CHAPTER 11 SECTION 5

East Asia’s Economic & Social Development

JAPAN…

Set the pace for the world economy from 1960-1990 but in the early 1990’s Japan experienced a deep recession & its growth has slowed. It is still one of the world’s top 3 economic powers (with US & China);

The “Economic Miracle” refers to Japan’s comeback following almost total destruction in WWII; the economy is based on exports (at first simple, inexpensive items; later more sophisticated products like cars & electronics). By the 1980’s it led the global high-tech economy.

JAPANESE CAPITALISM

Japanese capitalism is characterized by far greater government control than we have in the US. The Ministry of Int’l. Trade & Industry (MITI) controls most business activity.

In the US, giant corporations may be illegal (monopolies), but in Japan they are encouraged resulting in less investor control.

Most Japanese employees work for 1 company for their lifetime; there is very strong loyalty between company & employee & vice versa.

JAPAN SINCE THE RECESSION

The Japanese still live with high inflation & most goods/services are quite expensive, however, they still have one of the highest GDP per capita rates in the world.

Unemployment & extreme poverty remain lower than in the US, but they have disparities between social classes like we do.

SOUTH KOREA

When the Japanese occupied SK during WW!! Their industrial development was concentrated in the north (resource rich) so SK had a very underdeveloped economy; many years of war on the peninsula did not help econ. Dev.;

In 1960 SK’s gov. started a program of export-led economic growth & with heavy gov. involvement they achieved impressive growth. The US has always been a major trading partner of SK. Their heavy investment in education helped them become a major player in the global high-tech economy.

TAIWAN…

Like SK & Japan, Taiwan’s gov. has a lot of control over its economy but a major distinguishing feature of Taiwan is the absence of large conglomerates & reliance instead on mid-size family run corporations. They believe this protected them from the “Asian Crisis” of the 1990’s, kicked off by Japan’s severe recession.

HONG KONG…

China lost control of Hong Kong to the British after losing the Opium Wars in the mid 1800’s.

Under British control the gov. took a very “laissez faire” (hands off) approach to the economy, which is different from other countries in the region.

When China regained control in 1997 they made Hong Kong into a SAR (special administrative region) & have not introduced many changes to its economic management, keeping it one of the world’s leading economies.

CHINA’S ECONOMIC GROWTH

Deng Xiaoping introduced the profit incentive into Chinese society & this jump started the decades of growth that have moved China into the #2 spot in overall GDP (#1=US; #3=Japan);

The East Coast has seen the most economic growth & development & the further west you move the less developed China becomes;

Here’s how the World Bank explains it: China's economy

PROBLEMS FOR CHINA…

Ghost cities 60Minutes Clip http://articles.chicagotribune.com/2013

-06-03/business/sns-rt-us-china-economy-pmi-hsbcbre95201h-20130602_1_growth-fears-factory-activity-economic-growth

Uneven economic development Slowed growth rate Housing market in trouble