The role of government in East Asian economic development

The role of government in East Asian economic development has been a contentious issue. This collection of essays suggests a breakthrough, third view: the market-enhancing view. Instead of viewing government and the market as mutually exclusive substitutes, it examines the capacity of government policy to facilitate or complement private sector coordination. The book starts from the premiss that private sector institutions have important comparative advantages over government, in particular in their ability to process information available on site. At the same time, it recognizes that the capabilities of the private sector are more limited in developing economies. The market-enhancing view thus stresses the mechanisms whereby government policy is directed at improving the ability of the private sector to solve co-ordination problems and overcome other market imperfections. In presenting the market-enhancing view, the book recognizes the wide diversity of the roles of government across various East Asian economies - including Japan, Korea, Hong Kong, Malaysia, and China - and its path-dependent and developmental stage nature. This volume is the outcome of a two-year research project co-sponsored by the Center for Economic Policy Research at Stanford University and the Economic Development Institute of the World Bank.