THE MYTH OF THE MIRACLE

ASIAN LEADERS CONFRONT THE REALITY THEY TRIED TO IGNORE

News flash--the law of gravity does apply in Asia. For the past decade or two, Japan and then a succession of its East Asian neighbors had us convinced that they were exempt from conventional economic constraints. The proof: year after year of high growth with minimal inflation. Contravening all known wisdom of economic management, they did it with lots of direction from government bureaucrats--who regularly outguessed the markets in developing efficient industries. The dawn of an Asian Century was upon us, and pundits struggled to explain this miracle.

Most took as their starting point the thesis that the region's comparative advantage...

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