Comparative Performances of East Asian and Latin American NICs

Comparative Performances of East Asian and

Latin American NlCs

Steve Chan

Introduction

There is a growing literature OR the emergence of the so- called newly industrializing countries (NICs) on the world scene. There is furthermore an increasing recognition that the developmental processes and policy performances of the East Asian and Latin American NlCs have been quite different.’ In particular, the recent achievements of countries like Taiwan have cast doubts on the validity of some generalizations derived from orthodox as well as revisionist versions of dependenty theory,* much of whose origins could be traced to the experiences of Latin American countries (especially Brazil).

This paper seeks to assess comparatively the policy perform-

I would like to thank Aran Park and Kook Kim for their research assistantship, provided jointly through the Center for International Relations and the Political Science Department at the University of Colorado. I am also indebted to the institute of Behavioral Science at the University of Colorado for a research fellowship during 198687 that provided for 50% released time from my normal teaching duties.

1. See, for example, Stephan Haggard, ”The Newly Industrializing Countries in the international System,” World Politics 38 (January 1986). pp. 343-370. 2. For example, see Alice H. Amsden, “Taiwan’s Economic History: A Case of Etatism and a Challenge to Dependency Theory,” Modern China 5 (July 1979), pp. 341-379; Richard E. Barrett and Martin K. Whyte, “Dependency Theory and Taiwan: Analysis of a Deviant Case,” American journal of Sociology 87 (March 1982), pp. 1064-1089; and George T. Crane, “The Taiwanese Ascent: System, State, and Movement in the World-Economy,” in Edward Friedman, ed., Ascent and Decline in the World System (Beverly Hills, Calif.: Sage, 1982), pp. 93-113.

Pacific Focus, Vol. II, No. 1 (Spring 1987135-56. 0 1987 by the Center for International Studies, lnha Universitv

35

36/ Pacific Focus

ances of two sets of NlCs identified by earlier re~earch .~ The first set consists of four East Asian countries: the Philippines, Singa- pore, South Korea, and Taiwan. The second set consists of four Latin American countries: Argentina, Brazil, Chile, and Mexico. The policy performances to be assessed pertain to these countries' attainment of the desiderata of economic growth, income equality, social welfare, political freedom, and birth control. As will be explained below, this assessment is conducted on the basis of the pertinent global norms.

The rest of this paper is organized into four sections. First, I explain the substantive and theoretical rationales underlying this research. Second, I discuss the concepts, methodology, and data sources of this research. Third, I present the results on the relative over- or underperformance on the part o f the eight NlCs for each of the dimensions being evaluated. Fourth and finally, I conclude by offering some substantive and theoretical specula- tions about the reasons for these countries' differential policy performances.

Substantive and Theoretical Rationales

Surely, the ability of governments to provide a decent living environment for their citizens is a central concern of social scientists. The quality of life of the people of a country is indicated by its achievements on multiple values, such as prosperity, freedom, equality, and welfare. Although the operationali- zation or measurement of these values may be contentious, few would question that these values are the end of good government.

To evaluate how well governments do in pursuing these values, it is necessary that one controls for what they have to work with or against. That is, one needs to adjust for the resources or liabilities faced by each government. It does not seem to

3. Tong-whan Park and Chung-chian Teng, "Between the, North and the South," paper prepared for delivery at the annual meeting of the International Studies Association, Mexico City, April 5,1983; Bela Balassa, The Newly lndustrializing Countries in the World Economy (New York: Pergamon Press, 1981); and James A. Caporaso, "Industrialization in the Periphery," in W. Ladd Hollist and James N. Rosenau, eds., World System Structure (Beverly Hills, Calif.: Sage, 1981), pp. 14l3171.

Comparative Performances / 37

make much sense, for example, to equate the ability of an af- fluent developed country to maintain democracy with that of a poor developing country to achieve the same level of political rights and civil liberties. Nor does it seem warranted to treat two developing countries with approximately the same GNP growth rates but very different defense burdens as equally successful in their pursuit of national prosperity.

Additionally, in attempting to evaluate different national performances on the values mentioned earlier, attention should be directed to achievements that deviate substantially from cross- national norms as opposed to achievements that conform roughly to these norms. As policy evaluation is inherently con- cerned with comparative or relative performances, the significant outliers-suggesting exceptionally good or poor performances- particularly deserve attention. These cases of anoma- lous performance are especially important from the perspective of revising or improving our existing knowledge or theories4

Accordingly, this research focuses on the residuals (or unex- plained variance) in a country’s performance as opposed to the central tendency for all countries’ performances. An example may help to illustrate the logic of analysis. There is a body of literature suggesting that a country’s defense burden should have a tangible impact on i t s ability to achieve sustained economic g r o ~ t h . ~ This relationship can be established empirically by

