Faculty Spotlight

Rethinking East Asia’s Success Story: A Q&A with SIPA professors Arvid Lukauskas and Yumiko Shimabukuro

By Miranda Wang MPA ’25
Posted Jan 31 2025
Rethinking East Asia’s Success Story: A Q&A with SIPA professors Arvid Lukauskas and Yumiko Shimabukuro

In their new book, Misery beneath the Miracle in East Asia (Cornell University Press), Arvid Lukauskas and Yumiko Shimabukuro examine how prioritizing rapid economic growth while neglecting social protection has created severe welfare gaps in even the wealthiest East Asian societies. Their findings contribute to ongoing debates about sustainable development and the true costs of pursuing growth above all else.

Lukauskas is the executive director of the Picker Center for Executive Education and the MPA in Economic Policy Management (MPA-EPM) program at SIPA. He also directs the International Economic Policy and Global Policy Studies concentrations for the Executive MPA program. Shimabukuro is the founding director of the Urban and Social Policy Concentration for the Executive MPA program and Lecturer in the Discipline of Social Welfare Policy at SIPA.

Their research reveals the hidden social costs behind East Asia’s celebrated economic success. Using data analysis and big-picture analysis, they document widespread challenges from elderly poverty and child abuse to inadequate housing and stagnant wages - problems that have been largely overlooked in discussions of the region’s development.

In this SIPA News Q&A, Lukauskas and Shimabukuro discuss their research findings and propose new approaches for analyzing social welfare systems. 

Throughout your research, what surprised you the most about the gap between East Asia’s narrative of an economic miracle and the social welfare realities you uncovered? 

Yumiko Shimabukuro: Scholars who have studied the East Asian miracle often mention the notion of “shared growth” as one of its key characteristics. This concept claims that policymakers tried to design policies so that all citizens would benefit from rapid economic development, not just elites. The primary channel for sharing growth was to lift wages as labor productivity rose, increasing standards of living and providing good education and health services and,in some cases, housing. The initial years of economic development were indeed marked by rising wages and less inequality than most emerging markets, but we found that starting roughly at the turn of the century, disparities in who benefited from growth began to emerge. Wages stagnated even as growth continued, and the government did little to step in and provide a safety net for those who were being left behind.

We are also surprised at the reluctance of some governments to acknowledge the existence of poverty – Singapore and Taiwan, for instance, do not even have an official poverty line – or to somewhat hide it, as in Japan.

Your book argues that the productivist welfare strategy was a major force behind these welfare crises. Could East Asian economies have achieved their rapid growth while maintaining a more robust social safety net? 

Arvid Lukauskas: That’s a counterfactual question, and difficult to answer. Our impression is that productivism promoted development in the early years of the miracle by allowing government funds to be channeled toward growth-oriented activities but that at one point in time – which certainly varies by country – starting to build a safety net was warranted because there were ample resources and the first signs of serious social problems emerged. Several scholars have contended that providing social insurance, employment support and targeted assistance may also foster growth by helping to build skills, sustain the purchasing power of the working class, create more flexibility in labor markets, and create a more stable environment for investment.

Your book looks at many aspects of welfare crises, from child abuse and elderly poverty to low wages and affordable housing. Why did you choose such a broad approach, addressing multiple dimensions of welfare crises across the region instead of focusing on just a few specific areas for more detailed comparative analysis?

Lukauskas: We think that a lot of work in social policy is siloed – both with respect to disciplinary approach and analytical focus – and overlooks critical interactions among policy areas. Valuable insights can be obtained by examining multiple social welfare issue areas simultaneously in an integrated fashion. In other words, one has to treat the social welfare policy space as a complex system and include what scholars call system effects in the evaluation of policy outcomes.

