Economic and Political development in east asia and latin america: discerning differences

Francis Fukuyama

Omer L. and Nancy Hirst Professor of Public Policy

School of Public Policy

George Mason University

Mail Stop 3B1

3401 North Fairfax Drive

Arlington, Virginia 22201

(703) 993-2286

Fax: (703) 993-8215

ffukuyam@gmu.edu

Sanjay Marwah

Bradley Research Fellow

School of Public Policy

George Mason University

Mail Stop 3C6

4400 University Drive

Fairfax, Virginia 22030

(703) 993-2289

Fax: (703) 993-1574

smarwah@gmu.edu

TRAJECTORIES OF DEMOCRACY AND ECONOMIC DEVELOPMENT

It is of course very difficult to compare two regions as large, varied, and complex as East Asia and Latin America with respect to both economic and political variables. Each region contains within it as much variation as exists between the regions as a whole; Burma and Japan are as dissimilar as Haiti and Argentina. Nonetheless, regions do matter, and it is possible to make certain broad generalizations about the patterns of economic and political development within each[1].

Broadly speaking, East Asia has achieved higher and more sustained rates of economic growth throughout the postwar period, while Latin America has been, overall, more democratic. These general differences have narrowed somewhat during the 1990s, and particularly during the Asian economic crisis, when Asia became more democratic while stumbling economically relative to Latin America. The fact that more Asian countries were able to put economic growth before political democratization means that what Samuel Huntington labeled the “authoritarian transition” has been more successful in East Asia than in Latin America.

This paper compares the East Asian and Latin American regions in terms of economic and political development. The focus of the comparisons are centered on describing, explaining, and understanding the evolution of economic and political institutions and their performance in these regions. In order to make meaningful comparisons, we will have to start by imposing certain limitations on the regions in question. We will concentrate on the larger and more successful societies, and make some, perhaps, arbitrary exclusions. In the case of Latin America, we will exclude communist Cuba and other the small states of the Caribbean, while including the relatively poor countries of Central America. In the case of East Asia, we will exclude communist North Korea and authoritarian Burma, but will include communist China and Vietnam because they have opened their economies to market forces in recent years[2].

ECONOMIC AND POLITICAL MEASURES

Rankings for GNP per capita for 1998 for 12 East Asian and 17 Latin American countries reveal that East Asia is ahead of Latin America (see Table 1).

Table 1. GNP per capita, 1995 and 1998, US Dollars ($)

East Asia	1995	1998	Latin America	1995	1998
Japan	39640	32380	Argentina	8030	8970
Singapore	26730	30060	Uruguay	5170	6180
Hong Kong	22990	23670	Chile	4160	4810
Taiwan	NA	10855	Brazil	3640	4570
Korea	9700	7970	Mexico	3320	3970
Malaysia	3890	3600	Venezuela	3020	3500
Thailand	2740	2200	Panama	2750	3080
Philippines	1050	1050	Costa Rica	2610	2780
Indonesia	980	680	Peru	2310	2460
China	620	750	Colombia	1910	2600
Cambodia	270	280	Paraguay	1690	1760
Vietnam	240	330	El Salvador	1610	1850
			Ecuador	1390	1530
			Guatemala	1340	1640
			Bolivia	800	1000
			Honduras	600	730
			Nicaragua	380	420
Mean	9895	9485	Mean	2631	3050

Japan, Singapore, Hong Kong, and Taiwan are the clear leaders in East Asia and Argentina, Uruguay, Chile, and Brazil are the leaders in Latin America[3]. If income is measured in terms of parity purchasing power rather than nominal dollars, some of the rankings change dramatically at the top: Japan, whose nominal per capita income is distorted by rapid fluctuations in the yen-dollar exchange rate, falls below Singapore, while China rises quite substantially; in Latin America, Chile moves ahead of Argentina (see Table 2). Overall, in purchasing power terms, East Asia as a whole is still greater than Latin America, but the median GNP per capita (in PPP terms) levels are close for these regions. Obviously, the East Asian average is weighed down significantly by China; measured in purchasing power parity terms, the gap closes significantly.

Table 2. GNP per capita (Measured in PPP terms), US Dollars ($)

East Asia	1998	Latin America	1998
Japan	23180	Argentina	10200
Singapore	28620	Uruguay	9480
Hong Kong	22000	Chile	12890
Taiwan	NA	Brazil	6160
Korea	12270	Mexico	8190
Malaysia	6990	Venezuela	8190
Thailand	5840	Panama	6940
Philippines	6740	Costa Rica	6620
Indonesia	1700	Peru	3540
China	3220	Colombia	7500
Cambodia