4. Thomas 5. Kuhn, The Structure of Scientific Revolutions (Chicago: University of Chicago Press, 1970). 5. See, for example, Emile Benoit, Defense and Economic Growth in Develop- ing Countries (Lexington, Mass.: D.C. Health, 1973); Saadet Deger and Ron Smith, ”Military Expenditure and Growth in Less Developed Countries,” lournal of Conflict Resolution 27 (June 1983). pp. 335-353; Karen A. Rasler and William R. Thompson, ”Longitudinal Change in Defense Burdens, Capital Formation and Economic Growth,” paper prepared for delivery at the annual meeting of the International Studies Association, Atlanta, March 30,1984; Adne Cappelen, Nils Petter Gleditsch, and Olav Bjerkholt, “Military Spending and Economic Growth in OECD Countries,” lournal of Peace Research 21 (1984), pp. 361-373; David Lim, “Another Look At Growth and Defense in Less Developed Coun- tries,” Economic Development and Cultural Change 31 (January 1981). pp. 377-384; and Ron Smith and George Georgiou, “Assessing the Effect of Military Expenditure on OECD Economies: A Survey,” Arms Control 4 (May1983). pp. 3-15. A survey of the literature on the relationship between economic growth

38 / Pacific Focus

resorting to a regression anatysis of data from all countries in the world. The regression intercept and coefficient thus obtained indicate a cross-national norm, which can in turn be used as a standard or benchmark for evaluating the growth performances of individual countries. Those outliers that are located substantially above this central tendency are the “overachievers,” whereas those that are located substantially below it are the ”underachievers.”b The extent of a country’s over- or underachievement can be measured by the extent to which i t s past economic growth has departed from the regression line (i.e., on the basis of i ts residuals).

Naturally, the regression analyses used to engage in this sort of comparative assessment should capture phenomena of theoretical as well as substantive importance. The analyses that follow are based on very established lines of inquiry regarding the determinants of national performances regarding equality, freedom, and welfare. In addition to the literature on the relationship between economic growth and defense burden mentioned in the preceding example, I have grounded this research on the vast literature pertaining to facilitative or inhibitive conditions for achieving income equality, liberal democracy, and desirable physical qualities of life.’ To summarize this latter

and defense burden can be found in Steve Chan, ”The Impact of Defense Spending on Economic Performance: A Survey of Evidence and Problems,” ORBlS 29 (Summer 1985). pp. 403-434. 6. This idea was presented by Bruce M. Russett, “The Marginal Utility of Income Transfers to the Third World,” lnternationat Organization 32 (Autumn

7. The literature on these topics is extensive. For discussions on the determinants of Western-style liberal democracy, see Seymour Martin Lipset, Political Man: The Social Bases of Politics (Garden City, N.Y.: Doubleday, 1963); Phillips Cutright, “National Political Development: Its Measurement and Social Correlates,” in Nelson W. Polsby, Robert A. Dentler, and Paul A. Smith, eds., Politics and Social Life: An Introdqction to Political Behavior (Boston: Houghton Mifflin, 1963), pp. 569-582; and Deane E. Neubauer, “Some Conditions of Democracy,” American Political Science Review 61 (December 19671, pp. 1002-1009. On the related subject of human rights, a good summary of the literature is provided by James C. Strouse and Richard P. Claude, ”Empirical Comparative Rights Research: Some Preliminary Tests of Development Hypotheses,” in Richard P. Claude, ed., Comparative Human Rights (Baltimore: johns Hopkins University Press, 1976). pp. 51-67. A similarly good analysis and

1978), pp. 91 3-928.

Comarative Performances / 39

literature, a country’s level of economic development (usually operationalized in terms of i t s per capita GNP) has been suggested by virtually all analysts as the single most important determinant (a necessary, if not sufficient, condition) of i t s ability to achieve these desiderata. Therefore, I try below to assess national performances after adjusting for the effects of economic development.

Concepts, Data, and Methods

The performance assessments presented below focus on the central concepts of economic growth, income equality, social welfare, political freedom, and birth control.

I use the average annual rate of increase in per capita GNP (1965-83) to index the concept of economic growth. Although there are many pertinent factors that influence relative national performances on this dimension, I choose to deal only with the impact of defense burden in this paper. The latter concept i s operationalized by three measures; (1) military expenditures as a percentage of GNP, (2) per capita military expenditures, and (3) the number of armed forces personnel per 1,OOO citizens.

As for the concept of income equality, I use three indicators: (1) the income share of the top (i.e., richest) 10% of the population, (2) the income share of the top 20% of the population, and (3) the income share of the bottom (i.e., poorest) 40% of the population. The concept of social welfare is operationalized by the following multiple indicators: (1) the literacy rate of a country (i.e., the percent of i ts population that is literate), (2) the rate of infant mortality of a country (i.e., the number of infant deaths per 1,0oO births), (3) the average life expectancy of a country (in number of years, males and females combined), (4) the average

summary of evidence on social equality can be found in Robert W. Jackman, Politics and Social €quality: A Comparative Analysis (New York: Wiley, 1975). As for studies on physical quality of life, in addition to Russett’s article cited in footnote 6, see Norman Alcock and Gernot Kohler, “Structural Violence at the World Level: Diachronic Findings,” journal of Peace Research 16 (19791, pp. 255-263; and Gernot Kohler and Norman Alcock, “An Empirical Table of Structural Violence,” journal of Peace Research 13 (1976), pp. 343-356.

40 / Pacific Focus

calorie intake of the people of a country as a percentage of daily requirement, (5) the percentage of the population with safe (i.e., modern sanitary) water supply, and (6) the percentage of secondary-school age population actually enrolled in education institutions. These measures of social welfare not only indicate the physical qualities of life in a country, but also reflect i t s degree of egalitarianism.’ An inegalitarian society is unlikely to score very high on these measures of general levels of welfare provision.

