Making a Miracle
Author(s): Robert E. Lucas, Jr.
Source: Econometrica, Vol. 61, No. 2 (Mar., 1993), pp. 251-272 Published by: The Econometric Society
Stable URL: http://www.jstor.org/stable/2951551
Accessed: 21/02/2010 22:13
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=econosoc. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact email@example.com.
The Econometric Society is collaborating with JSTOR to digitize, preserve and extend access to Econometrica.
Econometrica, Vol. 61, No. 2 (March, 1993), 251-272
MAKING A MIRACLE1
E. LUCAS, JR.
This lecture surveys recent models of growth and trade in search of descriptions of technologies that are consistent with episodes of very rapid income growth. Emphasis is placed on the on-the-job accumulation of human capital: learning by doing. Possible connections between learning rates and international trade are discussed. KEYWORDS:
Growth, productivity, on-the-job training, learning.
IN 1960, THE PHILIPPINES AND SOUTH KOREA had about the same standard of living, as measured by their per capita GDPs of about $640 U.S. 1975. The two countries were similar in many other respects. There were 28 million people in the Philippines and 25 million in Korea, with slightly over half of both populations of working age. Twenty seven percent of Filippino's lived in Manila, 28 percent of South Koreans in Seoul. In both countries, all boys of primary school age were in school, and almost all girls, but only about a quarter of secondary school age children were in school. Only 5 percent of Koreans in their early twenties were in college, as compared to 13 percent in the Philippines. Twenty six percent of Philippine GDP was generated in agriculture, and 28 percent in industry. In Korea, the comparable numbers were 37 and 20 percent. Ninety six percent of Philippine merchandise exports consisted of primary commodities and 4 percent of manufactured goods. In Korea, primary commodities made up 86 percent of exports, and manufactured goods 14 (of which 8 were textiles). From 1960 to 1988, GDP per capita in the Philippines grew at about 1.8 percent per year, about the average for per capita incomes in the world as a whole. In Korea, over the same period, per capita income grew at 6.2 percent per year, a rate consistent with the doubling of living standards every 11 years. Korean incomes are now similar to Mexican, Portuguese, or Yugoslavian, about three times incomes in the Philippines, and about one third of incomes in the United States.2
I do not think it is in any way an exaggeration to refer to this continuing transformation of Korean society as a miracle, or to apply this term to the very similar transformations that are occurring in Taiwan, Hong Kong, and Singapore. Never before have the lives of so many people (63 million in these four areas in 1980) undergone so rapid an improvement over so long a period, nor (with the tragic exception of Hong Kong) is...
References: KENNETH J. (1961): "The Economic Implications of Learning by Doing," Review of
Economic Studies, 29, 155-173.
BACKUS, DAVID K., PATRICK J. KEHOE, AND TIMOTHY J. KEHOE (1991): "In Search of Scale Effects
in Trade and Growth," Federal Reserve Bank of Minneapolis Working Paper.
and Welfare," American EcoBAUMOL, WILLIAM J. (1986): "Productivity Growth, Convergence,
nomic Review, 76, 1072-1085.
Welfare: Reply," American Economic Review, 78, 1155-1159.
DAN (1991): "Equalizing Exchange: A Study of the Effects of Trade Liberalization,"
Bureau of Economic
SCHEINKMAN (1988): "Learning-by-Doing,
Growth: A Note," in Santa Fe Institute Studies in the Sciences
BOSTON CONSULTING GROUP (1968): Perspectiues on Experience. Boston: Boston
DE LONG, J. BRADFORD (1988): "Productivity
American Economic Reuiew, 78, 1138-1154.
Please join StudyMode to read the full document