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Development-patters

Source: TW

Is there a difference between the pattern of development of South Korea vs that of Mexico? Taiwan vs Thailand? There is a distinct difference and broad-brushing such diverse countries as examples of “free trade”, “open to FDI” does not offer much insight.

Japan, South Korea and Taiwan followed what can only be termed their Swadeshi model, emphasizing domestic savings and investment, mercantalist export policy, with consumer goods imports restricted. To this day, you will not find many foreign owned factories in these countries.

Bangladesh is following the Mexican model of what I call “subsistence development” - you get foreign owned factories but very little value addition.

Prof Panagariya misses these nuances in his broad brush Vietnam-and-Bangladesh-are-grabbing-the-foreign-factories thesis. Compare Prof Panagariya with “How Asia Works” book that explains the nuances of the East Asian model. Which economist should we be listening to? This debate is important for our nation.