As used here, the concept of political freedom refers to the traditional Western definition of liberal democracy. It has two component measures: (1) the political rights enjoyed by the citizens of a country (e.g., universal suffrage, regular elections, the right to organize politically), and (2) the civil liberties enjoyed by the people (e.g., legal protections of due process, the freedoms of speech and religion).

For all the above measures pertaining to income equality, social welfare, and political freedom, I use a country’s level of per capita CNP in 1982 as a control or predictor variable. As mentioned before, the extant literature strongly suggests that economic development is the single most important determinant of a country’s ability to attain these desiderata. Thus, the following performance assessments ask how well the eight NlCs have done in pursuing these desiderata, after adjustment for their relative levels of economic development and in comparison with the pertinent global norms regarding the relationships between this variable and each of the desiderata.

Finally, it seems to me that population explosion is a major problem facing much of the Third World. Uncontrolled demographic expansion threatens to exceed the developing countries’ ”carrying capacity.” It is a significant impediment to their achieving economic progress, political stability, social equality, and improving physical qualities of life. Therefore, I include a final evaluative dimension concerning relative national successes in promoting birth control (as measured by the number of crude

8. See, for example, Jackman, op. cit. (footnote 7); and Douglas A. Hibbs, Jr., Mass Political Violence: A Cross-National Causal Analysis (New York. Wiley, 1973).


births per 1,000 people in 1981). Three separate independent variables are taken into account in making this assessment: (1) the per capita CNP level of a country, (2) i ts literacy rate, and (3) the share of i t s labor force employed in the agricultural sector. The pertinent literature suggests that these factors are among the most important determinants of breeding p r a ~ t i c e . ~

The data for my analyses come from several sources: the U.S. Arms ’Control and Disarmament Agency for the military and some economic data, the World Bank for most of the economic and some social data, the Freedom House for the ratings on political rights and civil liberties, and the compilations by Sivard as well as Taylor and Jodice for most of the data on physical qualities of life and for the data on income distribution.’O

Most of the data employed refer to conditions prevailing in the early 1980s. However, in some cases such as the data on income distribution, only more dated information (e.g., for the 1970s and, in some cases, the late 1960s) was available. In these cases, the statistics for different countries do not necessarily refer to the same year, and the control variables (e.g., per capita GNP) often are derived from a later year. To the extent that these cases are relatively few in number (except regarding income distribution) and to the extent that the phenomena of interest (e.g., income distribution, birth rates, defense burden) tend to be relatively stable over time, the threats to validity posed by these data problems are somewhat reduced.

In studying the relationships between the performance variables and the control variables, three regression models are

9. See, for example, Lester R. Brown, In the Human Interest: A Strategy to Stabilize World Population (New York: Norton, 1974); and Robert S. McNamara, ”Population and International Security,” International Security 2 (Fall 1977). pp.

10. US. Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers (Washington, D.C.: USACDA, 1985); the World Bank, The Development Data Book (Washington, D.C.: World Bank, 1984), and World Development Report (New York: Oxford University Press, 1985); Ruth Leger Sivard, World Military and Social Expenditures: 7985 (Washington, D.C.: World Priorities, 1985); Charles Lewis Taylor and David A. Jodice, World Handbook of Political and Social Indkators, third ed., vol. 1 (New Haven, Conn.: Yale Univer- sity Press, 1983); and Raymond D. Castil, Freedom in the World: Political Rights and Civil Liberties, 7987 (Westport, Conn.: Greenwood Press, 1981).

25-55.

42 / Pacific Focus

examined:

(1) Y=a+b,X,+e (linear model) (2) Y = a + blXl + b2(X1I2 + e (curvilinear model) (3) Y=a+b,X,+e (curvilinear model)

where Y = the dependent variable X, =the independent variable X2=the natural logarithm of XI a =the regression intercept b= the regression coefficient

Equation (1) specifies a monotonicallv increasing or decreas- ing relationship between the independent and dependent variables. Equation (2) indicates a second-degree polynomial, so that this relationship takes a parabolic form (e.g., the regression curve is initially positive and then turns negative). Equation (3) is a natural logarithmic model, and suggests that the strength of the relationship between X and Y gradually weakens as X increases in value. Unlike equation (21, however, the regression slope only levels o f f and does not reverse i t s direction.

Each of the above models is evaluated for each pair of data relationship for i t s empirical fit (i.e., the amount of cross-national variance explained) and statistical significance. The one with the most robust results is chosen. Therefore, the performance statistics to be presented in the next section are derived from one or another of these models, as is specified in Table 1.

Performance Statistics

The results presented below are selected from a much larger set of analytic findings. Some six hundred separate regression analyses were undertaken to determine the strength of various factors that have been suggested by prior theoretical and empirical studies to have important influences on one or another type of policy performance, and to ascertain the nature of their respective influences. The performance statistics reported in Table 1 are selected because they are based on the most robust and significant relationships. The weakest empirical relationship reported (that between per capita CNP growth rate and military expenditures as a percentage of GNP) can account for 8% of the


data variance and is significant at the 0.0054 level. Most reported relationships are, however, much stronger, with the strongest one (that between birth rate and literacy rate) being able to explain 79% of the data variance and achieving a level of statistical significance at 0.0000 (that is, there is less than one chance in ten thousand that the results obtained are due to random chance).

