The Asian Miracle and Modern Growth Theory.

This article argues that the rapid growth in a number of Asian economies that occurred between 1960 and 1996 was accompanied by a major change in the structure of their economies including shifts in the size of firms and the sectors of specialization. These changes were a fundamental component of the growth process. While capital accumulation was an important source of growth, its productive assimilation was a critical component of the success of these economies. Estimates of the contribution of total factor productivity to aggregate growth that neglect these phenomena may lead to erroneous estimates.