The market and the state in economic development: Some questions from East Asia and Australia

From the birth of modern economics with Adam Smith's Wealth of Nations two centuries ago, debate has continued in the West about the appropriate roles of markets and state intervention in co-ordinating economic activity. We have learned a great deal in principle from the concepts of public goods and external economies, and from the theory of public finance which relies so heavily on them. We have also learned that much depends upon the institutions and the ideas that shape the effectiveness both of markets and the state. The economist and the historian have been provided with a rich new set of data on the big theorems by the success of the economies of East Asia in recent decades. Japan, Taiwan, South Korea, Hong Kong, and Singapore have expanded economic output faster for longer than any other in world history. In this paper, I focus on a different type of implication - the implication of this new and powerful case of economic development for our understanding of economic processes. To the economist whose discipline is a social science, the emergence of this new case in a different cultural and institutional setting is as great a gift as a new hemisphere to an astronomer