Table 1 contains the following information: Y (the dependent variable, or the policy performance variable), X (the independent variable, or the control or predictor variable), a regression equation number (indicating whether a linear, polynomial, or logarithmic model provides the best empirical fit), the F signift cance test (indicating the probability of obtaining the reported regression results due to random chance), R2 (indicating the amount of variance in the dependent variable that is explained by the independent variable), and N (indicating the number of cases or countries for which data were available to be included in the sample for the regression analysis).

Of more direct interest are the figures following each of the eight NlCs in Table 1. These figures indicate the extent to which their actual historical performance levels have deviated from the levels that are predicted by the pertinent control variables. In other words, they refer t o these countries' over-or underperformance with respect to the central tendency characterizing all the countries in the sample. The extent of overperformance is analogous to a "surplus" over the relevant global norm, whereas the extent of underperformance is indicated by a "shortfall" below this norm. Note that the figures on over- or underperformance are about the specific dependent variable in each data relationship; they could refer to the percentage gain in per capita GNP, or the income share (in percentages) of various segments of a population, or the number of infant deaths (per 1,OOO births), or the degree of rated civil liberties. Thus, the units of performances being assessed vary for different measures.

The numbers preceding each country name and enclosed in parentheses are the rank-order positions of the NlCs among all the countries constituting the sample for the particular regression analysis. Higher ranks (i.e., smaller rank numbers) indicate better policy performance. Naturally, interpretation of national

44 I Pacific Focus

ranks needs to take into account the number of countries being ranked; that is, the sample size or N.

What do the statistics in Table 1 tell us about relative policy performance? I discuss them in the order of the five dimensions presented by the headings in that table; that is, growth, equality, welfare, freedom, and birth control.

Growth. Three measures of defense burden are used to control for or predict the average annual rate of change in per capita GNP. In two cases (la and Ib in Table I), equation (3) or the natural logarithmic model provides the best empirical fit, indicating that the effects of the two independent variables in question tend to wear off gradually after an initially strong positive impact on the dependent variable. In the other case (Ic in Table 11, equation (2) or the polynomial model provides a better empirical fit. It indicates a V-shaped parabola, according to which the initial impact of the independent variable is margi- nally negative but this impact becomes rather positive after a certain threshold. Although I have not reported the signs and sizes of the regression coefficients in Table 1, in general the results conform to the findings of other cross-sectional analyses on this subject. They imply that military expenditures tend to be more of a stimulant to than a retardant of economic growth. These cross-sectional results are at variance with more valid longitudinal analyses of the time series data for individual countries, which tend to suggest the opposite conclusion of a drag rather than stimulative effect created by defense spending on the economy."

11. See, for example, US. Congressional Budget Office, Defense Spendingand the Economy (Washington, D.C.: U.S. Government Printing Office, 1983); as well as Cappelen et a/., op. cit.; and Chan, op. cit. (in footnote 5).


Table 7 . Comparative National Performances

I . Growth a. Y=average annual rate of increase in per capita GNP (in %)

X= military expenditures as a percentage of CNP equation 3 sig. F =0.0054 R2= 0.07958 N=96 (36) the Philippines 0.88 (78) Argentina - 1.61

(3) Singapore 5.33 (8) Brazil 3.1 2 (4) South Korea 4.23 (86) Chile - 2.42 (2) Taiwan 6.54 (27) Mexico 1.34

b. Y = average annual rate of increase in per capita CNP (in %) X= per capita military expenditures equation 3 sig. F=0.0014 R2= 0.10372 N=96 (31) the Philippines 1 . I 4 (77) Argentina -1.55

(5) South Korea 4.29 (88) Chile - 2.38 (3) Singapore 4.56 (9) Brazil 3.25

(2) Taiwan 6.42 (26) Mexico 1.46 c. Y = average annual rate of increase in per capita CNP (in %)

X = number of armed forces personnel per 1,000 citizens equation 2 sig. F=O.O000 RZ=0.19371 N=101 (27) the Philippines I .31 (84) Argentina -1.78 (9) Singapore 3.23 (8) Brazil 3.26

(11) South Korea 2.93 (97) Chile - 3.35 (3) Taiwan 4.62 (22) Mexico 1.91

II. Equality a. Y = income share of the top 10% of population (in %)*

X= per capita GNP equation 1 sig. F=O.OOOO R2= 0.30948 N=64 (26) the Philippines -0.79 (30) Argentina - 0.08

(60) Brazil 14.26 (11) South Korea -9.18 (25) Chile - 1.45 (9) Taiwan -11.03. (36) Mexico 0.96

* * ("*I Singapore

b. Y = income share of the top 20% of population (in %)* X=per capita GNP equation 1 sig. F = 0.0000 R2= 0.29244 N=64 (34) the Philippines 0.56 (31) Argentina -0.48

(13) South Korea - 6.86 (32) Chile -0.34 (60) Brazil 14.78

(7) Taiwan - 12.02 (40) Mexico 3.1 7

(**) Singapore * *

46 / Pacific Focus

c. Y=income share of the bottom 40% of population (in %) X=per capita CNP equation 1 sig. F=0.0018 R2= 0.1 4645 N=64 (41) the Philippines -1.83 (32) Argentina -0.56

