Taiwan’s development and poverty reduction efforts mirrored those of Korea both in their nature and timing. Korea’s efforts, e.g., in land reforms, were in part motivated by developments in communist North Korea. China may have motivated Taiwan’s reforms even more. Taiwan began with a phased but comprehensive land reform between 1949 and 1963, which involved an organized transfer of ownership to the tillers. By 1965, more than 90 percent of the land was tilled by tenants. Agricultural productivity increased quickly, putting a big dent in extreme poverty.

While the population more than doubled between 1950 and 2000 (the population is about 23 million today), massive investments in education, health, and family planning resulted in declining fertility, rising school attainment, and greater longevity. An aggressive policy to attract foreign direct investment (FDI) resulted in Taiwan becoming a major exporter by the 1990s. By 2005, agriculture was just 3 percent of GDP and the island was home to a third of the world’s computer industry. Despite minimal spending on social welfare, extreme poverty appeared to have been eliminated.

Because statistics on poverty have only been maintained since 1981, it is impossible to be sure. Even today, Taiwan’s social welfare spending is less than 4 percent of GDP, less than half the ratio in South Korea and one‐fifth the average in the OECD. Welfare recipients are fewer than 2 percent of the population and get less than $150 a month.

# **_Malaysia and Thailand_**

Malaysia followed South Korea and Taiwan with a lag of about a decade. Malaysia is unusual in East Asia in that it has had an official poverty line since 1970, when the New Economic Policy was introduced as a response to social unrest. Steps to increase agricultural productivity and attract manufacturing‐related foreign direct investment were accompanied by programs to provide health, housing, and other services in rural areas. As in other countries, rural poverty rates are higher in Malaysia: three times as high as those in urban areas. The civil unrest had its roots in ethnic disparities. At independence, almost 90 percent of the Malay population was rural, compared with about 70 percent for Indians and 50 percent for the Chinese. The policy objective was as much the reduction of ethnic inequality as poverty, as much national unity as economic progress.

It turns out that Malaysia’s record in reducing poverty is more impressive than in eliminating ethnic inequalities. In peninsular Malaysia, rural poverty rates fell from 58 percent in 1970 to 19 percent in 1990; urban poverty from 21 to 7 percent. In 1970, the poverty rates were about 65 percent among Malays, 40 percent among Indians, and 25 percent for the Chinese. In 1990, the official poverty rates for Malay, Indian, and Chinese groups were 21, 8, and 6 percent, respectively.

After 1990, somewhat more attention was paid to the alleviation of “hard core” poverty. Poverty rates using the national line fell from about 50 percent in 1970 to less than 3 percent by 2005, despite a setback in 1997‐99 due to the financial crisis. This decline in poverty was largely the result of annual economic growth rates that averaged 8 percent in the 1970s, 6 percent in the 1980s, and 9 percent in the first half of the 1990s, and a successful effort to provide basic services such as education, health, housing, and sanitation in rural and urban areas, and in lagging and leading states.

While Malaysia’s record of poverty reduction is impressive, it is not as stellar as that of Korea and Taiwan. With more natural resources and better initial conditions, Malaysia took a decade longer to end extreme poverty. Malaysia’s task was complicated by ethnic heterogeneity; in Taiwan, by contrast, 95 percent of the population is Han Chinese. But 6