Book summary: How Asia works by Joe Studwell

Many years ago (around 7) I read poor economics. It was a book about developing nations and what challenges they are facing. I even did a review in Spanish. This is a topic that aligns with my quest for a better world. Joe Studwell, in the book How Asia works, analyzes different Asian countries. He analyses Japan, South Korea, Taiwan, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, and China. Comparing the rights and wrong each country did and what they could have done better acknowledging why some countries did better than the others.

The book is well documented and has a good literary style. Not the typical boring and dense academic approach to science. Just be aware that he analyzes what takes for countries to go from poor to rich which is not the same formula for already rich countries. In the book, Joe is quite harsh on IMF and the world bank. He argues that these large bureaucratic institutions are keeping poor countries poor due to bad advice not fitting their economic status.

One of the first key points is the idea that “poor countries” should maximise their farming yield. The maximization should be aiming to get the maximum output per acre of land; thus, forcing people into labour intensive jobs on small farms. Studwell proposes a land reform as the path to achieve high yield/acre. Expropiating land from rural landlords to give it back to the farmers in theory should prevent communism and motivates the farmers to do the best job they can. At the same time the government should be aware that farmers cannot stand alone and need external aid. Farmers need services and infrastructure. Once a good farming base is set the next step is manufacturing and industry.

After the farming stage is completed or near completion the country tilts toward industrialism. There is not enough land for everyone so people move towards the main metropolis. This movement is accompanied by an industrialization of the economy. Studwell often repeats that manufacturing companies should aim for exports to be more productive. He calls it “export discipline”. By forcing companies to export the government is making sure that they reach the global market and keep high standards for they products. The companies that that find a niche and produce quality resources will succeed at exporting and survive the test of time. Although he argues that at early industrialization stages the companies shall be protected, gross exports are much more important than the net exports.

There are several strategies to improve the quality of the manufactured products. The first one is through collaborations with more advanced companies from other countries. Collaboration to learn the know how and the state of the art of the processes for the industry. Then an important Darwinian management from the government should be applied. The companies should be let fail (go bankrupt) or force merges to accumulate volume and knowledge. It should be about allowing internal competition while protecting the baby companies but forcing them to compete in the global market. The government should not pick the winners. The key point is to achieve an accelerated technological upgrading.

In conclusion, I liked this book although towards the end it became repetitive. These may be some good ideas that African countries and less fortunate Asian ones could apply to their economies. It never ceases to amaze me how different countries evolve differently. But most surprisingly is how some countries in a ver, very short period of time turned around and became super-powers.

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