In the wake of World War II, Japan was widely assumed to be ‘finished’, South Korea was a basket case of underdevelopment and China was chaotic and poor — indeed the terms ‘Chinese’ and ‘poor’ were held to be synonymous. Taiwan was hardly worth consideration economically notwithstanding its importance geopolitically. When I first visited Taipei half a century ago its main economic activity seemed to be as a base for US soldiers on rest and recreation from the Vietnam War. As to Southeast Asia, it was mired in poverty, instability and conflict.
Reflecting the perception of backwardness accompanied by a degree of condescending hopelessness, the Swedish Nobel economics laureate Gunnar Myrdal published in 1968 a three-volume magnus opus entitled ‘Asian Drama: an Inquiry Into the Poverty of Nations’. In 1993, 25 years later, the World Bank published its report entitled ‘The East Asian Miracle’.
Apart from confirming the fact that, yes, economists believe in miracles, the term has been quite widely used in describing economic developments in East Asia.
The first use of the term ‘economic miracle’ (to my knowledge) was applied to Japan in the 1960s. Contrary to expectations, the phoenix did rise from the ashes: in 1964 Tokyo held the Olympic Games, in 1965 it joined the OECD, in 1967 it surpassed West Germany in GDP, and from then on went about conquering international markets.
Following Japan’s rise there were the four ‘tigers’ — Taiwan, Hong Kong, Singapore and South Korea — which rank among the few economies worldwide that succeeded in rising from third world status and overcoming the middle income trap. Over the course of the late 1970s and 1980s, Southeast Asia transformed from a battlefield to a marketplace with the notably high growth rates of Thailand, Malaysia, Vietnam and Indonesia. And then came the most awesome miracle of all — China.
These East Asian economic miracles had significant positive social consequences: tremendous reduction of poverty, rise of a robust urban middle class, increased life expectancy, improvements in education, cultural achievements (for example in music) and increased leisure activities such as foreign travel.
There are, however, a number of egregious qualifications to this.
While the region’s economic edifice remains impressive, its institutional, historical and geopolitical foundations are alarmingly weak. The contrast between the post-war settlement in Europe and the post-war settlement in East Asia illustrates the East Asian situation.
One begins with the starkest contrast of all in post-war Germany’s attitudes towards its neighbours and those of Japan. One cannot imagine a senior German politician paying respects to a memorial dedicated to former Nazi leaders, as Japanese political leaders repeatedly do in respect to war criminals at the Yasukuni Shrine — most recently the Minister of Defence Tomomi Inada. One cannot imagine the mayor of Berlin publicly denying the existence of the Dachau concentration camp, as the former long-serving governor of Tokyo, Shintaro Ishihara, publicly and repeatedly denied the occurrence of the Nanjing massacre. One cannot imagine a German chain hotel proprietor installing in every room a book praising Germany’s past military prowess as Toshio Motoya has done in his chain of APA hotels with a book he authored praising Japan’s past imperialist militarism.
Whereas Germany has been a major source of peace, reconciliation and stability in Europe, Japan, through its hubristically un-contrite behaviour is a source of friction, suspicion and instability in East Asia.
This is especially critical in a region that is the world’s most geopolitically explosive. A number of situations in East Asian could foreseeably degenerate into World War III. Offensive military action in the Korean peninsula, US intervention in the conflict between Japan and China over the Senkaku/Diaoyu islands in the East China Sea or Secretary of State Rex Tillerson’s threatened blockade on the South China Sea could all be triggers.
These are the biggest flashpoints in the region but there are others.
Every East Asian state has tense relations with one or more of its neighbours. As ASEAN celebrates its 50th anniversary this year it can be commended for the significant achievements it has made in neighbourly confidence-building. Yet even the most ardent ASEAN fan would admit there are fragilities.
Since the end of the Vietnam War, the impact of the United States in East Asia has been on balance benign. This is partly due to the economic dynamism of the region and its integration with global markets and especially the US market. It is also because the United States has been militarily bogged down in the Middle East following its interventionism and thus limited in its ability to do harm in East Asia.
Not just China but the whole region can be construed as the proverbial ‘china shop’ into which the US presidential election has unleashed a bull. Great delicacy and diplomatic sophistication is required. Following East Asia’s economic miracles, what is urgently required in the Trumpian era is a geopolitical miracle.
