East Asia expert Joe Studwell has little patience for doctrine.
"There are no one-stop solutions to economic progress," he writes in "How Asia Works," the latest of his three books on the region.
Contrarian statements like these are Studwell’s calling card. With more than 20 years of experience covering East Asia for publications like the Economist Intelligence Unit and Wall Street Journal Asia, Studwell has built a reputation of challenging orthodoxy. In 2007, for example, the Financial Times suggested that, "Joe Studwell should be named chief myth-buster for Asian business."
Studwell’s major accomplishments -- including founding the China Economic Quarterly, a leading source of news and analysis on the region, and his three books -- fortify this characterization. For the last several decades, Studwell’s studies of the ideas and individuals that steer the world’s most-populated continent have excited the imagination of business leaders around the world.
The China Economic Quarterly
Studwell never expected to become an expert on East Asia, he explained over lunch in New York in June. Instead, it was serendipity that led him to this field.
When his wife, Tiffany, set off for East Asia to practice journalism after studying Chinese at Cambridge, Studwell followed. "I only went to China because my wife read Chinese," he said. "She made me go."
Their timing, however, was fortuitous. As a freelance journalist, Studwell witnessed firsthand the uptick in foreign investment in China during the 1990s. The China Economic Quarterly, founded in 1997, offered economists and senior executives an insider’s perspective on this transformation. A leading authority on the nation, the China Economic Quarterly is regularly referenced in the New York Times, the Economist and the Sydney Morning Herald.
The China Dream
"Foreigners dream of making lots of money in China," Studwell said. This, of course, is nothing new. Westerners have been dreaming of China's large, untapped market for decades.
"It was the last great prize," Studwell said.
In the 1990s, this fascination began to manifest itself in massive amounts of foreign investment. According to a 2009 study by Lai Pingyao, professor of economics at the University of International Business and Economics in Beijing, foreign investment in China rose from 4.3 billion in 1991 to 40.7 billion in 2000.
The China Dream, Studwell’s first book, came out of this context. Rather than capitulating to the fervor, as many of his contemporaries did, Studwell instead cautioned to potential investors, reminding readers that issues like limited intellectual property rights, general inefficiency and communism itself remain barriers to progress.
Asian Godfathers, Studwell’s second book, continues to pull back the curtain on the continent. Described as "an intriguing and myth-shattering study" by Bloomberg Businessweek, the book profiles a concentrated group of billionaire businessmen who control large swaths of Southeast Asia.
"Fundamentally, the myth of the second book was that these tycoons, these entrepreneurs, were really generating a lot of value; that they are heroes because they made all this money," Studwell said.
Rather than lionizing his subjects as entrepreneurs or innovators, Studwell undermines many of the myths, suggesting that the "Godfathers" of Asian business contribute little to economic growth.
"The godfathers have been much more the beneficiaries than the instigators of growth," Studwell writes.
How Asia Works
Studwell’s latest book, How Asia Works, is also his most ambitious. Written concurrent to his doctoral study at Cambridge University in the United Kingdom, it scours the history of major East Asian economies, hoping to decipher common principles that aid or detract from economic growth.
How Asia Works isn’t a shy project. Studwell’s conclusions, which often emphasize the role of individual actors over the invisible hand of the free market, are far from traditional. They certainly don’t fall in step with the canon regularly prescribed by the IMF or World Bank.
If any one character is the star of How Asia Works, it is Park Chung Hee of South Korea: the military strongman who ushered in a period of economic growth so storied it’s known in policy circles as "the miracle on the Han."
Before Park seized control in 1961, the South Korean economy was far from the economic stalwart it is today. GDP, at the time, fell below that of African nations like Mozambique and Senegal. Until his assassination in 1979, Park steered South Korea through a period of strong growth through a combination of technology transfers, talent acquisition, and a non-negotiable focus on exports. Between 1960 and 1989, the country averaged more than 6 percent growth.
Integral to Park’s philosophy was a focus on competition. Rather than selecting a single producer for a particular industry, as Malaysian Prime Minister Mahathir Mohamad did in the 1980s, South Korea encouraged many entrants. This philosophy gave South Korea the ability to cull failing companies. Surviving as a business in South Korea meant that you had to both beat the local competition and then beat the global competition as well.
"In industrialization, the obvious mistake is just not understanding that when you run industrial policy, you're not planning the future in a doctrine kind of way," Studwell said. "You're nudging the market. You're managing competition. You're framing competition to produce outcomes you want."
The companies that survived this strict scrutiny grew to be economic behemoths. The Hyundai Motor Corp., Samsung and LG, for example, designed and delivered advanced goods like cellular telephones, monitors and automobiles to the world market.
In economic terms, Park’s tenure was a striking success. Analyzed against ideals of property rights, rule of law and political freedom, however, it is not without problems.
The World Stage
"Ships at a distance," wrote novelist Zora Neale Hurston, "have every man’s wish on board." While this adage may offer insight into the relationship between multinational companies and Asia, to Studwell, the region has never been a ship at a distance. For the majority of his career, it’s been his backyard.
That proximity afforded Studwell a great deal of clarity, allowing him to separate the reality of Asian economics from the ether. This approach is much less simple, but it is also less forced. Declining to make broad pronouncements or dovetail with doctrine, Studwell demonstrates that the way Asia works isn't quite as simple as we ever imagined.