EAST ASIAN DEVELOPMENT TO BE DISCUSSED BY CONFERENCE IN KUALA LUMPUR, 29 FEBRUARY-1 MARCH

GENEVA, 16 February (UNCTAD) -- Policy-makers, academics and senior economists will discuss paths to development in east Asia at a conference in Kuala Lumpur from 29 February to 1 March. The findings of the conference will be transmitted to the ninth session of the United Nations Conference on Trade and Development (UNCTAD IX), to be convened in South Africa in late April, which will focus on globalization and liberalization issues.

The Kuala Lumpur conference, whose theme is "East Asian development: lessons for a new global environment", is organized jointly by UNCTAD and the Malaysian Institute of Strategic and International Studies (ISIS), and funded by the Government of Japan. It is part of UNCTAD's ongoing research on the economy of the region, which began with an analysis in the 1994 Trade and Development Report.

During the last two decades, the economic performance of a small group of rapidly growing east Asian countries has attracted an enormous amount of attention. More recently, a second tier of industrializing economies -- Indonesia, Malaysia and Thailand -- has been added to the set of countries which are regarded as being part of the "east Asian miracle". That strong collective economic performance, along with the economic re-emergence of China, has raised prospects of a wider regional dynamic.

Economic development in east Asia has been associated with a fast pace of industrialization, rapid growth of exports and steeply rising trends of output and living standards. That experience had a profound impact on economic policy debates outside the region. In a report to the conference, the UNCTAD secretariat points out that there is a growing consensus that the economic success of east Asia was not purely market driven, but was also attributable to a well defined role of the State.

Detailed studies have shown that the east Asian newly industrialized economies (NIEs) were using selective industrial policies to channel resources from old into new industries, altering their long-term industrial development. They were also applying policies that supported an impressive pace of capital accumulation in the region, without which the rapid pace of technological upgrading, product diversification and increasing international competitiveness would not have been possible. Those policies were accompanied by the construction of institutional links to facilitate the cooperation between the government and the private sector.

However, elements necessary to understand the "east Asian miracle" are still missing, in particular those related to the institutional framework and the role of savings and investment. The objective of the conference in Kuala Lumpur is to shed light on those elements. Its final purpose is to examine whether other developing countries have the institutional prerequisites to implement a selective industrial policy and whether those prerequisites are still relevant in today's globalizing world economy.

The UNCTAD report to the conference states that the changing international trading environment may be restricting the freedom of developing countries to conduct east Asian-style policies. However, there is considerable room for manoeuvre if countries skilfully use various "permissible" subsidies, balance-of-payments clauses, non-trade-related policy measures, and are more creative in interpreting the new international trading rules.

The search for lessons from success stories should not be guided by a desire to replicate experiences elsewhere, UNCTAD warns. "The real issue is whether other countries can construct their own policy regimes and supporting institutions around development principles that have been a helpful guide to policy-makers and other actors involved in successful development experiences", the report adds.

However, there are lessons to be learnt from the east Asian experience, says UNCTAD. It is both possible and instructive to identify some major principles that underlie that experience and try to adapt the policy tools and institutional vehicles that were used to fit local conditions elsewhere, and if necessary to devise new policy tools and institutions. If east Asian governments had themselves believed in the impossibility of such institutional adaptation and innovation and had ignored earlier success stories, it is doubtful whether there would have been an "east Asian miracle", the report concludes.