ABSTRACT
A distinguishing characteristic of the economic performance of newly industrialised countries (NICs) in East Asia since the late 1960s is the highly equitable distribution of gains from economic growth. The rapid and sustained growth in these economies has been accompanied by a rapid reduction in poverty and a more equal income distribution than in other countries at a comparable stage of development.2 Mainstream (neo-classical) economists interpret this achievement as a natural outcome of exportoriented industrialisation, which, given the right policies, can be replicated in other developing countries. The argument is that, as comparative advantage of developing countries in international production is in relatively labourintensive production, the expansion of manufactured exports translates into higher employment. As labour is the most widely distributed factor of production in the economy, employment expansion and the subsequent increase in real wages reduce poverty and income inequality (Fei et al. 1979, Chow and Papanek 1981, Balassa and Williamson 1987, Krueger 1995, Stiglitz 1996).
