The Asian miracle: Was it a capital-intensive structural change?

The Asian miracle has been the focus of much research seeking to understand this extraordinary phenomenon. Ventura (Quarterly Journal of Economics 112: 57-84.) offers an explanation for the success of the Asian Tigers in sustaining exceptional growth rates over an extended period based primarily on capital accumulation. He points to their ability as export-oriented economies to exploit the accumulated capital to reallocate from labor-intensive to capital-intensive sectors instead of raising the capital intensity within each sector. We test this argument using industry-level data on manufacturing in 33 countries over three decades. The evidence on the argument is mixed. We identify two stages in the evolution of the structural change in the Tigers. It was labor-intensive initially and became capital-intensive only in the 1980s. Compared to other countries, the Tigers are exceptional in the extent of their shift from a labor-intensive to a capital-intensive structural change during the sample period. However, structural change in the 1980s accounted for only a negligible part of capital accumulation in manufacturing.Asian miracle, structural changes, capital accumulation, sustained growth, capital intensity,