Geographical proximity has facilitated capital flows, as north east Asian manufacturers of labor intensive exports moved their factories south to take advantage of the skilled labor which helped a lot Indonesia, Malaysia and Thailand. From policy view point these linkages have been encouraged by the generally liberal treatment of foreign investment. But even where foreign investment policies have been restrictive, informal credit and information networks have helped investors to move capital relatively freely.
             1- Policy imitation specifically of Japan's industrial strategy. This was an explicit objective in Korea and Malaysia. (regional linkages facilitated the adoption of imitative strategies in both public and private sector activity.
             2- Korea borrowed Japanese techniques for building large trading companies and directing the structure of industry.
             Through their earlier trade with Japan, western importers had become familiar with Asian business. As a consequence gained respect for East Asian quality. Later US imposed quantitative restrictions on Japanese products were producers from Korea, Taiwan and China took advantage to establish lucrative positions.
             Of course regional characteristics alone cannot count for East Asia's success. If geography, history and culture were an adequate explanation other economies would have little to learn from them.
             In which the market takes the centre stage in economic life and government play a minor role.
             Wolf (1988, p27) " a striking fact that the few relatively successful developing economies-Hong Kong, Malaysia, Singapore, the republic of Korea, Taiwan and China have greatly benefited from decisions and policies that limit government's role in economic decision making and instead allow markets- notwithstanding their imperfections and shortcomings- to exercise a decisive role in determining resource allocation"
             Chen (1979, pp 183-84) argued that in Japan, H...