Viewing each social policy as part of a broader welfare system clarifies how a country’s overarching strategy influences its design and implementation. It also enables us to identify interactive effects across multiple policy arenas and explore their consequences. In productivist welfare states, the interconnectivity of seemingly disparate policy spaces is extensive and has far-reaching, sometimes unintended, consequences. For example, the heavy emphasis on improving human capital through privately funded education – social investment – has led many seniors in South Korea to dedicate most of their life savings to cover the high educational expenditures of their children. As a result, many elderly people enter retirement with no nest egg and, due to inadequate pensions, fall into poverty.

For this reason, we propose a new approach to studying social policy, called "dynamic integrated social welfare analysis." It proposes examining multiple social welfare issue areas simultaneously from the perspective of different disciplines, considering dynamic elements such as the welfare system’s ability to adjust over time, and using a dual micro and macro lens to capture the views of ordinary citizens as well as government officials.

You wrote about issues faced by disadvantaged groups in East Asia – like the old age crisis in South Korea and Japan’s “other” children (those who are abused, neglected, and live in despair). Why do some high-income democracies provide such limited support for their vulnerable populations?

Shimabukuro: Yes – democracies like South Korea and Japan, in theory, should have a more robust safety net for the poor.Why hasn’t this happened? We’re almost done writing the sequel to this book, tentatively titled, Building an Inegalitarian Welfare State, which gets to the heart of your question. We found that the answer to this lies in the origins of how these countries pursued economic growth and democratization. A dualistic economy with privileged workers and firms and elite-driven democracy – not originating from the working class movement like in Europe – create conditions inimical to the development of a robust safety net for the poor. Both countries did build an inegalitarian welfare state that caters mostly to the middle and upper classes but is hollow at the bottom.

Could you elaborate on how you developed your interdisciplinary framework for analyzing these welfare issues? What made you decide to combine statistical analysis with personal narratives?

Lukauskas: We are strong believers in using data to identify the characteristics of social welfare systems and trends in outcomes. This is a staple of most social policy analysis. The key innovation here is including narratives that capture the view from the ground, connecting policy with people. Cognitive scientists have shown that our brains are wired to learn through people-oriented stories because they lead to higher levels of engagement and remembering.

We also think that many social policy analyses often focus too much on policymakers and interest groups and neglect the circumstances facing citizens. Several recent works, notably Matthew Desmond’s Poverty, by America, have shown the analytical value of seeing public policy issues through the eyes of those whose lives are directly affected. 

Given current global economic pressures and demographic challenges such as aging populations, do you see any signs that East Asian countries are shifting away from the productivist welfare model? What changes have you observed since completing your research? 

Lukauskas: Yes and no. Demographic trends like aging have pushed most East Asian countries to spend more on programs for seniors. In Japan this is a function of more people aging into an entitlement that has been in place for a while. In others, like China, new programs are being rolled out to deal with an increasingly older population. But we see much less change with respect to policies that target the poor and families that are headed by low-skill workers. In these areas, governments in the region have turned to policies that seem to address problems but do very little to address their causes or attend to the worst situations. A common tactic is to implement temporary measures, like a tax rebate or one-time benefit, to address an urgent situation, but not change the baseline policies. We have coined the term “policy façade” to capture this approach of appearing to do something to stem criticism but not tackling the fundamentals.

Many countries today, including the United States, face similar tensions between prioritizing economic growth and social welfare. What lessons from East Asia’s experience would you highlight for policymakers grappling with this balance? 

Shimabukuro: Many other countries do face similar tensions, but leaders believe social programs are expensive and drain resources from other priorities and are swayed by arguments that they create dependency. In their view, social spending not only wastes resources but impedes recipients from contributing to the economy. This mindset is especially common in countries where there is a general belief that poor people are poor because of their own failings. 

One of our findings is that a focus on economic development at the expense of improving social welfare among all members of society may end up undermining growth in the long run. In East Asia, high levels of elderly poverty have diminished consumption among seniors, who globally, account for the highest percentage of consumer spending. Not addressing child maltreatment means increasing the risk that children will grow into adults with low productivity. Not providing employment training means individuals do not reskill to have the ability to move into more productive employment. Stated simply, we argue that social spending not only saves money in the long run but also can promote growth.