Asia’s economy has boomed in recent years, yet what has been the secret ingredient that has empowered this economic boom? One common element that has been found across all of Asia’s so-called Tiger economies has been a steady rule of law largely free from party politics.
Many analysts will quickly point out that the efforts of global multinational corporations (MNC’s) to reduce costs and outsource business processes, has been one of the main drivers of growth. Others could argue that natural resources propelled some countries, such as Malaysia, up the development ladder.
Such analysts would miss some key points, however. While the move to slash costs has undoubtedly generated a lot of wealth, why has Asia benefited more from globalization than Latin America and Africa? And certainly natural resources have helped some countries, but why has Nigeria, Angola, Sudan, and other countries benefited far less from their rich stocks of oil and other resources?
It’s important to examine the rise of two of Asia’s most prominent nations, Singapore and China, to see if anything can be learned from their experience. China is now a world power, and while many remain poor, the government has launched several new issues to increase wealth equity and spur the development of a large middle class. Singapore is now one of the richest cities (and also countries) in the world with a GDP per capita of $51,000 dollars.
China is ruled by the all-powerful Communist party. While the country lacks any true Democracy, the government has been proving to be increasingly responsive to the needs of the Chinese people and shifting emphasis to a more holistic economic development. Why?
While the Communist Party controls the government, it still understands that ultimately its rule is guaranteed so long as the economy continues to grow and Chinese citizens see their quality of life increasing. In an age of social media and under the continuous monitoring of the international media, countries will find it increasingly difficult to rule if their people do not support, or at least tolerate, their government.
Singapore features a functioning Democracy, but the election system is set up to favor the ruling party, the People’s Action Party, and the media is tightly controlled. Throughout most of Singapore’s history the PAP has enjoyed approval ratings in access of 60 percent. Despite being expelled from Malaysia in 1965 and facing dim economic prospects, the city-state has positioned itself as a regional hub for trade and business. The PAP must still face elections, however, and as a result has proven to be largely responsive to society’s needs.
Taiwan, Japan, and Malaysia have all enjoyed similar success underneath strong-armed, single party governments, so it’s worth asking, is a strong, centralized government that suffers from little political infighting the key to economic success?
Arguably, a single party government is able to act more effectively and efficiently in passing laws and reacting to changing circumstances. The Chinese government does not have to waste its time with pork barrel politics to secure votes, nor does it need to compromise on many of its policies. What the managers decide must be done, is often done with little resistance.
The same is true in Singapore. When Lee Kuan Yew assumed power in 1965 he decided that he wanted to take the country in a vastly different path. His plan was to convert the poor, backwards port island into the world’s most economically vibrant city.
He installed numerous policies, from making English a national language, to enforcing a minimum wage free market that attracted businesses. He was also able to divert funding away from social spending and cash handouts to set up state sponsored companies. Singapore’s government now has over 500 billion dollars in its investment portfolio, a stunning number for a country home to less than 4 million citizens.
In the cases of both Singapore and China, along with numerous other Asian countries, strong-armed governments were able to resist populists pressures for welfare and install the economic policies necessary to spur growth. Both governments, however, were arguably guided by neo-Confucian beliefs that compel government leaders to look after their respective societies.
Whereas Western culture often places the individual first, followed by family and then society as a whole, Asian culture emphasis the opposite beliefs. Society should come first, then family, and finally the individual (some might also argue that family is first).
This created a sort of guiding ethical code that encouraged leaders to look at the well being of their own societies over their own personal gain. Corruption certainly exists in Asia (often based on family and kinship networks) but unlike the United States and many other countries, private interests and populism have not hijacked the system. And with no real opposition parties to challenge them, these strong armed Asian governments have been able to install the policies they think will increase economic growth and prosperity (thereby ensuring their continued rule).
So is the missing ingredient in the United States and other Western countries the strong-armed rule found in Asia? Or could it be the Confucian moral commitment of public policy leaders?
Private interests and populism both seem to be gaining more and more influence, while political influences have largely corrupted the system, with pork barrel politics now the norm.