East Asian model of capitalism

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The East Asian model (sometimes known as state-sponsored capitalism [1]) is an economic system where the government invests in certain sectors of the economy in order to stimulate the growth of new (or specific) industries in the private sector. It generally refers to the model of development pursued in East Asian economies like Singapore, Japan, Taiwan and South Korea.[2] In recent decades it has also been used to classify the contemporary economic system in mainland China.[3]

Key aspects of the East Asian model include state control of finance, direct support for state-owned enterprises in "strategic sectors" of the economy or the creation of privately owned "national champions", high dependence on the export market for growth, and a high rate of savings. It is similar to dirigisme.

This economic system differs from a centrally planned economy, where the state would mobilize its own resources to create the needed industries which would themselves end up being state-owned and operated. East Asian model of capitalism refers to the high rate of savings and investments, high educational standards, assiduity and export-oriented policy. According to the macroeconomic analysis of the EAEM, the role of the government in the economic growth is limited.[4]

See also[edit]


  1. ^ Chun, Lin (5 December 2013). China and Global Capitalism. Palgrave Macmillan. p. 78. ISBN 978-1137301253. . 
  2. ^ An East Asian Model of Economic Development: Japan, Taiwan and South Korea, by Paul W. Kuznets. April 1988. Economic Development and Cultural Change, Vol. 36, No. 3, April 1988.
  3. ^ Does China follow the 'East Asian Development Model'?, by Seung-Wook Baek. 2005. Journal of Contemporary Asia, Vol. 35, No. 4, 2005.
  4. ^ Prokurat, Sergiusz (2010), European Social Model and East Asian Economic Model – different approach to productivity and competition in economy (PDF), Wrocław: Asia – Europe. Partnership or Rivalry?”, pp. 35–47, retrieved 4 August 2016