EC294 - Economic Policy and Performance in East Asia
Fall 2005
Professor Philip H. Brown
website: http://www.colby.edu/economics/faculty/phbrown/ec294/index.html

Meeting Times: Tuesday and Thursday 11:00am - 12:15pm
Classroom: Miller 014
Office: Miller 238 (859-5246)

Office Hours: Wednesday 9:00-10:00am and Wednesday 2:00pm-4:00pm. Open door policy at all other times. Appointments welcome.

Course Description
During the postwar period, Japan's economy grew to become the second largest in the world, after the U.S. Adapting the Japanese development model to their political-economic environments, Korea, Taiwan, Indonesia, Hong Kong, and Singapore grew out of poverty at unprecedented rates. Malaysia's and Thailand's economies were also rapidly expanding during this period. In sharp contrast with most countries' experiences, within-country economic inequality fell as these East Asian economies grew. By the late 1980s, The World Bank and others described the economic development of this region as the "East Asian Miracle." Scholars and policy makers alike sought to understand what made East Asia different, whether the experiences of these economies could be replicated elsewhere, and whether East Asia was poised to overtake Europe and North America as economic superpowers.

During the second half of the 1990s, however, East Asia's economies underwent a dramatic reversal. A severe currency crisis engulfed Korea, Indonesia, Malaysia, the Philippines, and Thailand, and seriously threatened many other East Asian economies. Japan's economy stagnated as well, causing enormous economic hardships, the effects of which are still being felt. Economic policies that were once credited with providing high growth rates were blamed for causing economic ruin.

Had East Asia developed a new model for economic development? If so, what went wrong in the late 1990s? Why did some economies falter so profoundly while others were scarcely affected? What was the role of international institutions such as the International Monetary Fund? What are the implications for East Asia's future? And what are the lessons for other countries?

In this course, we will study the broad patterns that gave rise to the remarkable growth of these East Asian economies. We will then develop in-depth case studies of two economies during different periods: Korea in the run-up to the Asian Financial Crisis and post-boom Japan. We will also analyze the causes and implications of the Asian Financial Crisis.

Required Textbooks and Readings
This course has four required textbooks. Other required readings will be placed on electronic reserve or will be available through links below. The required textbooks are listed here; a full bibliography is given at the end of the syllabus.

• Blustein, P. (2001). The Chastening. New York: Public Affairs, 2001.
• Clifford, M.L. (1998). Troubled Tiger: Businessmen, Bureaucrats, and Generals in South Korea. Armonk, New York: M.E. Sharpe, 1998.
• Katz, R. (2003). Japanese Phoenix: The Long Road to Economic Revival. Armonk, New York: ME Sharpe.
• World Bank. (1993). The East Asian Miracle: Economic Growth and Public Policy. Oxford: Oxford University Press.

You are also expected to follow current political, social, and economic events in East Asia. The following news sources offer excellent coverage: The New York Times, The Wall Street Journal, and The Economist. Current content is available through these links as well as through the library.

In addition, the documentary Frontline: The Crash will be shown on Thursday, October 27 at 7:00pm in Miller 008. Attendance is expected.

Notes on the Readings
Some of the assigned readings include topics and methods that are quite advanced. When you encounter particularly dense or difficult passages in the reading, please read for the main ideas. You are also invited to discuss any of the readings during office hours.

The appendices of The East Asian Miracle are technical. You will not be held responsible for this material unless and until we cover it explicitly in class.

Prerequisites
All of the books and articles we will discuss in this class assume familiarity with economic concepts and skills taught in introductory economics and statistics course. If you have difficulty remembering definitions or ideas from these courses, please see me during office hours. Familiarity with current events in Asia will also prove useful.

Evaluation
Your grade will be a weighted average of scores received on three in-class examinations, two short papers, one geography test, one in-class debate, and an undisclosed number of NLQs. Participation in class discussions is also expected; in cases where a student is on the margin between two final grades, consistent and constructive class participation may make a positive contribution toward his or her final grade.

• Examinations
  There will be three 90-minute examinations. Each exam will consist of several true/false/uncertain questions, identification questions, and/or several short essay questions. The examinations will draw heavily from both lecture materials and the assigned reading. Each exam will be held during the regular class time, beginning at 11:00am and ending no later than 12:30pm. Please plan accordingly. The main topics for each exam are described below:
  o First Examination: Thursday, October 6 (15%)
  main topics: models of economic development, the "miraculous" growth of East Asian economies, economic and social institutions
  
  o Second Examination: Thursday, November 10 (15%)
  main topics: political economy of Korea, the Asian Financial Crisis, international responses
  
  o Third Examination: Thursday, December 8 (15%)
  main topics: political economy of Japan, Japanese business culture, prospects for renewed growth in East Asia

• Geography Test: Tuesday, September 20 (5%)
  This short test is designed to ensure that you are familiar with the political geography of East Asia. In addition to being responsible for labeling Brunei, Burma (Myanmar), Cambodia, China, East Timor, Hong Kong, Indonesia, Japan, North Korea, South Korea, Laos, Malaysia, Mongolia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam and their capital cities on an outline map, you will also be responsible for knowing the head of government, chief of state, total population, GDP per capita, currency name, major industries, and natural resources for Hong Kong, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. The CIA World Factbook is an excellent resource for current data.

