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Almost half a century ago, eight nations across
Eastern Asia experienced a phenomenon known as “The East Asian Miracle”, due to
their consistency and incredible growth in economy. Twenty years ago, East Asia
has remarkably rise the economic expansion since the Second World War. The six
rapid growing economies (China, Hong Kong, Korea, Japan, Singapore and Taiwan)
determined its Gross National Product (GNP) increase about 5 percent per
capital growth in the period 1965-1990, and the economic growth in three other
Asia countries in the region (Indonesia, Malaysia and Thailand) increases
approximately 3.5 percent per year. (Ahrens J. , 2002) This report will be
assessing the growth of these nations to see if it was mere luck or if there a
real explanation for their economic success.

 

These eight nations consist of, Japan, Singapore,
Hong Kong, Korea, Taiwan and the newly industrializing economies (NIEs) of
South East Asia, Indonesia, Malaysia and Thailand. It is also known that
Singapore, Hong Kong, Taiwan and Korea have been classified as “The Four Tigers”.
Together these eight nations are known as the eight high-performing economies
or HPAEs in short.

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These eight nations were chosen among the other
nations across the Eastern Asia as they have incredible growth in Gross
National Product per capita and they also share some economic characteristics
that differs them from most of the other developing economies. Since the 1960s,
the HPAEs have grown nearly twice as fast compare to the rest of East Asia,
three times as fast as Latin America and South Asia and nearly five time faster
than the Sub-Saharan Africa, outperforming even the industrials and oil-rich
economy Middle East-North Africa region. Many authors have also claimed that
there are common threads between the academic and development policy
communities in comparison to the relationship between public policies.

 

The government and economic policy is the key
factor to describe the East Asia’s dramatic increase of their economic behavior,
including trade policy, saving and investment policy, industry policy, fiscal
policy and foreign policy. As such, it is highly recognized that economic and government
policy is the leading cause of success in development of Taiwan’s economy. Kuo
(1990) initiated the China government to apply case-by-case strategy programs
in response to counter economic problems in Taiwan and with frequent use of the
principle “growth with stability”. The real Gross Domestic Product (GDP) of
Taiwan developed at an average rate of 8.6 percent per annum and the genuine
per capita GNP developed at 6.3% from 1952 to 1994. (Taiwan GDP
Annual Growth Rate, n.d.) Also, the annual inflation rate was 4.12
percent from 1960 to as of now and the employment rate has been negative. (Taiwan Inflation Rate, n.d.) It is certain that the
national saving and investment policy means higher growth in economies due to
higher domestic savings.

 

As the writers concludes the rapid growth in
each economy was due to market-friendly economic policies, Singapore and
Malaysia was involved in applying mandatory funds to protect the country’s
fiscal revenue. The duo of tax policies and expenditure are the key factor for
Singapore’s successful fiscal policy, which flatters the economic policy in
encouraging a balanced and non-inflationary economic growth. (Finance,
n.d.)
Since it is an essential need for developing countries to get the policy
fundamentals right, they utilize different merge of financial and government
policies to keep their economic growth as there were many familiar policies
that the East Asian countries step by with.

 

The High-Performing-Asian-Economies (HPAEs)
attain rapid growth by getting the basics right. It is well known for
macroeconomic management to be included in their country’s economic development
because private national investment and fast growing capital were the root of
the growth. Macroeconomic management involves low inflation, social stability,
high savings, private investments and a stable financial environment to attract
foreign investment. As macroeconomic management, is strangely efficient and
macroeconomic performance was likely stable so as such, it was the principle of
achieving the rapid growth. Since Malaysia is rich in natural resources,
although agriculture was declining in importance, it still experienced a large
increase in growth and productivity. Population growth rate then decrease faster
in the HPAEs in comparison to other developing countries. However, it does not
explain the whole scenario.

 

The educational system and a good macroeconomic
management is the key element of East Asia’s rapid growth as it was believed
that a strong relationship between a well-trained and better-educated labor
force has a head start in order to achieve an effective system of public
administration. As such, through education it gives them the capacity to create
modern day technology, which is one of the key factor to a sustainable
developing country. Hence, with the increasing rates of investment, surpassing
20 percent of GDP on average between 1960 and 1990 including the abnormally
high percentage of private investment, merging with excessive endowments of
human capital due to universal primary and secondary education, tells a large
part of the growth process. (Oxford University Press, 1993) Due to the large
increase in physical and human capital it shows that there is very little luck
that plays a part in the HPAE’s economic success.  

