Economic Progress in East Asia and Australia to 1988

In East Asia a few relatively poor nations in the 1960s began their journey to highly developed economies. Singapore's prime minister from 1959 to 1990, Lee Kuan Yew, rose to political power in an alliance with the Communists because, he was to say, that was where the people were before 1963, when the British gave Singapore its independence. Lee's government faced problems of education, housing and unemployment. Lee was a pragmatist who used a combination of free entrepreneurship and government programs. Singapore ranked 35th in per capita GDP in 1960 with 13.7 percent of the per capita GDP of the world leader, the United States. By 1988, Singapore had risen to 30 percent of the world leader, Switzerland, and to 43 percent of the United States.

South Korea also developed rapidly -- not long after a devastating war. By the end of 1957, the economy had regained its pre-war level, largely as a result of rapid growth in the production of cotton cloth and of wheat flour and sugar. In 1960, South Korea had a per capita GDP that was 5.4 percent of that of the United States. By 1988 its economy had risen to 25 percent that of the Untied States, and it did so with considerable government intervention in the economy under authoritarian governments. The government put a lot of importance on educational development. The Koreans pulled themselves up by long hours of hard work and a sacrifice of low wages. Rather than working for wealth in the form of frivolous pleasures and consumption, a good portion of their work went into building up the economy, including a manufacturing base for participation in world trade. Korean industrialists introduced modern technologies into outmoded or newly built facilities at a rapid pace and plowed their profits back into further industrial expansion. South Korea had begun exporting color televisions, radios, videocassette recorders, microwave ovens, watches, personal computers and videotapes. South Korea became a leading producer of ships, including oil supertankers. It built oil-drilling platforms. Automobile production increased. Korea became the world's tenth largest producer of steel, and it contributed to arms production, the chemical Industry and construction abroad.

Taiwan was also developing as an exporting power. As an anti-Communist bastion, it too was benefiting from U.S. aid. U.S. aid made up more than 30 percent of Taiwan's domestic investment from 1951 to 1962. Taiwan moved from cheap, labor-intensive manufactures, such as textiles and toys, into an expansion of heavy industry and infrastructure in the 1970s, and then to advanced electronics in the 1980s. Taiwan's industries maintained an average annual growth rate of around 14 percent.

Another economic power in the East was Australia. It traded extensively with the West and between 1949 and 1972 it was led politically by the conservative Liberal Party and devoted to fighting Communism. In 1955 it benefited as an exporter of coal to Japan's burgeoning economy. In 1960 if ranked 7th in per capita GDP, ahead of Switzerland. By 1988, following a return of the Labor government, like the U.S. it had fallen behind Switzerland and Japan. It had 63 percent of the U.S. per capita GDP in 1960. In 1984 it climbed to 79.2 percent of U.S. per capita GDP, and during the last four years of the Reagan administration and during the Labor Party in power, under Prime Minister Bob Hawke, it gained further to only 83.8 percent that of the United States.