Innovative East Asia: The Future of Growth

The salience of East Asia in the global economy is now unquestionable, and with a population of nearly 1.9 billion, its expanding markets will strongly influence the tempo of international trade and the growth of global incomes. However, while the potential of East Asian economies has been amply demonstrated, their future performance is by no means assured. The crisis of 1997, the uneven recovery, the intensifying trade competition, and the rapidity of technological change, call for initiatives by governments and by firms on several fronts. East Asia needs to sustain its hard-earned stability by recalibrating its fiscal and exchange rate policies, by strengthening social safety nets and governance, and by invigorating financial, regulatory, and legal institutions. Yet these are only preconditions; future economic performance will depend on linking growth to productivity. The major contribution of 'Innovative East Asia' is that it identifies and analyzes the ingredients of an innovative economy, discusses how these can be meshed together by government policy and market initiatives, and demonstrates how stability can be a stepping stone to innovation-driven growth.