(1 7) South Korea 2.74 (36) Chile - 0.91 (6) Taiwan 7.40 (51) Mexico -4.19

(61) Brazil - 7.28 (**I Singapore * *

Ill. Welfare a. Y = literacy rate (in %)

X=per capita CNP equation 3 sig. F=O.OOOO R2=0.46613 N=137

(6) the Philippines 32.1 9 (24) Argentina 18.26 (87) Singapore - 0.52 (65) Brazil .5.40 (1 3) South Korea 25.55 (15) Chile 22.94 (41) Taiwan 11.23 (461 Mexico 10.28

b. Y -- infant mortality rate (per 1,000 births)" X= per capita CNP equation 3 sig. F=O.OOOO R2= 0.54763 N=137

(12) the Philippines -41.24 (57) Argerltina - 10.33

(16) South Korea - 35.93 (17) Chile - 35.71 (8) Taiwan - 48.28 (74) Mexico - 4.38

(35) Singapore - 22.76 (98) Brazil 9.37

c. Y=average life expectancy (in years) X= per capita CNP equation 3 sig. F=O.OOOO R2= 0.58527 N=137 (17) the Philippines 6.95 (26) Argentina 5.58 (44) Singapore 3.26 (55) Brazil 1.85 (35) South Korea 4.80 (36) Chile 4.65 (11) Taiwan 8.45 (52) Mexico 2.47

d. Y = calorie intake as a percentage of daily requirement X= per capita CNP equation 3 sig. F=O.OOOO R2= 0.65379 N=134 (54) the Philippines 2.53 (30) Argentina 8.22 (65) Singapore 1.31 (99) Brazil - 6.62

(49) Taiwan 3.81 (28) Mexico 8.85 (11) South Korea 17.12 (89) Chile - 3.99

e. Y = population with safe water (in %) X=per capita CNP equation 3 sig. F=O.OOOO R2 = 0.66393 N=128

Comparative Performances I 47

(45) the Philippines 4.55 (85) Argentina - 6.85

(24) South Korea 13.71 (15) Chile 20.41 (74) Taiwan - 2.04 (43) Mexico 5.03

(20) Singapore 16.02 (33) Brazil 9.00

f. Y = number enrolled in secondary school as percentage of age group X= per capita CNP equation 3 sig. F=O.OOOO R * = 0.66440 N=119

(7) the Philippines 30.43 (66) Argentina -1.74 (75) Singapore -4.22 (109) Brazil -19.18

(2) South Korea 40.57 (43) Chile 7.24 (3) Taiwan 39.77 (65) Mexico -1.16

IV. Freedom Y = Freedom House’s rating of political rights (a scale of 1 or most rights to 7 or least rights)* X= per capita CNP equation 2 sig. F=O.OOOO R2=0 29003 N=137 (68) the Philippines -0.24 (118) Argentina 1.81

(11 7) Singapore 1.74 (58) Brazil - 0.58 (76) South Korea 0.28 (102) Chile 1.45 (86) Taiwan 0.65 (51) Mexico - 1.36

Y = Freedom House’s rating of civil liberties (a scale of 1 or most liberties to 7 or least liberties)* X=per capita CNP equation 2 sig. F=O.OOOO R2= 0.32999 N=137 (69) the Philippines -0.18 (98) Argentina 0.82

(1 21) Singapore 1.82 (23) Brazil -1.56 (108) South Korea 1.31 (81) Chile 0.47 (94) Taiwan 0.66 (60) Mexico - 0.34

V. Birth Control Y = number of crude births per 1 ,OOO people* X=per capita GNP equation 2 sig. F = 0.0000 R2= 0.59851 N=128

(30) the Philippines -6.74 (13) Argentina - i 0.38 (43) Singapore - 3.43 (41) Brazil - 4.02 (10) South Korea -11.82 (20) Chile - 9.22

(5) Taiwan - 14.32 (84) Mexico 3.64 Y = number of crude births per 1 ,OOO people* X= literacy rate equation 2 sig. F=O.OOOO R2=0.791 26 N=129 (122) the Philippines 9.50 (66) Argentina 0.1 9

48 I Pacific Focus

(10) Singapore - 9.70 (35) Brazil (98) South Korea 3.79 (104) Chile (11) Taiwan -9.50 (115) Mexico

c. Y = number of crude birth per 1,OOO people* X=share of labor force in agriculture equation 2 sig. F=O.OOOO R2=0.64877 N=114 (35) the Philippines - 3.09 (50) Argentina 0.07 (86) Singapore 4.89 (57) Brazil 0.54

(19) Taiwan - 6.56 (79) Mexico 3.1 7 (14) South Korea - 7.90 (62) Chile 1.02

-3.18 4.79 7.76

* in these cases, a minus sign indicates better policy performance whereas a plus sign indicates poorer policy performance. For example, a negative figure may suggest less wealth for the richest segments of the population, fewer infant deaths, more political rights or civil liberties, or lower population growth.

* * no data.

