The process through which a poor underdeveloped country gradually breaks loose from stagnation at a low per capita income level and develops the capability for continuous self-sustained advancement of the living standard of its people has been described by Professor W. W. Rostow as economic take-off. The recent experience of the four Asian newly industrialized countries – the Republic of China in Taiwan, South Korea, Hong Kong, and Singapore – provides a good illustration of this kind of transformation process.
In this paper we derive the basic condition for take-off from an adjusted neoclassical growth model: S/Y > (K/Y) · l, which means that the average propensity to save should be greater than the average capital/output ratio times the rate of population growth. If we apply this condition to the experience of these four countries, we learn that successful movement from take-off into self-sustained growth was achieved by these countries within a few years of each other – for Taiwan, in 1963; for Hong Kong, 1965; for Korea, around 1966-67, and in 1968 for Singapore.
From this paper we additionally learn that the rapid economic growth in Taiwan, Korea, Hong Kong, and Singapore during the past two or three decades was achieved not by employing economic tricks, but by implementing sensible policies based on sound neoclassical economic principles. It should provide useful lessons for other developing countries on how to achieve an economic take-off without tears or bloodshed.
