The Illusion of Asian Economic Miracle and Fallacy of Their Innovation Success

The so-called Asian economic miracle and innovation capacity building have been by design as a result of interdependency between the East and the West to a certain extent.

Their economic growth model predicated on a command economy is flawed from the start.

The structure and participation of the global capital markets have been a driving force for their rapid economic growth and innovation success.

While some Asian countries have been able to build their productive capacity and boost manufacturing employment for a certain period of time through this reciprocal relationship coupled with their own hard work and successful strategies including smart technology transfer, they have engaged not only in such wealth creating activities but also in wealth destroying activities such as wasteful stimulus and bubble blowing.

In a sense, innovation/productive capacity building in Asian Countries has been icing on the cake.

The rise and fall (or becoming Korea-based multinationals seeking maximum profits worldwide) of chaebols may have to be understood in the larger context as well.

Again, a critical matter is whose benefits Asian countries’ innovation apparatus and endeavor have served most. If innovation and rapid economic growth have triumphed at the expense of citizens in the long term, what good would that do for the overall health of the economy and the wellbeing of the general public? Without the general public, there would be neither economy nor innovation.

Given that purchasing power in their biggest export markets including Europe and the U.S. is waning, the crescendo has passed. Further, the unwinding of the bubbles and the woes of the banking sector would act as a drag on Asian countries’ productive economy.

One of the most important lessons would be: innovation and productive capacity are the forces that allow the wealth of a nation to develop and grow, yet innovation endeavor alone can’t sustain the real economy. A nation needs to develop and maintain a long-term approach to economic growth and innovation apparatus.

(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)