As for the results on individual NIC performances, Table 1 shows rather clearly that Singapore, South Korea, Taiwan (among the East Asian NICs), and Brazil (among the Latin American NICs) have been outstanding overperformers on the dimension regarding the relationship between economic growth and defense burden. For instance, Taiwan’s actual historical rate of increase in per capita CNP has been 6.54% higher than the rate predicted by i t s military expenditures (as a percentage of GNP) on the basis of the norm among 96 countries in the sample (la in Table 1). The overachievements for the others are 5.33% for Singapore, 4.23% for South Korea, and 3.12% for Brazil. These NlCs consistently rank among the top 10% of the countries included in the various samples (i.e., for la, Ib, and Ic). Mexico (1.34%) and, to a lesser extent, the Philippines (0.88%) are also overperformers (for la), although the extent of their overperformance has been much lower than that of the four countries just mentioned. On the other hand, Argentina (-1.61 %) and Chile ( - 2.42) have been underperformers. There is considerable congruence in the results from the three different regression analyses (that is, between la, Ib, and Ic). The fact that the extent and rankings of over- or underperformances by the eight NlCs are rather stable regardless of the particular measure used to operationalize the concept of defense burden


gives greater confidence to these results than if they had been discrepant.

Equality. The degree to which national income has been dis- tributed equally in South Korea and especially Taiwan, at their respective levels of economic development, is perhaps the most impressive dimension of their policy performances. Measured by the three performance variables in Table 1 ( l la, l l b , and l lc ) , these countries have been more egalitarian than all Western developed economies (including the Scandinavian countries)- not to mention the Latin American NICs. Only the developed socialist countries (e.g., Czechoslovakia, East Germany, Hungary) rank higher than Taiwan in the degree of egalitarian income distribution.

At the other extreme featuring a high degree of inegalitarian income distribution, we find Brazil (ranking 61st among 64 countries in the sample for Ilc, for example), along with such others as Gabon, Ecuador, and South Africa. The richest 10% of the Brazilian population captured 50.6% (!) of the national income in 1972, whereas only 27.5% (in 1976) and 24.7% (in 1971) of the national income in South Korea and Taiwan respectively went to the richest 10% of their population. Conversely, the poorest 40% of the Brazilian population obtained only 7.0% (!) of the national income, whereas the comparable figures for South Korea and Taiwan were 16.9% and 21.9% respectively. Thus, although all these three NlCs have been able to achieve rapid economic growth, the gains of this growth are much more likely to benefit the poor in South Korea and Taiwan than in Brazil. The significant overachievement of the former two East Asian NlCs on this egalitarianism dimension is in sharp contrast to the significant underachievement of ,Brazil.

To a lesser extent than Brazil, Mexico is also less egalitarian than it should have been on the basis of i ts level of economic development. The other three NICs-the Philippines, Argentina, and Chile-tend to cluster around the global norm.

Welfare. Although the performances of our cases vary on the six measures of social welfare or physical qualities of life, the East Asian NlCs have generally outperformed the global norms as well as their Latin American counterparts. Among the former group, Singapore has not done as well as the Philippines, South

50 / Pacific Focus

Korea, and Taiwan, given their respective levels of economic development, except on the criterion of provision of safe water to i t s citizens. On the same basis of evaluation, Taiwan has excelled in i t s achievements in reducing infant mortality, pro- longing average life expectancy, and increasing secondary- school education. South Korea has also scored significantly above average gains on these criteria regarding i ts citizens’ literacy rate, infant mortality rate, calorie intake, and secondary-school education. Surprisingly, the Philippines has been a strong overachiever on these same criteria, except for i t s people’s dietary nutrition.

Turning to the group of Latin American NICs, their welfare performances have not been very impressive. Only Chile has done significantly better than expected on the criteria of literacy infant mortality, and provision of sanitary water. This country, however, has done significantly worse than expected on the criterion of the dietary nutrition of i ts citizens. More noteworthy is the case of Brazil, which has been a significant underperformer on the criteria of infant mortality, calorie intake, and secondary- school enrollment. It ranks 98th. 99th, and 109th among the 137, 134, and 119 countries in the regression sample for these respective criteria. Moreover, Brazil has also not done nearly as well as the other NlCs on the criteria of attaining higher literacy rate and life expectancy for i t s people. As for the other two Latin American NICs, Argentina and Chile have tended to be overachievers on most of the welfare criteria, although their overachievement has not been very dramatic.

Freedom. The ratings of political rights and civil liberties used in Table 1 refer to the year 1981, and thus do not reflect the more recent post-Marcos and post-Caltieri changes in the Philip- pines and Argentina respectively. Significantly, none of the eight NICs-with the possible exception of Brazil (!) on civil liberties- can be characterized as a significant overachiever on these two criteria. Although, in addition to Brazil, the Philip- pines and Mexico have performed somewhat better than their counterparts in these regards, their overachievements have been rather marginal. On the other hand, the underachievements of the other NlCs have also tended to be relatively minor-except perhaps for the somewhat surprising results for Singapore,


showing it quite less politically free and more authoritarian in light of the global norms.

In contrast to the other dimensions of policy performance reviewed so far, the NlCs included in this research as a group have been distinct underperformers in the pursuit of liberal democracy in the Western tradition. With the possible Brazilian exception mentioned above, they have actually done quite poorly in this regard. Clearly, whatever achievements that these countries can claim in improving the living standards or conditions of their people have not been matched by comparable progress in political freedom.