Jean-Pierre Lehmann is Emeritus Professor of International Political Economy at IMD, Switzerland, founder of the Evian Group, and Visiting Professor at Hong Kong University. You can follow him on Twitter at @JP_Lehmann.
A brilliant article that is so very true, especially with regard to postwar Japanese revanchism. If something is missing in this article it is that even while pretending otherwise, the US has used Japan’s postwar unwillingness to reflect on its wartime barbarism and reconcile with its neighbors to its military and economic advantage. Thus, while it is certainly correct to say that “Great delicacy and diplomatic sophistication is required,” the last place to expect it is from the US, most especially under Donald Trump. Those of us who understand this must work even harder to change an all too dangerous future.
thanks, Brian, for the compliment! I fully agree with your last sentence. We must indeed act, or at least react! Jean-Pierre
Mr. Tanaka’s analysis published a few days ago offers some optimisitc, albeit admittedly very ambitious, suggestions as to how the complex and potentially troubling geopolitical dynamics of the region could be approached. It is going to require patient and persistent efforts to sustain stability. Can/will the leaders of the various countries do this?
Thanks, Richard, the question in your last sentence is undoubtedly one of the key questions for the 21st century. JP
If the past is any predictor of the future, the ASEAN leaders will take a long time to discuss and arrive, if ever, at some kind of cohesive, let alone comprehensive, approach to these issues. I fear that events/a crisis instigated by ‘the bull in the china shop’ may well overtake even the best of intentions that ASEAN leaders might have.
What about USA leadership during the Cold War? Several times, American politicians were looking at using nuclear weapons when the French were losing in Vietnam, looking at using nuclear during the Korean War against the Chinese, looking at using nuclear weapons if the Chinese had intervened when the USA was fighting the North Vietnamese, and finally, when the US policy in Europe was to use nuclear weapons against the Russian Army if they invade Western Europe and the Americans had feared that there was no way to stop the Russians. By the way, one of Reagan official stated that a nuclear was winnable because all you had to do was to get a shovel, dig a hole, crawl into it, and then put dirt on top of the hole and the dirt will protect you from all that radiation.
Although those Asian countries have turned into economic powerhouses, when it comes to Western and Northern Europe in terms of labor rights for workers, curbing corporate power, and in the last 27 years having good paying, permanent full-time jobs after recovering from the 1990s economic meltdown and sending jobs overseas. You have a country like South Korea not having a social safety net for its elderly population when they retired who are facing poverty and homelessness despite the fact that they worked their butts off making it an economic powerhouse.
When it comes to democracy, Taiwan and South Korean still have a way to go considering the fact how they were under right wing dictatorship during the Cold War and those governments crush any kind of political, social, and economic dissent under the disguise of Communism.
Gunther, as Westerners we are hardly in a position to “preach”. We got to the situation you describe after many decades (centuries) of exploitation of our own rural and industrial workforces, but even more so of actual slavery and exploitation of the people we colonised. Democracy in most of Europe is fairly recent and at the moment very fragile. Jean-Pierre
Not preaching, just stating facts. These Asian countries should learn the lessons from the West particularly the Great Depression of 1929 and the various social and economic benefits that were created by the European Union after World War II which gave them a stable economic lifestyle for a long time. Instead, they act no better than Western countries who had once been their colonial oppressors where the elite benefit while the poor suffer.
You are correct about democracy being fragile especially when the economy goes down and the people are manipulated in supporting right wing parties which is why the social and economic policies need to be strengthened and expanded in bad economic times.
thanks, Gunther, the examples of countries learning from history and especially learning from other societies’ histories, are indeed rare if non-existent.
I might add Jean-Pierre that Democracy in America is fragile considering the fact that American corporations and wealthy people are trying to re-take control of government at the city, county, state and federal levels since the 1980s. They use to control the government at all levels until the Great Depression of 1929 and then lost most of their political and economic control over the government after they had their power being reduced by Franklin Roosevelt’s social and economic policies. You are also welcome, Jean-Pierre.
Thanks. The US is clearly a fractured society or perhaps a society with multiple fractures in early 21st century. JP