East Asian Economic Development

(Provisional, subject to change)

Summer 2008
9:00 10:40 a.m. MTWTh
531 LP-POSCO Building

Professor Chung H. Lee

Office: Woodang #504
Office Hours: To be determined

This course is designed for students who would like to learn about economic
development in East Asia in the past forty-some years, the emergence of China and its
effect on the region, growing regional economic interdependence, and the possibility of
forming a free trade area in East Asian. It is assumed that the students enrolled in this
course have taken at least the introductory courses in economics and are familiar with the
basic concepts and theories about markets and the market economy.
Attendance requirements
Students are required to attend all classes and read all assigned readings prior to class.
The instructor will frequently assign students to make presentations in class on various
topics and selected readings. Students must fulfill 48 classroom hours during the six
week terms to obtain academic credit at KU.
Course grade
Grades are based on attendance and class participation (20%), presentation (30%), and a
term paper (50%).
Term paper
Students are required to form groups of two (or three in exceptional cases) to work on a
joint term paper and consult with the instructor in choosing their paper topics. (Please see
the section on possible topics.) A one-page outline of a proposed topic must be submitted
by Monday of the second week of instruction. A five-page review of the literature is due
by Thursday of the third week and the 15-page (typed, double spaced, excluding
endnotes, bibliography, and graphs and tables) term paper is due at the ISC Office by
Tuesday of the sixth week of instruction. Plagiarism is absolutely prohibited: the
information, data, and/or ideas that are obtained from other sources for use in the paper
must be cited and referred to in the paper. The term paper should identify the question to
be addressed, discuss its relevance to the purpose of the course, critically evaluate the
answers extant in the literature, and offer the answer of choice with reasons for the
choice.

Topics and Readings

1. Introduction
Overview of the course
Economic development
East Asian experience in economic development
Lessons from the East Asian experience

Washington consensus

Rodrik, Dani. 2004. Rethinking Growth Policies in the Developing World,

http://ksghome.harvard.edu/~drodrik/Luca_d_Agliano_Lecture_Oct_2004.pdf
World Bank Report 2002 Building Institutions for MarketsOverview available at
www.worldbank/org/wdr/2001/fulltext/fulltext2002.htm
Stiglitz, Joseph. 2004. The Post-Washington Consensus Consensus,
http://www2.gsb.columbia.edu/faculty/jstiglitz/download/2004_Post_Washington_Conse
nsus.pdf
[To access commonly used websites on the Asia-Pacific economies, go to
http://home.earthlink.net/~harstadm/econhome1.htm. For country statistics go to, e.g.,
www.adb.org/Statistics/default.asp ]

2. East Asian economic development: the orthodox view

How has East Asia achieve rapid economic development? A market-friendly
approach
World Bank, The East Asian Miracle: Economic Growth and Public Policy, World
Bank, 1993, 8-26
World Bank, The Republic of Korea: four decades of equitable growth, World Bank
Working Paper no. 30781, May 2004 (Available at World Bank Documents and Reports)
Young, Alwyn, Lessons from the East Asian NICs: A contrarian view, NBER Working
Paper no. 4482 http://www.papers.nber.org/papers/w4482.pdf
Mulder, Nanno and Onodera, Osamu, Trade Liberalization and Economic Performance:
Latin America v. East Asia 1970-2006, OECD Trade Policy Working Papers No.70,
2008 http://ideas.repec.org/s/oec/traaab.html
3. Role of the state in East Asian economic development: heterodox views
Role of state in economic development
Industrial policy
Trade and development
Financial system and economic development
Rodrik, Dani, Getting Interventions Right: How South Korea and Taiwan Grew Rich,
Economic Policy 20, 1995 (See also a discussion on his book, One Economics, Many
Recipes: Globalization, Institutions, and Economic Growth, at
http://imf.org/external/np/tr/2007/tr071129a.htm
2

