ding of human capital was essential to the HPAEs growth. Spending was first concentrated on providing primary education for all. Universal secondly education was introduced later on. Birth rates fell, so when spending remained constant, more resources were available per child. Further education concentrated on skills (mainly technical) and imported educational services for most of this teaching. These improvements resulted in a technologically inclined human capital base from which they could engage the rapid growth of the economy.The HPAEs increased the levels of savings and investments by avoiding inflation and keeping interest rates on deposits stable and positive. On the whole HPAEs had higher real interest rates on deposits than other low and middle-income developing economies. Banks were given higher security and made more accessible to the public (especially rural areas). Postal banking was introduced to lower transaction costs and free up more resources for the government. These improvements increased levels of deposits in financial institutions (see fig. 2). The Government's role in the HPAEs labour markets contrasted greatly with the situation in other developing countries. Unlike other countries, HPAE leaders were less inclined to give legislation for a minimum wage which would set the wage artificially high. Instead, they concentrated on job generation and creating demand for employment. Employment levels rose followed by rises in wages (due to markets and productivity). Due to the flexibility of wages, HPAEs were able to adjust to macroeconomic shocks more easily than other developing countries, meaning rapid growth could be maintained and real wage growth was possible. Pacific Asian wages were kept close to the supply price of labour by the high productivity and income growth in agriculture (see fig. 3). This brought the gap between urban and rural incomes to less than other developing countries. The HPAEs have been help...
