las razones por las que Japón, Corea, Taiwán y China están creciendo sólidamente, mientras que Filipinas, Tailandia, Indonesia y Malasia no. No solo permite entender mejor lo que está sucediendo en Asia, sino que también permite comprender por qué Latinoamérica no despega, ni lo hará con las políticas que siguen sus países. Me pareció muy iluminador.