The issue of how much output growth in a particular country is due to total factor productivity growth versus growth in inputs is particularly important to understand the Asian Miracle and the recent economic crisis in Asia. Three years ago, Paul Krugman wrote an article in Foreign Affairs where he presented the controversial view (originally advanced by Alwyn Young) that the Asian economic "miracle" was not due to total factor productivity (TFP) growth but rather to an intensive use of inputs, i.e. a high growth rate of capital (high rates of investment) in Asia and a high rate of growth of labor inputs given the increased labor participation rates in the region. This view was very controversial since it implied that very little TFP growth had occurred in Asia; if true, it also suggested that the very high rates of Asian growth were not sustainable in the long run given the expected fall in the rate of growth of employment and the expected reduction of investment rates. The readings below present an introduction to this debate.
An Introduction to the debate by Nouriel Roubini
"The Myth of Asia's Miracle: A Cautionary Fable" by Paul Krugman (Foreign Affairs 1994)
The argument by Paul Krugman in his recent assessment of Asia
A summary of Krugman's view of the Asian Miracle and some counter-arguments
Some arguments against the Krugman's view (from an Economist's Article)
An assesment of the sources of Asian growth from the World Bank
World Bank: The making of the East Asia miracle (October 1993)
The East Asian Miracle - One Paradigm Too Many? by Edith Terry
Asia's Miracle is Alive and Well? Wrong, It Never Existed by Paul Krugman
Perspectives on East Asian Growth by Jeffrey Frankel (6/97)
"Economic Growth in Asia" by Steven Radelet, Jeffrey Sachs, and Jong-Wha Lee, (11/97)
Asia Adapt to Global Change by the World Bank
The Asian Miracle and Modern Growth Theory by Richard R. Nelson and Howard Pack (2/98)
Growth in East Asia: What We Can and What We Cannot Infer by Michael Sarel
The Singapore Productivity Drive from "Productivity Digest"
Growth and Productivity in ASEAN Countries by Michael Sarel IMF Working Paper WP/97/97
East Asian Growth Before and After the Crisis by Nicholas Crafts
A Vision of Capital Markets and Stock Exchange by Roberto F. De Ocampo
Why Not Africa? by Richard B. Freeman and David L. Lindauer NBER Working Paper No. W6942 (2/99)
International Center for Economic Growth