Lee, Chung H., The Government, Financial System, and Large Private Enterprises in the
Economic Development of South Korea, World Development, Vol.20, No.2, 1992
____________, The State and Institutions in East Asian Economic Development: The
Past and the Future, Journal of the Korean Economy, Vol.3, No.1, spring 2002,
Available at as State and Institutions in East Asia, http://www2.hawaii.edu/~lchung
Lawrence, Robert Z. and Weinstein, David E., Trade and growth: import-led or exportled? Evidence from Japan and Korea, NBER Working Paper no. 7264, July 1999
(pp.1-10 and 18-22) http://www.nber.org/papers/w7264.pdf
Chang, Ha-Joon, The East Asian Development Experience in Ha-Joon Chang (ed.),
Rethinking Development Economics, Anthem Press, London, 2003
Amsden, Alice, Asias next giant: South Korea and late industrialization, Oxford
University Press, 1989
Wade, Robert, Governing the market: economic theory and the role of government in
East Asian industrialization, Princeton University Press, 1990
Frankel, Jeffrey and Romer, David, Trade and Growth in East Asian Countries: Cause or
effect, NBER Working Paper No.5372. www.nber.org/papers/w5372.pdf
[Presentation of term paper: work in progress]
4. Emergence of China and its impact on East Asia
Economic reform in China: Big Bang v. Gradualist approach
--Dual-track system (TVEs and SOEs)
--Free-market prices at the margin
Trade and economic development
Regional production networks
Comparative advantage and structural adjustment
Foreign direct investment and trade
Naughton, Barry, The Chinese Economy: Transitions and Growth, MIT Press, 2007, 85111, 139-159, 377-99
Fogel, Robert W., Capitalism and democracy in 2040: forecasts and speculation,
NBER Working Paper no. 13184, June 2007 www.nber.org/papers/w13184.pdf
Eichengreen, B., Y. Rhee and H. Tong, The impact of China on the exports of other
Asian countries, NBER Working Paper No.10768, 2004
http://www.nber.org/papers/w10768
3

Kim, Joon-Kyung, Y. Kim, and Chung H. Lee, Trade, Investment and Economic
Interdependence between South Korea and China, Asian Economic Journal, Vol.20,
No.4, 2006 (Available at http://www2.hawaii.edu/~lchung)
Lee, Chung H., Economic Development in China and Its Implications for Japan (with
Shigeyuki Abe) in M. Blomstrm, B. Gangnes, and S. LaCroix (eds.), Japans New
Economy: Continuity and Change in the Twenty-First Century, Oxford University
Press, 2001. (Available at http://www2.hawaii.edu/~lchung)
Zebregs, Harm, Intraregional trade in emerging Asia, IMF policy discussion paper,
PDP/04/01, April 2004 www.imf.org/external/pubs/ft/pdp/2004/pdp01.pdf
Mercereau, Benoit, FDI flows to Asia: did the dragon crowd out the tigers? IMF
working paper, WP/05/189 www.imf.org/external/pubs/ft/wp/2005/wp05189.pdf
Athukorala, P-c, The rise of China and East Asian export performance: Is the crowdingout fear warranted, (Available as China and East Asian Trade at
http://www2.hawaii.edu/~lchung)
5. Economic integration and regional free trade area in East Asia
Trade, investment and economic integration
Production networks, international fragmentation of production processes
Free trade area: trade creation v. trade diversion
Ng, F. and Yeats, A., Major trade trends in East Asia: What are their implications for
regional cooperation and growth, World Bank Policy Paper, WPS3084, 2003
(available at the World Bank webpage)
Gaulier, G., et al, Chinas integration in East Asia: production sharing, FDI and hightech trade, CEOU Working Paper, Paris, 2005
www.cepii.fr/anglaisgraph/workpap/wp05-09.pdf
Ando, M. and Kimura, F., Foundation of international production and distribution
networks in East Asia, NBER Working Paper 10167, 2003
http://www.nber.org/papers/w10167
Urata, Shujiro, Toward Northeast Asian Production Networks in Yoon Hyung Kim and
Change Jae Lee (eds), Strengthening Economic Cooperation in Northeast Asia, Korea
Institute for International Economic Policy, Seoul, 2004
Lee, Chang Jae, Rationale for institutionalizing Northeast Asian economic cooperation
and some possible options, Schott and Goodrich, Reflections on economic integration
in Northeast Asia, Langhammer, Rationale for enhancing Northeast Asian economic
cooperation and some possible options in Yoon Hyung Kim and Change Jae Lee (eds),

