Comment by throw0101a
Comment by throw0101a 2 days ago
> I don't particularly like Noah Smith (he's also in favour of protectionism and 'industrial policy'), but his https://www.noahpinion.blog/p/the-polandmalaysia-model has some good points also about Malaysia.
Yeah:
> On a trip to Turkey in 2018, I read How Asia Works, by Joe Studwell. Despite the fact that it didn’t get everything right, it’s probably the best nonfiction book I’ve ever read.
* https://www.noahpinion.blog/p/the-developing-country-industr...
> As any longtime reader of mine will know, my favorite book about economic development is Joe Studwell’s How Asia Works. If you haven’t read this book, you should definitely remedy that. In the meantime, you can start with Scott Alexander’s excellent summary.
* https://www.noahpinion.blog/p/what-studwell-got-wrong
The book goes over what actually happened: it's not theory, it's history. What worked in each country (often the same/similar things), the variations, and where things were tried but went badly (often with analysis on why).
> The book goes over what actually happened: it's not theory, it's history. What worked in each country (often the same/similar things), the variations, and where things were tried but went badly (often with analysis on why).
Alas, in the absence of randomised controlled experiments, it's very hard to infer causality purely from observations. You need a theory to guide you. But observations are still extremely useful, of course.
Just because countries did X and Y happened later, doesn't necessarily tell you X causes Y. In addition to the usual causation vs correlation dilemma, in economics you can even have what looks like reverse causation that goes back in time, because intelligent actors anticipate the future.
(Silly example, if there's a clear sky, and you see many people carrying raincoats and umbrellas, it's likely to rain later. But that doesn't mean that umbrellas cause rain.)
Many of the successful countries in 'How Asia Works' share some ethnic similarities. (Eg many have at least sizeable Chinese minorities or have outright Chinese majorities.) Many of the success stories also have some land reform in their past. The author decided that the latter 'worked' (ie was a causal factor), and ignores the former as perhaps a mere coincidence. Similarly, the author decided that the bouts of industrial policy and protectionism are praiseworthy causal factors.
He almost arbitrarily excludes Singapore as purely a financial centre, even though we have a pretty diversified economy these days, and in the past during the fast catch up growth, we weren't a global financial hub yet. That early development owes much more to the typical 'sweatshop' model that we see in many successful industrialisers, ie (light) manufacturing for export.