This post originally appeared on Attravero: Jeff Atik's Commentary on International Banking and Finance.
Pity Joe Studwell. He has written a very intelligent, very thoughtful book. You might not agree with much of it; I have my doubts about his recipe. But there is little doubt what the book is: an exercise in economic history, with a focus on a peculiar developmental pathway followed by a few highly successful (generally northern) east Asian countries and not followed by certain (largely southern) east Asian countries. And geography has nothing to do with these diverging outcomes.
So poor Studwell delivers this intelligent book to his editor - one imagines - who decides it needs a snazzy title. Regardless of whether the title describes Studwell's book. Studwell writes about 'How Certain Asian Countries Developed' - not about 'How Asia Works'. He has very little to say in How Asia Works about how any of Asia works today - again, he is an economic historian. And he makes no claim within the book's pages that Asia is 'the World's most dynamic region.' Poor Studwell.
He can take comfort from having written a provocative book, which challenges much of the prevailing orthodoxy in developmental economics. And he's obviously willing to horrify both left and right - praising Robin Hood-esque land reform (but not agricultural collectivization), autocratic leaders who impose export discipline on their cronies, and the elegant effectiveness of capital controls.
Studwell examines the East Asian development successes (Japan, Korea, Taiwan, and China) and the laggards (Malaysia, Indonesia, Thailand, and the Philippines). The winning path, according to Studwell, involves three distinct phases ("one, two, three," he calls these in his concluding chapter). These three phases are a recipe for developmental success, they form the "same stretch of the river" that poor countries must navigate.
The first stage requires equitable land distribution to absorb labor and capture the productivity gains associated with moving to garden-style agriculture by small family landowners. The magic here is that everyone works - and most start at the same base. Garden intensity agriculture yields very low returns on labor but enhanced returns on land - it permits the accumulation of small surpluses that can be used to fund imports of necessary technology.