Economic Development of East Asia

The East Asia Magic: Lessons for the growing countries

The East Asia region has been pulling global attention as fruits of its growth and development over the past thirty years continually awe many. The best successful developing countries over the last half century obviously have come form this region. It has a exceptional record of high and sustained economic growth as 23 economies in it grew faster that those in other parts of the world. However, when the Asian Financial Crisis strike this region in 1997 some structural and institutional weaknesses have cast uncertainty on the "East Asian Miracle". Hasty restoration and resiliency which the region revealed in overcoming and prevailing over the majority of the negative downsides helped bring by the turmoil was enough to preserve the opinion in the wonder. Although East Asian economies applied differing strategies in their economical development, a salient and strong factor common to all or any is the existence and the role of the government in their development. East Parts of asia have assumed a job of an 'developmental' state in which the government performed an important hands-on role in the process of industrialization and monetary development.

Thus, understanding the economical development and experience of East Asia may offer helpful lessons that other growing countries stuck in stagnation may want to consider.

According to Thorbecke and Wan (2004) there are two critical factors and related phases of development that happened in East Asia. First, countries need to attain first a take-off point which stresses on promotion of education, to build up on individual capital and the campaign of the agricultural sector to be able to eventually finance opportunities on physical infrastructure. The second phase, development demands industrialization that brings structural and technological upgrading.

First lesson implied in the first phase of development is the fact economic development can't be hurried. There are specific processes that need to be readied before countries reach the take-off point. At the beginning of the development process a country is mostly agrarian and the current economic climate is relatively closed. East Asian governments realized that the major device for acquiring the resources had a need to "escape the poverty trap as well as for industrialization was through and inter-sectoral transfer out of agriculture". The major role of the agricultural sector was to generate the required capital to fund the outset of the industrialization process. The primary lessons to be drawn from the knowledge was summarized by Thorbecke and Morrison cited in the Revisiting East and (South East) Asia's development model (2004)

"A lesson learned from those countries that have been most successful in achieving both expansion and collateral throughout their development history (e. g. Taiwan and South Korea) is that a continuing gross movement of resources should be provided to agriculture in the form of such elements as irrigation, inputs, research and credit, combined with appropriate establishments and price guidelines to increase this sector's productivity and potential capacity of contributing an even bigger flow to all of those other economy"

In addition, the East Asian countries invested intensely on common education with a long-term goal at heart. They spread of education in the rural areas provided farmers and their children the skills they have to operate in non-farming activities after the take-off. They sponsored education of specialized skills in the college or university level. This plan resulted in an extremely competitive labor force in a position to man their market sectors.

In the next period, East Asian economies known that the international market is highly interdependent and a development process of interdependence is a lot more favorable than individual progress. Discussion among countries lets in trade, investment and technology transfer. East Asian economies needed good thing about the positive spill over results the interactions helped bring with it. It should be known however that Thorbecke and Wan perceived of openness as a necessary yet insufficient condition for successful development. Getting up though is impossible without openness.

In an increasingly interdependent world, competition is a lot potent. To make sure high economic development rate major structural changes like industrialization should undertaken. Structural changes needed by less developed countries require acquisition of technology. That is a step familiar to East Asian economies. They needed benefit of the technology and knowledge transfer by causing their countries attractive to foreign direct investments; they truly became subcontractors of high-tech firms and studied how to localize the ideas and finally create their own. Just to illustrate is Taiwan which invested in industrial parks and attracted many foreign organizations. They purchased technology and idea copy from joint endeavors and foreign immediate investments.

Policies also performed a great role in the development of East Asian economies. Although there are specific differences in the initial conditions for development and expansion, financial development and development pattern that East Asian economies that are normal to them is linked to expansion factors and the insurance plan system they adopted.

East Asian economies have growth led by investments, exports and enforcing of acoustics policies to aid their industries. Moreover, the governments in East Asian countries are very much engaged and unhesitatingly intervene in the market-oriented economies. The role of the government is to keep up macroeconomic stability, triumph over possible coordination failing and become an intermediary in promoting expansion initiations. The financial system was predicated on far reaching cooperative romance between government and the neighborhood and transnational businesses based in their country.

The industrial plans enforced seek to encourage the introduction of industries through various federal procedures such as duty incentives, Research and Development subsidies, credit allocation and protection against foreign imports. Furthermore, the export-oriented market sectors didn't develop without these particular measures of the federal government to speed up investment in such companies; provision of infrastructure, common education. The role of the government was mainly to set up institutional policy foundations required for development and overcoming coordination failures that can stop a the current economic climate from flourishing.

The Asian FINANCIAL MELTDOWN unearthed and subjected certain weaknesses of the East Asian monetary model. Weak and inefficient financial systems, lack of corporate and business transparency and accountability, and popular corruption became apparent after the turmoil broke out. This event explicitly calls for continuous improvement on institutions in the united states which acts as the pillar of financial development. This is a lesson not only for developing countries but for the East Asian economies as well.

The East Asia financial development model does apply to the Philippines to a certain extent. The former regulations and steps undertaken needed to be modified to suit the health of the Philippines. The Philippines can consider establishing its friends and neighbors and the East Asia Wonder as benchmark of development and a goal to be performed. The Philippines always must understand that East Asian economies started modestly and took benefits and cultivated the original conditions and tool endowments with their edge. A step back to reexamine where the Philippines went incorrect, why it seems to be experiencing a prolonged period at the take-off stage, will be a humble at the same time brave gesture for the countries leaders. Although it can be too late to move the focus again on agriculture because of changing conditions, it continues to be important that the federal government invest in infrastructure (i. e. farm-to-market roads) and R& D as much in the united states still rely on agriculture for a living. _ If it is possible that the federal government nurture the current industries they have and the agricultural sector at the same may be beneficial for the united states.

The Philippines have a whole lot of catching up to do, the East Asian miracle may also come true for the Philippines if it would only reconsider a few of the insurance policies being put in place and strengthen its institutions that could foster financial development.

Sources:

Chang, H. "The Financial Theory of the Developmental Status. " 182-199.

East Asia Analytical Device. The Philippines: Beyond the Crisis. Manila: Team of Foreign Affairs, 1998.

Page, John. "The East Asian Magic: Four Lessons for Development Insurance policy. " NBER Macroeconomics Annual, 1994: 219-269.

Park, Jong. "The East Asian Model of Economic development and producing countries. " Journal of Growing Societies, 2002: 330-335.

Sakurai, Makoto. "The Sustainable Development of East Asia and accompanying issues. " Economic and Public Research Institute, 2003.

Thorbecke, E, and H Wan. "Revisiting East and (South East) Asia's development model. "

Cornell Meeting on Seventy-five years of Development. New York, 2004. 1-38.

Wade. "Lessons from East Asia's Development Experience. " 2005.

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