2021 Volume 30 Issue 1 Pages 17-32
The East Asian Miracle, the World Bank's largest selling publication, is the outcome of the concerted operations of Japan's Ministry of Finance and the Overseas Economic Cooperation Fund (OECF) ; the objective was to urge the World Bank to make an in-depth study of the role of government in the East Asia's development achievements.
In the 1980s and the first half of the 1990s, structural adjustment was a dominant stream in international development circles. The prescription, or the Washington Consensus, was based on Neoclassical economics and shared by the US Treasury, the World Bank and the IMF. However, a group of government officials and academics in Japan were critical of market fundamentalism and“one size fits all” pattern of the structural adjustment policy packages. After a series of hot dispute, particularly on the financial sector reform in the Philippines, MOF and OECF made up their mind to challenge the orthodoxy. They presented a provocative paper to the annual meeting with the World Bank. Dani Rodrik described the confrontation“King Kong versus Godzilla.”
In spite of“inelegance,”the OECF paper attracted considerable attention. Under the circumstance, the World Bank agreed to have a study of public policy in East Asia, with the Japanese funding.
The East Asian Miracle report tried hard to conserve the World Bank's orthodoxy. It concluded that industrial policy, the most controversial subject, was“largely ineffective.”However, it resorted to acknowledge extensive government activism, including directed credit, another controversial topic, and export promotion. In retrospect, The East Asian Miracle was the beginning of the decline of Washington consensus; afterwards in 2004, President Wolfensohn announced“The Washington consensus has been dead.”
Japan's challenge to the development norm could furnish developing countries with useful hints, as they must express themselves under the inequal donor-recipient relationship.
