THE KEY TO THE

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THE KEY TO THE

JOSE EDGARDO CAMPOS

AND

HILTON L. ROOT

THE KEY TO THE

THE KEY TO THE ASIAN MIRACLE

THE KEY TO THE ASIAN MIRACLE Making Shared Growth Credible

Jose Edgardo Campos Hilton L. Root

The Brookings Institution Washington, D.C.

About Brookings

Tire Brookings Illstitutioll is a private Ilonprofit orgallizatioll devoted to researc1l, educatioll, and publication 011 important issues of domestic and foreigll policy. Its prillcipal purposc is to bring kllowledge to bear 011 currellt and emerging policy problems. Tile Illstitution was founded on December 8, 1927, to mergc tire activities of tile Illstitute for Governmcnt Research, fOllllded ill 1916, tile Illstitute of Ecollomics, founded ill 1922, and tlze Robert Brooklllgs Graduate School of £COIIOlllics, fOlllldcd ill 1924. Tize Illstitutioll mailltaills a position of lIeutrality on issues of public policy. Interpretatiolls or cOllelusiolls in Brookillgs publicatiolls sllOuld be ullderstood to be solely tllOse of tlze authors. Copyriglrt © 1996 THE BROOKINGS INSTITUTION

1775 Massaclrusetts Avellue, N.W., Washillgtoll. D.C. 20036 All rights reserved

Library of COllgress Catalogillg-ill-Publicatioll data Campos, Jose Edgardo The key to the Asian miracle: making shared growth credible / Jose Edgardo Campos, Hilton Root. p. cm. Includes bibliographical references and index. ISBN 0-8157-1360-6 (cloth: alk. paper) 1. East Asia-Economic policy- Decision making. 2. Asia, Southeastern-Economic policy- Decision making. ). East AsiaEconomic conditions. 4. Asia, Southeastern-Economic conditions. I. Root, Hilton L. II. Title. HC460·5·C26 1996 96-428 338·95- 100 indicate that the rural average is higher than the urban average access to the service.

urban regions are too crude to provide accurate comparisons among countries. Nevertheless the available data suggest that the allocation has been less biased in the HPAEs. Among the HPAEs, Indonesia, Thailand, and Malaysia have large rural sectors, while Taiwan and Korea have modest rural sectors. For comparisons with other low- and middle-income countries, data on sanitation and water facilities are available for Indonesia, Thailand, and Korea. Table 1-8 gives a rough picture of the relative emphasis of public investment in sanitation and water facilities in these countries and other developing countries. As indicated there is a better balance between rural and urban sectors in the three HPAEs.19 The data on rural electrification also suggest that the HPAEs with nontrivial rural sectors have done better on average at providing electricity to the rural areas. "Less than 10 percent of electricity investment in the third world goes to the rural areas and in many countries that investment is less than 5 percent. ... In Taiwan province of China, universal electrification has been achieved. fl20 Since the early 1980s, electricity has also been universally available in Korea . As shown in table 1-9 Malaysia and Thailand have made great strides in rural electrification. Indonesia has not done as well. But the relative disparity between the urban and rural sectors is smaller compared with the 19. In Malaysia. as of 1987. 95 percent of the urban population and 68.6 percent of the rural population had access to safe water. See World Bank (1990a). 20. United Nations ()990. p. 132).

East Asia's Road to High Growth

23

1-9. Percentage of Rural and Urball Population Served by Electricity, Selected Years

TABLE

Region and country

Per capita 1983

GNP

population

80

2 15 15 22 8 60

1981 1981 1981 1980 1982 1982

27.5 2.4 8.2 75

2,070 510 1,880 1,870 1,430 1,020 1,420 2,240

> 95 72 > 95 > 95 84 > 95 79

5 Y 19 42 13 > 95 13 < 20

1981 1981 1981 1981 1978 1982 1980 1982

6.5 40.9 5.8 9.5 2.1 18.9 6.2

180 120 300 710 480 340 440

< 15 10 21 93 86 < 10 83