Why Asia is Rich

Robin Hanson (hanson@dosh.hum.caltech.edu)
Thu, 29 Aug 96 10:09:03 PDT

"Why is Asia Booming?" seems an oft-asked question, who various
answers are taken as important clues about future trends and what it
will take to prosper. Here is a paper that suggests a very simple

------- Start of forwarded message -------
From: Wayne Marr <M_Wayne_Marr@ssrn.com>
Sender: Economics Research Network <ERN3@publisher.ssrn.com>
Reply-To: ADMIN@ssrn.com
To: Multiple recipients of list ERN3 <ERN3@publisher.ssrn.com>
Message-Id: <9608291440.AA25020@hss.caltech.edu>
Date: Thu, 29 Aug 1996 10:03:24 -0500
Subject: DEVELOP-WPS: ERN Development Economics Abstracts, 08/29/96


W O R K I N G Paper Abstracts

"Asian Demography and Foreign Capital Dependence"

Federal Reserve Bank of New York
Harvard University and NBER

Paper ID: NBER Working Paper 5560
Date: May 1996

Contact: Jeffrey G. Williamson
E-Mail: MAILTO:jwilliam@kuznets.harvard.edu
Postal: Harvard University, Cambridge, MA 02138
Phone: (617) 868-3900
Fax: (617) 495-7730

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Ansley Coale and Edgar Hoover were right about Asia. Rising
fertility and declining infant mortality have had a profound
impact on Asian savings, investment and foreign capital
dependency since Coale and Hoover wrote in 1958. We argue
that much of the impressive rise in Asian savings rates
since the 1960s can be explained by the equally impressive
decline in youth dependency burdens; where Asia has kicked
the foreign capital dependence habit is where youth
dependency burdens have fallen most dramatically. Aging will
not diminish Japan's capacity to export capital in the next
century, but little of it will go to the rest of Asia since
the rest will become net capital exporters, at least if
demography is allowed to have its way. These conclusions
emerge from a model which rejects steady-state analysis in
favor of transition analysis and extends the conventional
focus of the dependency rate literature on savings to
investment and net capital flows.

JEL Classification: J11, J13

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