Birth Control. As mentioned earlier, in much of the Third World economic progress, social welfare, and even political stability are threatened by rapid demographic expansion. Thus, a government’s ability in controlling population growth is one pertinent dimension for policy evaluation. The results of this dimension tend to vary somewhat for the eight NICs, depending on which predictor or control variable is used. Thus, for example, the Philippines, South Korea, and Argentina stand out as relative overachievers on the basis of their respective per capita CNP and share of labor force engaged in agricultural occupation. However, the performances of Singapore and, to a lesser extent, Brazil look more successful than expected if their respective people‘s literacy rate is considered as a determinant of the number of crude births.

Two countries show consistent results regardless of the independent variable used in the regression analyses. Taiwan has been a consistent overperformer in the sense that i t s actual birth rate has been far lower than i t s predicted birth rate, whether the latter value is derived from its per capita GNP, i t s literacy rate, or the share of agricultural laborers in i t s national work force. Conversely, Mexico has been a significant and consistent underperformer in the same sense. If it i s reasonable to argue that the birth rate of a country provides an accurate, albeit indirect, indication of the modernity of i ts people’s atti- tudes and values, then those of the Taiwanese people seem to be ahead of and those of the Mexican people seem to lag behind their respective societies’ actual level of modernization.

52 I Pacific Focus

Candidate Explanations

This paper has taken a somewhat unconventional approach. Instead of the usual social science practice of trying to maximize the amount of empirical variance accounted for by some explanatory or predictory variable, I have focused on the extent of national deviations from different cross-national norms. This latter approach is useful for directing analytic attention and efforts to anomalies.

What can one conclude about the nature of such anomalies from the results presented in the last section? One puzzle relates to the apparently exceptional performances of several N ICs- Taiwan, Singapore, South Korea, and Brazil- in achieving rapid per capita economic growth, whether despite of or because of their comparatively heavy defense burdens. A second puzzle derives from the truly remarkable achievements of South Korea and especially Taiwan in attaining a very high degree of egalitarian income distribution, given their current levels of economic development and in view of the tendency for a rapid rate of socioeconomic change to increase inegalitarianism.12 Why have these countries been able to accomplish this feat, whereas Brazil features one of the most inegalitarian societies on earth? Third, as a group the East Asian NlCs have outperformed the Latin American NlCs as well as the pertinent global norms on various criteria of social welfare. The first part of this finding is surprising because one would have expected the Latin American countries to do better given their more abundant natural resources, larger domestic economies, more European heritages, and more “modern” or developed social conditions. Fourth, although the NlCs (especially the East Asian ones) in this paper can boast at least some major achievements on growth, equality, or welfare, why have they done comparatively poorly in regard to the political rights and civil liberties of their citizens? As a group, they have been distinct underperformers on the latter criteria. Fifth, why do Taiwan and Mexico in particular have such divergent performance records on birth control? Even

12. Mancur Olson, Jr., “Rapid Growth as a Destabilizing Force,” journal of Economic History 23 (December 1963), pp. 529-552.


recognizing the presence of a large native Indian segment in Mexico’s population, it i s not immediately clear that societal outlooks or values can readily explain this discrepancy as the Chinese traditionally place at least as much emphasis on having large families as the Mexican culture.

I will not attempt to explain the above enigmas here, but will only suggest three hypotheses that may be worthwhile to pursue further in future research. The first hypothesis relates to the domestic political costs of following a strategy of export-led growth, a strategy more or less adopted by all the eight NlCs dis- cussed in this paper. By hitching their economies to the domi- nant core power (i.e., the US.) and by opting to compete in the capitalist world system as relatively late industrializers, these countries face certain political real i t ie~. ’~ They need to acquire access to the especially vital U.S. market; they need to recruit foreign investment and technology transfer; and they need to protect their one major comparative advantage in a relatively cheap, skilled, and pliable work force. Accordingly, their domestic and foreign policies tend to feature anticommunism, support for free trade (in rhetoric if not entirely in practice), and enticements to overseas investers and especially multinational corporations (e.g., tax credits, docile and unorganized workers, “law and order”). These policies are part of a package, so to speak, for obtaining Western and especially U.S. inputs (e.g., market access, technology, investment, political backing, military subsidies) to undertake what Cardoso has called associated- dependent g r 0 ~ t h . l ~ Authoritarian politics is usually a con-

13. Some helpful discussions of these points are provided by James A. Caporaso, ”Industrialization in the Periphery: The Evolving Global Division of Labor,” lnternational Studies Quarterly 25 (September 1981), pp. 347-384; Johan Caltung, “A Structural Theory of Imperialism,” journal of Peace Research 8 (1964), pp. 95-119; and Robert Gilpin, ”Three Models of the Future,” in C. Fred Bergsten and Lawrence B. Krause, eds., World Politics and International Eco- nomics (Washington, D.C.: the Brookings Institution, 1975). 14. Fernando Henrique Cardoso, “Associated-Dependent Development: Theoretical and Practical Implications,” in Alfred Stepan, ed., Authoritarian Brazil: Origins, Policies, and Future (New Haven, Conn.: Yale University Press, 19731.

