Factor Accumulation Without Diminishing Returns: The Case of East Asia: Technical Paper 2003-11

Working Paper
December 1, 2003

Peter Debaere and Ufuk Demiroglu

We investigate the similarity of the country endowments of the newly industrialized East Asian countries and their major developed trading partners since the 1960s. In particular, we analyze their factor endowments in years 1965, 1977 and 1990, using the lens condition of Deardorff (1994). Because of the similarity of endowments of the NICs and their developed-country trading partners, we cannot reject the hypothesis that these countries were able to produce the same set of goods since the 1960s. This empirical evidence supports the theoretical analyses of the East Asian growth miracle of Mankiw (1995) and Ventura (1997) in an environment in which factor accumulation did not imply decreasing returns to capital.