Economics of Asia
Myth: some accepted beliefs or stories that may not necessitate scientific explanation. What is modern economic growth? It involves a sustained increase in real per capita product, accompanied by an increase in population and significant structural changes (Key d evolution here. Do remember it. ) Sustainable growth o ever some period: so what co institute dir vine factors o f sustain inability ? We will discuss these dir vine of recess by stud Yin two articles: a: The M yet of Asia M oracle; b. The East Asian M oracle – Economy Grog with & P o lice b.
In fellatio n protected, thus growth in purchasing power per person . Sustain able grog with needs to be viewed in the light of this persistent t an d co initial growth of real per capital in come, where briefly it is measured by : Real (inflation d accounted) GAP / Number of P people. P o population n grog with as well: average age d creases, thus supply o f future young g v vibrant woo rook race. W ditto UT population growth, labor force, which is on e of the four production n factors, will decline in the 10 Eng
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Structural change: change o f allocation of resources and intuitions reform Take n Tote that “Growth” and “Development” are not the same. G row the : relate in a n arrow man near fro m measure of GAP and its derived indicators only Develop mom en t: a broader and holistic perspective that apart GAP , also includes measures of HID, Healthy Life Expectancy, Green GNP . Thus Dave loomed t is what an economy shoo old aim for, not Just grog with.
Structural change Structural change can have a narrow or wide meaning Narrow meaning- refers to the allocation of resources (capital and labor) between primary, secondary and tertiary industries A key factor shaping a country’s economic performance is its ability and willingness to transfer resources from areas of declining returns o areas of increasing returns Thus, with same level of resources or inputs, output volume for an economy increases. This is growth. When Output / Input (or output per unit of input) increases, we say that growth has taken place.
Different sectors of an economy experience different rates of growth. Those sectors with low (or negative) growth, their resources, such as labor and capital, will be re-channeled to other high growth sectors. 2 Wide meaning- refers to the changing institutional features of the economy or to the forms of economic organization “Institutions are rules of human interaction that constrain possibly opportunistic and erratic individual behavior, thereby making human behavior more predictable and thus facilitating the division of labor and wealth creation. (W. Gasper and M. Street) Both types of structural change are crucial to understanding the long run growth performance of economies system, law and order, economic and financial system, political system, and custom and culture. Some forms of institutions are designed while other evolved. For designed, policy and other deliberate means can bring about structural change effectively; while for evolved institutions, structural change usually take effect at a less immediate manner and less obvious.
Definition of an NINE Savings ratio at least 15 per cent Real GAP of at least IIS$ 1000 per capita Share of manufacturing in GAP and employment of at least 20 per cent A Human Development Index (HID) of at least 0. 75. Higher saving gas lead to higher in vestment in physical capital, that in turn drive pro ductility of an icon o my an d ultimately bring about grog with. Share of manufacturing in GAP and employment indicates the extent t of in disinclination an icon o my.
In grog with CEO anomy, society evolves from agricultural/ fishery to industrial society Human Development In des denotes the upgrading g an d improvement of labor skill test to enhance work ere prod activity. Tech cyclical, it consists 3 components: capital in come, life expectancy and education attainment level. Thus, the above measures emphasize ho w an economy my grows to an mind Austria economy thru improve Venn t in the measures ABA eve. An y economy is yet to achieve such minimum performance, that economy is still classified as Less Developed Economy my. The take-off of the NINES Roosts and the concept of take -off Crucial factors in the take -off: Savings ratio Capital output ratio Population growth rate ratio)*(population growth) Dating the take -offs An economy sails thru three phase: Less Developed, Industrialized, and Developed (Advanced) Economies. The point of take off from Less Developed Status to NINE status is when the four conditions with their respective minimum measures stated in previous slide are actualities.
A brief review of East Asian growth, 1870 to 2006 Measurement problems: statistical inaccuracy, definition variances, different approaches and deliberate manipulation. Japan not the only country to experience growth prior to the Second World War setbacks 1929-50 1950-73 Post-war growth boom 1973-97 accelerated growth in East Asia 1997 Asian Economic Crisis 998- Recovery process (W e will study these in great d details in two supplement articles and related discussion no test: : a: The M yet of Asia M oracle; b.
