The East Asian Miracle: Where Did Adam Smith Go Wrong?

Adam Smith ’s The Wealth of Nations is taken to explain almost all modern economic growth.

Masoud Movahed: The experiments of rapid economic growth in the East Asian Tigers , namely South Korea , Taiwan , and recently China , seem to contradict Smith 's theory.

He argues that there should be no force, not even state-intervention, disrupting the market, since intervention would only serve to distort the market.

The state directed the flow of capital to industries the state thought would be the most productive.

The Korean and the Taiwanese states actively manipulated trade and exchange rates and heavily protected the domestic markets against foreign competition while their industries were developing.

The World Bank’s landmark report The East Asian Miracle on the performance of those countries in 1993 said success in the South Korean and Taiwanese economies has not been due to “non-state intervention,” but rather a reliance on heavily interventionist industrial planning.

In the 1970s and 1980s , their growth rates were unseen in the history of mankind.

The quality of intervention as well as the capacity of the state to discipline the local industries has been phenomenal in the East Asian Tigers as modern experiments of successful economic development.

In short, amid the rich diversity of experiments of industrialization in the post-war era, the East .