HOW THE TIGERS GOT SO TOUGH
Why America Will Prosper as Asia's Economies Boom
By Jim Rohwer
Simon & Schuster 382pp $25
Imagine that it's 1955 and you're asked to predict which Asian economies will succeed and which will fail. Atop anyone's list of big losers would likely be Korea and Taiwan: The former was devastated by its war with North Korea, and the latter was little more than a U.S. protectorate for the losers in China's civil war. In both places, population density was high, as was illiteracy. Savings were low, and arable land was scarce.
Today, of course, both are classed among the Asian tigers, boasting arguably the best economic performances in the world over the past three decades. Their ascendancy, along with that of other Asian dynamos, is the subject of Asia Rising by Jim Rohwer, a former reporter for The Economist and now the director and chief economist in Asia for CS First Boston. Anyone seeking a comprehensive look at why these economies have been so remarkably successful--and why they're likely to stay that way--will find this book a valuable read. But if you're looking for particulars that explain how U.S. companies will benefit from this boom, you'll be disappointed.
While a lot of the data and studies cited by Rohwer is already well-known by folks in the field, his highly readable analysis of regional trends represents a big contribution. How did East Asia pull gff its economic miracle? Rohwer credits the region's predominantly authoritarian regimes, which pursued export-driven policies to jump-start their economies. True, many of these governments were hardly friends of liberty. But they focused single-mindedly on their economic development, remaining immune to "the wheedling of the special-interest lobbies" that are so pervasive in the West, the author argues. These regimes wisely invested in primary and secondary education, creating highly productive workforces. And a combination of low taxes, high interest rates, and other measures helped boost savings--and investment--throughout the region.
Asia's probusiness governments have also generally steered clear of providing social safety nets, leaving citizens to depend on their families for support. Rohwer credits this hands-off government policy as the main reason why economies have grown so quickly. "A society organized along Asian lines is far better equipped than the average Western society to embrace and absorb change: if a powerful government will not conserve the patterns of the past on your behalf...you learn quickly that you must cope with the future."
While Rohwer blesses small government and strong family ties, he finds weakness in other institutions, both public and corporate. Obstacles to future growth include an "opaque and highly personalized system of corporate management, an inefficient financial system that cannot objectively mediate between savers and investors, and a failure to build the infrastructure needed to sustain future economic growth."
As the book's subtitle suggests, Rohwer believes foreign companies will "prosper mightily" in Asia. Sure, some U.S. jobs may be transferred to the region, but by and large American companies in particular will find staggering growth in everything from consumer durables to finance. He predicts that, in the next 25 years, "Asia will account for half the worldwide sales growth in the markets for almost every product and service save the most advanced."
Such broad assertions offer little that's new. With Boeing Co. and other U.S. high-tech workers grumbling about jobs moving to Asia, a book laying out just how much America is gaining from investments there would have been particularly useful. Also, Rohwer is upbeat about Asia's boom at a time when many analysts are asking whether there are limits to growth in a region faced with shortages of skilled labor, weak management structures, flagging infrastructure, and skyrocketing costs.
That said, executives heading for Asia would do well to read this book. The author's knowledge is broad, and he gives readers a good sense of the region's dynamism. Asia's rise, says Rohwer, is "the greatest, and most thrilling, event of the last half of this century." He's betting that the next phase of development, though more challenging, will also "turn out to be one of greatness." Asians certainly hope he's right.BY JOYCE BARNATHAN