• Short Papers
  You are responsible for writing two short papers. Each paper should be no longer than 3 double-spaced pages in length (12 point font, 1-inch margins). You may attach a separate title page, tables and/or figures, and a bibliography.
  
  o Paper #1: due Thursday, September 29 (15%)
  To what extent is the "miraculous" post-war economic growth of East Asia attributable to Confucian values? Is the Asian development model applicable to settings with other cultural traditions?
  
  o Paper #2: due Thursday, December 1 (15%)
  How have Japan's largest manufacturers contributed to the country's economic stagnation? Should the government restrict their activities, and if so, how?

• Class Debate: Tuesday, November 8 in the Whitney Room, Roberts Union, time TBD (10%)
  Resolved: "The Asian Financial Crisis is primarily attributable to structural weaknesses in Asian economies, particularly large current account deficits and insufficient banking regulation."

• New Learning Quizzes, a.k.a. NLQs (10% total)
  NLQs are short, unannounced quizzes that ask you to respond to the assigned reading. NLQs have several purposes:
  1. to provide incentive for you to stay on top of the assigned reading;
  2. to enable you to demonstrate that you have internalized the reading and can think deeply about economic issues; and
  3. to give you a sense of what to expect in your examinations.

There will be at least one but no more than five NLQs held during class. Each will count equally toward your final grade.

Summary of Assignments

Missed/Late Assignments
Missed NLQs, examinations, geography tests, and debates will result in grade of zero unless the absence has been prearranged or unless the absence is due to serious medical or personal emergence. NLQs will be re-weighted for students who miss them due to excused absences. Papers up to 48 hours late will be penalized by 2*sqrt(# of hours late); no paper will be accepted beyond 48 hours past the due date.

Academic Honesty
You are expected to adhere to Colby's policies on academic honesty. In accordance with these policies, students who plagiarize or cheat will be dismissed from the class with an F. Any such incidents will be reported to the Dean of Students and may result in suspension or expulsion.

Other Important Announcements
An optional dinner will precede the viewing of "Frontline: The Crash" on October 27.

Contact Information
E-mail is the most reliable way of contacting me, and I will do my best to respond to all e-mail within 24 hours. In the days leading up to exams, I will check and respond to e-mail much more frequently. In your e-mail, please include your telephone number so I may call if a conversation is more conducive to answering questions. If you need immediate attention, you may also call my office phone (859-5246) or my home phone (872-2599). Barring an emergency, please don't call before 8:00am or after 10:00pm.

Other Notes
Following convention, ethnic Korean and Chinese names will be spoken and written with the family name preceding the personal name. The Japanese naming convention follows the English.

Reading Assignments
Please complete the assigned reading before the date shown. Also, please note that this schedule is subject to revision; revisions will be announced in class and posted on the course web site.

* You are also responsible for other readings distributed in class and for following the news per the above discussion.

References

texts:

"A Better Drive" (2005). The Economist. May 19.

Blustein, P. (2001). The Chastening. New York: Public Affairs.

Clifford, ML (1998). Troubled Tiger: Businessmen, Bureaucrats, and Generals in South Korea. Armonk, New York: ME Sharpe.

Cowling, K. and Tomlinson, P.R. (2000) "The Japanese Crisis - A Case of Strategic Failure?" Economic Journal. 110(June): F358-F381.

"How Far is Down?" (1997). The Economist. November 15.

"Japanese Spirit, Western Things." (2003). The Economist. July 10.

Katz, R. (2003). Japanese Phoenix: The Long Road to Economic Revival. Armonk, New York: ME Sharpe.

Krugman, P. (1999). "I Told You So." Unpublished manuscript, MIT.

_____. (1994). "The Myth of Asia's Miracle." Foreign Affairs. 73(6): 62-78.

"The Last Emperor" (1999). The Economist. February 4.

Mankiw, N.G. (2003). Macroeconomics, 5th ed. New York: Worth Publishers.

"Rising Again?" (2004). The Economist. April 15.

Rohwer, J. (1996). Asia Rising: Why America Will Prosper as Asia's Economies Boom. New York: Simon & Schuster.

Stiglitz, J.E. (2001). "From Miracle to Crisis to Recovery: Lessons from Four Decades of East Asian Experience." In Stiglitz, J.E. and Yusuf, S., eds. Rethinking the East Asian Miracle. New York: Oxford University Press.

Tai, H. (1989). "The Oriental Alternative: An Hypothesis on Culture," in Confucianism and Economic Development: An Oriental Alternative? Washington, D.C.: Washington Institute Press, 6-37.

"The $10 Billion Man " (2005). The Economist. February 24.

"Undone" (2003). The Economist. March 20.

World Bank. (1993). The East Asian Miracle: Economic Growth and Public Policy. Oxford: Oxford University Press.

films:

Frontline: The Crash. (1999). WGBH. 57 min. Videocassette.