HUMAN CAPITAL AND TECHNOLOGY: THE FUTURE OF EAST ASIA IN SUSTAINING ECONOMIC GROWTH

Beny Trias Oktora

Master of Arts in International Development
Economist and Analyst at Ministry of Finance

Convincing performance in turbulent time of economy made East Asia is proposed and granted as new engine for world economic growth. East Asia has been trying 4 decades ago to sustain their economic growth since 1960s. Different kind approaches has been implementing in boosting their economies. Most East Asia countries such as China, Indonesia, Malaysia, Philippines, South Korea, Singapore, Taiwan, and Thailand recognized in first step of developing economies were [are] deploying centralistic plan and political stability. There were similar strategies or “copy-cat” pattern between East Asian countries in their developing economies. Now most of East Asian countries hold political stability for their long run and sustainable growth.

Kuznets defines modern economic growth as a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands. I make important note from the definition proposed by Kuznets where technological progress play important role in modern economic growth.

Asia to be specific East Asia is now becoming world engine economic growth. Then to sustain growth itself, East Asia needs factors that could drive economic into sustainable mode. Here, I argued that there are two factors that could sustain East Asia economic growth which are human capital and technology as Sollow argument.

Logic to behind how human capital and technological progress to sustain long run growth are quite simple. Where traditional factors has limitation to boost more growth according to Solow analysis when there substantial human capital and technological progress involved for economic growth in the long run economic growth can sustain in the long run.

Reference

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Kuznets, Simon. 1973. “Modern Economic Growth: Findings and Reflections”. The American Economic Review, Vol. 63, No. 3 (Jun., 1973) 247-258.

Nelson, Richard and Phelps, Edmund S. 1966. “Investment in Human, Technologocal Diffussion, and Economic Growth”. The American Economic Review, Vol. 56, No. 1/2 (Mar., 1966) 69-75.

Becker, Gary S. 1962.”Investment in Human Capital: A Theoretical Analysis”. The Journal of Political Economy, Volume 70, Issue 5, Part 2: Investment in Human Beings (Oct., 1962), 9-49.