54 / Pacific Focus

sequen~e.’~ The acutal average annual rates of increase in per capita GNP

over the past 25 years have been much higher among the East Asian NlCs than among the Latin American NICs. This better performance by the former countries cannot be easily accounted for by classic economic theories because, compared with their Latin American counterparts, they have been less well- endowed with those conducive conditions emphasized by such theories. The Latin American NlCs tend to have more abundant natural resources, larger domestic markets, a better educated populace (at least until recently), a more stable business cli- mate, and a more hospitable international environment. My hunch is that the more successful economic performances of the East Asian NlCs are less due to the above domestic conditions than their foreign relations. Accordingly, my second hypothesis is that the East Asian NlCs have been better able to obtain economic and noneconomic “favors” from the US. (especially in the form of foreign aid and asymmetric commer- cial relations) due to their special political niches in Washing- ton’s historic policy of containing Asian communism and in American domestic politics as a result of the legacies of the “who lost China” debate and the Korean War. Thus, during the critical takeoff years of the late 1950s and early 1960s, Taiwan and South Korea especially were more able to parlay their status

15. The cross-national evidence pertaining to this observation is not, however, entirely clear-cut. For some relevant discussions, see Robert R. Kaufman, Harry I . Chernotsky, and Daniel S. Geller, “A Preliminary Test of the Theory of Dependency,” Comparative Politics 7 (April 1975), pp. 303-331; Christopher Chase-Dunn, “The Effects of Internationat Economic Dependence on Devel- opment and Inequality: A Cross-National Study,” American Sociological Review 40 (December 1975), pp. 72G738; Richard Rubinson, “The World-Economy and the Distribution of Income within States: A Cross-National Study,” American Sociological Review 41 (August 1976), pp. 638-659; Volker Bornshcier and Thanh-Huyen Ballmer-Cao, “Income Inequality: A Cross-National Study of the Relationships Between MNC-Penetration, Dimensions of the Power Structure and Income Distribution,” American Sociological Review 44 (June 1979), pp. 487-506; Volker Bornschier, Christopher Chase-Dunn, and Richard Rubinson, ”Cross-National Evidence of the Effects of Foreign Investment and Aid on Economic Growth and Inequality: A Survey of Findings and a Reanalysis,” American lournal of Sociology 84 (November 1978). pp. 651-683; and Vincent A Mahler, Dependency Approaches to International Political Economy: A Cross- National Study (New York. Columbia University Press, 1980).


as loyal cold-war allies into those foreign facilitations for coat- tail growth mentioned earlier. Of course, the Philippines always has had a special relation with Washington as a result of i t s having been a U.S. colony, while the same is true of Singapore vis-a-vis the British. In contrast, even in the aftermath of Castro’s seizure of power in Cuba, the absence of a “dear and present danger” of communist aggression in Latin America that is in any sense comparable to the saliency accorded by Washington to the Korean and Vietnam Wars has tended to make the countries in that region the objects of Washington’s “benign neglect.” The location of the Latin American countries in the U.S. ”backyard” has tended to give them a weaker leverage, in comparison with Washington’s East Asian allies, in extracting various forms of foreign assistance.

The management of the U.S. tie or conduit (in addition to the differential birth rates) cannot, however, entirely explain the substantial differences in the per capita GNP increases between the East Asian and Latin American NICs. M y third hypothesis is derived f rom Mancur Olson’s theory on distributional coalitions.’6 This theory argues that those societies with fewer and weaker self-seeking interest groups should be more produc- tive (i.e., efficient] and egalitarian than others with more numerous and stronger interest groups. It also posits that special interests tend to proliferate and become stronger, the longer a country’s social, economic, and political structures remain un- disturbed. Seen in this light, the East Asian NlCs differ sharply from the Latin American NlCs in one respect. The former countries all have had either traumatic civil wars or direct foreign rule (by the American, British, or Japanese colonialists) in the relatively recent past, whereas the latter countries have not had similar experiences since their political independence from Spain or Portugal. One recent quantitative study of the Asian Pacific-rim countries tends to support the implications of Olson’s theory.” Those countries that have experienced greater

16. Mancur Olson, jr., The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities (New Haven, Conn : Yale University Press, 1982). 17. Steve Chan, “Growth with Equity: A Test of Olson’s Theory for the Asian Pacific-rim Countries,” journal of Peace Research, forthcoming.

56 / Pacific Focus

upheavals due to domestic insurgency or foreign occupation- and thus, are hypothesized to have fewer or weaker distributional coalitions due to the destructions caused by these upheavals- have in fact tended to be the ones whose economies have grown the fastest and whose societies have become the most egalitarian. By extension, I hypothesize that the supposed benefits of rapid economic growth have not “trickled down” nearly as much or as fast for the poor in the Latin American NlCs than in the East Asian NICs, because special interests have had a better chance to accumulate in numbers and strength in the former countries since there have not been major sociopolitical upheavals to challenge or undermine them. The so-called Mexican Revolution tends to be a misnomer as it did not introduce any basic structural change of the society or polity and, in any case, it happened too long ago to warrant i t s consideration as a critical determinant of current realities.

As indicated already, the preceding remarks are intended as suggestions for further research, and not as conclusive evidence for explaining the enigmatic discrepancies observed. The attempt made in this paper to identify and measure exceptionally good or poor policy performances merely suggests a starting point for research. The fact that I have only specified some anomalies that demand more systematic theoretical and empirical explanation will hopefully not be missed by the reader.

Documents

Comparative Performances of East Asian and Latin American NICs