 

HPAE’s policies on education also contributed
to the income distributions, which helped initial factors create a virtual
circle whereby, the lower inequality is in income and education will lead to
and expansion in education which will cause a rise in inequality. With the HPAEs
miraculous growth the social status improved greatly and poverty was greatly
reduced, leaving only inequality as one of the significant problems remaining.
Although some authors have claimed that the HPAEs success is due to the
geographical location or their country’s culture rather than their own effort
in the economy or the policies implemented.

 

In a fast-growing independent world,
competition has surfaced. In order to sustain high economic growth rate industrialization
should take place involving structural changes as the changes required by the
less developed countries requires technologies. The East Asian economies made
use of the advanced technology and information transfer by attracting foreign
investments. Such as becoming a subcontractor of a cutting-edge organization to
be innovative and localizing their ideas. Such foreign organization requires
technology and innovation from joint ventures and foreign direct investment.

 

Since the East Asian rapid-growth economy were
led as the top by foreign investments, exports and enforcing different policies
there are undoubtedly differences in the conditions for development and growth.
The development model for the East Asia economic is suitable for the Philippines
to a reasonable extent because baby steps are needed to be taken place of in
order for the Philippines to fit in. The Philippines can take note of its neighbor
countries as a goal to be achieved as the Philippines had to keep in mind that
the East Asian economies started in a small degree and made use of the initial
conditions and information to their benefits. It was advised if the Philippines
wants to be a part of the East Asian Miracle, it should restructure some of
their policies and strengthens its firms which would enrich the economic
development.

 

Majority of the East Asian governments states
the sector-specific business policy to a certain extent. The recognized
instances included Japan as the strongest promotion policies of the 1950s and
the other following similar of these policies in Korea. As these policies covers
import protection scheme as well as subsidies for capital and other imported input,
the development of advanced industries is increasing. Despite Malaysia, Singapore,
Taiwan and even Hong Kong consists such programs, a small amount of evidence
has affect the rates of productivity change. Without a doubt, Korea, Japan and
Taiwan had developed gradually over the past thirty years as it will be
expected to be given comparative benefits and changing factors capabilities.
Altogether, it is not astounding that the industrial policy in Korea, Japan and
Taiwan make affirming results. As of such, governments take notice of their steps
to make certain of they were developing profits within other international
competitive organizations. Furthermore, the policies absorb a massive amount of
market information and used performance. It is obvious that other efforts that
promotes specific firms without better knowledge exchange have not succeeded.

 

In my opinion, I agree to the East Asia miracle
were just mere luck to a certain extent. As evidence, has shown significant
results of corruption on economic growth, capital formation, poverty and
inequality. The long-term sustainability of development has supposedly alleged the
cost of alteration on development from the experimental measurement. In short,
corruption might arise which is gainful to the economy and its development as
there is a disagreeable relationship between the corruption and the long-term
percentage of economic growth. The HPAEs was proven as the economic development
miracle. As these East Asia countries expands their economies and minimizing scarcity
by applying the effective policies, macroeconomic management is to enhance the level
and education.

 

Also because of living in different environments,
the reliability rate made an impact on people’s living, it also affects
economic grow percentage performance. For example, if population keeps increasing,
the income per capita will increase as well. In the lesser developing
countries, economies will be affected by the increase number of “working-age”
population. Since the boost of income per capita, people tends to spend more
which helps to aid the economic market. However, if the workable population minimizes,
economic growth will be detained as well.

 

Adding on, the World Bank pictures its own reflection
in East Asia’s success. It leads to the East Asian Miracle to macroeconomic
basics. Such as considerably high savings, investment rates, education and
inputs. In my point of view, these are referred as micro-institutions that
displays unwelcomed state affairs. According to several reports, East Asian Countries
have experienced unusual economic development since the end of World War II. Economic
growth must have decrease as other countries are doing poorly for their GDP. In
my stand, my thoughts for the reasons of increasing in economic growth was because
of foreign investments, combination policies, macroeconomic discipline which
helps the East Asia economic to grow. Lastly, my stand will be luck regarding
the East Asia Miracle. As economies challenges still floats, it is still considered
as a debate for the East Asia Miracle for its luck or an existing explanation
for its success.

 

In conclusion, many factors have been concluded
as the East Asia Miracle success. High saving, macroeconomic management, public
policies and foreign investment are concluded as one of the many factors. Each
and every Asian Tigers had high taxes on imports and low rate currencies.
Cluster of rapid growing economies with fast growing rates, industrial
development and quick rise in living standards also were part of the factor. In
contrast, there is a huge difference of world technology in progress, which
would cost Western nations to sacrifice their traditional advantage. However
all these factors are, my stand is luck was with them during that period and
hence forming the biggest economic rapid growth countries.  

 

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