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One of the fundamental questions in economics is, Why do some countries grow while others are stuck in poverty? Another is, Can a backward economy follow a growth path somewhat different from the traditional path traveled by the West and generate sustained economic growth successfully? This paper addresses these two questions by presenting a theoretical framework that helps in understanding the development of East Asian (EA) economies. The EA growth experience provides a fascinating case study of what makes a backward and stagnant economy suddenly start to grow rapidly and reach the status of an industrial economy within thirty years. Using eight propositions, the EA model explains economic transition from a backward economy to an industrial economy. Because human capital determines the nature and direction of product specialization and trade, and the speed of economic growth, the EA model puts more emphasis on the human capital that underlies investment in physical capital−ideas, entrepreneurship, innovation, and assimilation through learning by doing. The model is unique in that, (a) it validates the critical role of human capital, economic differentiation, and political stability in a time of "high development theory"(Krugman 1993), when the emphasis was skewed toward the accumulation of physical capitalas a necessary and sufficient condition for development; (b) it also validatesthe role of government at a time when interventionist policies were either failing elsewhere (in 1950s and 1060) or facing opposition (in 1970s and 1980s) (c) it takes cognizance of the importance of the psychological effect that an effective policy brings to human capital. Poverty is as much a psychological and mental problem as it is an economic problem. Given this psychological and mental effect combined with a myriad of more obvious policy effects, a country with a coherent set of policies can have a better chance of eradicating poverty and achieving political stability than a country without it. And (d) contrary to conventional wisdom, the EA model provides evidence pointing to precedence of economic development over democracy.