The East Asian Development Model: Savings and Investment, Competition, Rapid Wage Increases

China, along with other Northeast Asian economies (Japan, South Korea, Taiwan) adopted policies to promote high levels of savings and investment and competition. These policies led to such fast increases in real wages that the lifestyles of average people were fundamentally transformed. These countries had periods of high real wage growth and high GDP growth. A decline in the real wage growth rate is a precursor of a much slower period of overall growth. Many other countries had short-term periods of high GDP growth, but average people did not benefit because wages did not increase.