The East Asian M oracle – CEO anomy Growth & P logic ) 4 5 Growth rates of GAP (per cent) So urge: Asia n Dave ell pm e antitank 6 Key factors in the growth of the NINES Favorable international environment (Globalization, high commodities an d co immunization n, transport rotation, political stability as international community is tired with wars) Favorable internal environment (Education n, co SST advantages, population growth, labor bun dance, pop Leticia stability)
Export orientated industrialization (III) versus import substituting industrialization (IS’) Role of the state (Go Vermont policy can be positive or negative intervention , biz, for or against growth. To be positive e, there exist pop lilies to support an d facilitate grog with, tax allow wince, subsidy sees, incentives, employment policy, soups artic e measures and less legislation on commercial sectors. NINE: Newly Industrialized Economies – A term used by political scientists and economists to describe countries whose level of economic development ranks it somewhere between the developing and first-world classifications. These countries eave moved away from an agriculture-based economy and into a more industrialized, urban economy. Washington consensus’ Shared ideas of US Treasury, MIFF and World Bank Appropriate economic polices should be: free markets: least intern mention on market forces (d emend and supply), let mark et decides price, quantity an d efficiency level of allocation of resources thru equilibrium. Ere trade: no protection ism thru artificial barriers esp. in the forms of tax, d duty, tariff and subsidy sees; once urge free flow o f good and services at international level to enhance comparative divan tag o f nations, subsequent TTYL woo RL wide e P P C hafts o outwards free capital mobility: less protection ism, go Vermont intervention and other deliberate barriers as to en hence free flow Fids and financial investments limited government: least intervention policy, supportive of free trade an d global fool w of capitals. Emergence of ‘Post Washington consensus? From an economic point of view, globalization represents a process of increasing international division of labor and growing integration of national economies through trade in goods and services, crossbred corporate investment, and capital flows. Horst Koehler Managing Director, International Monetary Fund Cited by D. K. Ads from a speech given on the occasion of the Award Ceremony of the Conrad Deadener Foundation, Berlin, November 1 5, 2002. For a globalizes economy, there must be at least three free flow of activities across countries, biz. Flow of goods and services, flow of corporate investments, and flow of capital (fund).
Waves of globalization Two main waves of globalization: 19th century to 1914 (Mainly on flow of goods & services: commodities/raw materials from less developed countries (Asia & Africa) and finished consumable products from developed countries (US & Europe) asses to present More balanced of the three types of flows: namely goods/services, investments and fund(capital), after WI) Reversal of globalization between the two World Wars (protectionism and depression) 8 MEG (Modern Economic Growth) and the first wave of globalization led to the rise of the ‘North’ and the decline of the ‘South’ The second wave of globalization has seen the spread of MEG to the ‘South’s current trends China’s GAP could pass that of the USA by 2010 (Not really happen yet!!! New prediction is said to happen in 201 5, but a more realistic expectation should be some time in 2020 or later. Will it really take place then? ) The per capita income of China could reach the 2000 level of the USA by 2025 (Per capita income measures average income of a person, Globalization has a powerful economic momentum but it can be reversed by major crises such as war and depression Anti-globalization protests raise the possibility of a check to its progress by democratic politics? Ann-Globalization: Movement whose participants are opposed to capitalism and globalization .
The philosophy of the movement is based on the belief that individuals and organizations can achieve social, personal and economic goals without the negative consequences associated with capitalism. The anti-globalization movement places more emphasis on economic efficiency and human decency versus corporate competition and profits at any cost. Thus opt is (Government, Politics & Diplomacy) a political belief opposed to the emergence of a single world market dominated by multinational companies (corporate capitalism) – namely corporate investment as stated in one of the three key flows of global activities. 9 Characteristics of Democratic Politics: -Government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system.