Trade and Labour Market Outcomes: Why Have the East Asian Cubs Lagged Behind the Tigers?

The ‘High Performing Asian Economies’ (HPAEs) of East Asia share much in common in terms of growth rates and patterns compared with other parts of the developing world (World Bank, 1993; Balassa, 1988). However, they differed in several other respects, such as the stock of human capital and governance arrangements in support of public policy, during the early decades of sustained growth (Booth, 1999). One lesser-known contrast was the more rapid real wage growth that underpinned a labour market transition and earlier industrial upgrading among the four newly industrialized economies (NIEs) (Hong Kong, Korea, Singapore and Taiwan), compared with the latecomers (the ‘second-tier NIEs’) in Southeast Asia. This remains a neglected area of research of the East Asian development experience. Analysis of these trends has wider implications for broadening our understanding of labour market dynamics associated with industrial transformation in other parts of the developing world, including in the rapidly growing Chinese and Indian economies.