Deng Xiaoping (鄧小平), Lee Kuan Yew (李光耀) and Park Chung Hee make for an improbable trio.
One was a Communist who loved French wine and spurned Das Kapital. Another was a Cambridge-educated lawyer who ruled with Confucian values. The third, more taciturn, was a former army major-general who mixed rice with cheap barley to stay mindful of his people’s hunger.
Yet all three Asian leaders had something remarkable in common — an unwavering pragmatism, writes Michael Schuman in The Miracle, a comprehensive study of how a coterie of political and business leaders dragged Asia from abject poverty in the 1950s to economic dynamism today.
“By nature and experience, we were not enamored of theories,” Schuman cites Lee as saying. “What we were interested in were real solutions to our problems and not to prove someone’s theory right or wrong.”
A writer for Time magazine, Schuman has spent 13 years in the region and won an Overseas Press Club Award as part of a Wall Street Journal team covering the 1997-1998 Asian economic crisis. He draws on interviews with some four dozen political and business leaders — including Lee, the late South Korea President Kim Dae Jung and Infosys Technologies Ltd co-founder N.R. Narayana Murthy — to trace the ascent of nine nations and a dozen industries over some five decades.
Taking us into boardrooms, cabinet meetings and factories, Schuman shows how the Asian model of growth might become a template for Africa and other emerging countries — and how it might teach developed nations now grappling with financial crisis some lessons about state intervention in the economy.
Schuman’s prose meanders at times, and he has an annoying habit of repeating the word Miracle (with a capital M) to describe Asian economic growth. Yet he also has an eye for nuance, understands the region and seeds the book with first-hand material, presenting strong portraits of men who played the odds and bent fate to their wills.
South Korea’s Park, for example, fought the parliament in the late 1960s to fund an expressway linking the cities of Seoul and Busan, convinced it would spur commerce. In Singapore, Lee invited multinational companies to set up shop on the island state, defying critics who said the foreigners were out to exploit the resources and labor of poor countries.
China’s Deng, thrice purged by his own party for capitalist leanings, set up zones with liberal economic rules that would pave the way for the nation’s current exponential growth.
Asia got its first lift out of poverty by selling cut-priced radios, dolls and plastic knick-knacks to Europe and the US in the 1950s. By the 1980s, companies like Sony Corp had become synonymous with cool gadgetry. The secret behind this transformation lies in a mix of government aid, grit and favorable trade conditions, Schuman writes.
In Japan, the Ministry of International Trade and Industry, or MITI, restricted foreign investment to give local companies time to grow and take on overseas rivals, he says. International Business Machines Corp, for example, was repeatedly thwarted when it sought to expand in Japan, pitting executives at the Armonk, New York-based company against one of MITI’s top bureaucrats, Shigeru Sahashi, Schuman writes.
When IBM refused to give Japanese companies access to its computer patents, Sahashi issued a blunt warning.
“If you don’t agree to our conditions, we will take any measures necessary to deter IBM from operating in Japan,” he said. IBM capitulated, Schuman writes.
IBM spokeswoman Harriet Ip declined to comment on the book.
Government intervention by largely authoritarian regimes is the one constant in almost every economy profiled here. Hong Kong is the odd one out: Its laissez-faire capitalism and hands-off government bred entrepreneurs like billionaire Li Ka-shing (李嘉誠).
Schuman acknowledges that Asia’s hierarchical structure, while conducive to growth, foments corruption and nepotism, as evinced by Indonesia under former president Suharto. Asia also relies too much on exports, a weakness exposed when the credit crisis choked new orders from the US and Europe.
If the Asian model were superior, as Schuman implies, the region would surely have discouraged excessive saving and done more to develop its domestic markets. That, perhaps, is the subject for another book.
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