Strengthening Economic Cooperation in Northeast Asia, Korea Institute for

International Economic Policy, 2004. Comments on these papers by Chung H. Lee in
the same volume
Lee, Chung H., Intra-Regional Trade in Northeast Asia: Trends and Characteristics
(with Yangseon Kim) in Y. Kim and C. J. Lee (eds), Northeast Asian Economic
Integration: Prospects for a Northeast Asian FTA, Korea Institute for International
Economic Policy, Seoul, 2003. (Available at http://www2.hawaii.edu/~lchung)
Fung, K.C. and Iizaka, Hitomi, Japanese trade and direct investment links with Korea
and China in Joon-kyung Kim and Chang Jae Lee (eds), Enhancing Investment
Cooperation in Northeast Asia, Korea Institute for International Economic Policy, Seoul,
2004
De Grauwe, P. and Zhang, Z., Introduction: Monetary and Economic Integration in the
East Asian Region, World Economy, Vol. 29, Issue 12 (Available as East Asia
Integration at http://www2.hawaii.edu/~lchung)
Ahn, Sanghoon, K. Fukao, and K. Ito, Outsourcing in East Asia and its impact on the
Japanese and Korean labour markets, OECD Trade Policy Working Papers #65
http://ideas.repec.org/s/oec/traaab.html
6. Asian financial crisis and institutional reform
Finance and economic development
Financial liberalization
International capital movements
Crisis and its causes
Post-crisis institutional reform
Lee, Chung H., Introduction: issues and findings in C. H. Lee (ed.), Financial
Liberalization and the Economic Crisis in Asia, Routledge, London, 2003. (Available at
http://www2.hawaii.edu/~lchung)
Barro, Robert J., Economic growth in East Asia before and after the financial crisis,
NBER Working Paper no.8330, June 2001 www.nber.org/papers/w8330.pdf
Lee, Chung H., Chaebol, Financial Liberalization, and Economic Crisis: Transformation
of Quasi-Internal Organization in Korea (with Keun Lee and Kangkook Lee), Asian
Economic Journal, Vol.16, No.1, 2002, 17-35. (Available at
http://www2.hawaii.edu/~lchung)
Park, Yung-chul, 10 Years after the Financial Crisis: What has Korea Learned and
Where Is It Headed? Korea Focus, Vol.15, No.3, July 2007, 126-137
http://koreafocus.or.kr/essays/list.asp?volume_id=638category=G

[Term paper presentation]

7. Globalization in the East Asian economies
Does globalization require institutional changes in East Asia?
Park, Yung Chul; Ahn, Choon Yong; and Wang, Yunjong, In Search of a New East Asian
Development Paradigm: Governance, Markets and Institutions in J. J. Teunissen and A.
Akkerman (eds), Diversity in Development Reconsidering the Washington Consensus,
FONDAD, The Hague, December 2004, 150-166
http://www.fondad.org/product_books/pdf_download/3/Fondad-DiversityBookComplete.pdf
Lee, Chung H., Institutional reform in Japan and Korea: why the difference? in M.
Blomstrm and S. La Croix (eds), Institutional Reforms in Japan, Routledge, London,
2006. (Available at http://www2.hawaii.edu/~lchung)
Lee, Chung H., Financial Reform, Institutional Interdependency, and Supervisory
Failure in the Post-Crisis Korea (with Hong-Bum Kim), Journal of East Asian Studies,
V.6, No.3, September-December 2006, 409-431. (Available at
http://www2.hawaii.edu/~lchung)
8. Impact of Asian Drivers on the Developing World
How has economic growth in China impacted the developing countries and how
will it?
Kaplinsky, R. and Messner, D., Introduction: The Impact of Asian Drivers on the
Developing World, World Development, V. 36, No.2, 197-209 (Available at
http://www2.hawaii.edu/~lchung)
[See other articles in the same issue of World Development for their impact on different
parts of the developing world.]

Possible paper topics

East Asian model of economic developmentinstitutional foundations for East
Asian economic development
Emergence of China and/or India and its effect on its neighboring economies
resource-rich, developing economies v. industrialized countries
Economic relationship between Japan and South Korea
Production networks and intra-regional trade in East Asia

Intraregional foreign direct investment and economic integration in the region

Free trade area in East Asia?
Causes and consequences of the Asian financial crisis
Sustaining economic growth in East Asia
Economic relations between China and Japan
Does the growth of EA intraregional trade depend on the growth of Chinas trade
with the rest of the world?