seung park : the asian economy in the 21st century speech by mr seung park, governor of the bank of korea, at the korea economic institute of america, washington dc, 26 september 2005. * i. * * greetings president joseph winder of the korea economic institute of america, director richard bush iii of the brookings institution, ladies and gentlemen, i am delighted to be here today at the joint invitation of the brookings institution and the kei. i particularly welcome the chance to meet again with president winder and all members of the kei after one year has gone by. i also feel myself privileged to meet director bush of the world renowned think - tank, the brookings institution, and all those associated with it. today i would like to speak to members of your two institutions, which act to build bridges between the united states and asia, including korea, on the theme of'the asian economy in the 21st century.'i am sure that all members of this distinguished company will have remarked that nowadays, wherever senior figures involved in economic affairs get together, the topic of conversation quickly turns to the chinese and indian economies. world interest is now focused on china and india, which have recently continued to show rapid economic development, following on from japan, which has grown to be the world's second largest economic power, and the four asian dragons including korea, which experienced a successful process of industrialization within a very short period of time. strikingly, several experts foresee that before too long the asian economy will eclipse those of north america and europe in terms of economic scale. at the bank of korea, we have been carrying out research into the progress of economic development in the asian region over the next half - century. we are now almost ready to wrap up this research, and today i would like to speak about the asian economy of yesterday, that of today and that of tomorrow, based on the statistical forecasts derived in the course of the research. ii. why did the asian economy suffer long - term stagnation? from historical perspective, asia witnessed the meteoric rise of three of the four great human civilizations of antiquity. in many and arguably most aspects of science, culture and so on, it was ahead of the western world. in spite of the brilliance of these ancient civilizations, until about 50 years ago most asian regions had sunk deeply into poverty and their development presented a picture of stagnation. on the other hand, although not the origin of human civilization,

the advanced countries and the more belated its outset of industrialization, the greater would be the pace of progress once the process began. to sum up, nowadays the asian economy's process of development can be said to successfully exemplify the development theories put forward by professor lewis and professor gerschenkron. [UNK]. characteristic features of asia's economic development what characteristics distinguish the process of economic development in the asian region as compared to other regions? let me run through a summary of these features. firstly, the major resource that asia has in abundance is low - cost labor force. in contrast to the human resources of other region, those of asia are relatively well educated and possess a higher degree of moral discipline. 2 / 6 secondly, the needed capital and technology whose domestic supply was problematic has largely been introduced from abroad. it was possible to shorten the length of time needed for development by maximizing late - comer advantage in imitating advanced countries'technology and systems. this is one of the fruits of economic openness. thirdly, the products manufactured by combining domestic labor and imported capital and technology targeted mostly on export market rather than on local market. lastly, governments have played an activist role by, for example, setting up plans and lending support for development rather than just leaving things to the free play of the markets. while making the most of late - comer advantage, asia's economic development has proceeded in file order, moving from japan, to korea and then to china and india lately. 1. japan japan's industrialization began in the latter part of the 19th century, about 120 years after that of britain. spurred on by the meiji restoration in 1868, feudalism was cast aside and a modern country came to be established with power centrally concentrated. a national development strategy was put in place under government direction. this involved the introduction of capital and technology from the advanced countries of the western world, the active encouragement of trade and the forced savings on the part of the agricultural sector for the success of the modernization policies. these placed japan at the forefront of asian industrialization. after the second world war, on the foundation of its plentiful labor power and high savings rate, japan successfully promoted major key industries, turning itself into a global manufacturing base. in the course of this, it registered continued high growth rates, averaging over nine per cent annually in the years of 1950 - 73. by 1967 it had become second only to the united states as an economic power