overview of the modern east asian economies in the international perspectives j.d. han king’s...
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Overview of the Modern East Asian Economies in the International
PerspectivesJ.D. Han
King’s University CollegeUWO
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Current World Economy
• U.S. (Canada)• East Asian Economies• EU• Other BRICS; South Americas; Africa
-> The Closest Economic Relationship exists between U.S., and East Asian Economies
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Trade is only one aspect of the ‘Closest Relationship between U.S. and East Asia”
• The Largest Proportion of World Trade takes between U.S. and East Asia
• The two regions, U.S. and the East Asia have dove-tailing interests in terms of International Division of Labor.
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The second aspect of the closest relationship between U.S. and E.A. concerns International Division of LaborBetween U.S.’s Financing and East Asia’s Maufacturing
• Take the example of U.S.-(it is the same for U.S.-Japan, U.S.-Taiwan, and U.S.-Korea)
- My PPPP entitled “Bird Eye View of International Division of Labor between U.S. and China”
- East Asia: Manufacturing Goods, selling goods for U.S. dollars- U.S.: Buying Goods with U.S. dollars- -To make the circle completely sustainable, the U.S. dollars (Trade
Surplus) should come from China back to U.S. - -The International Capital Outflows from China to U.S. is only possible
when S>I in China and S<I in U.S.
- U.S.: Managing International Finance/Investment
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Why is it so important for U.S. to get the trade surplus money back from E.A., particularly China?
• Economic Reasons -> a long term sustainability
• Political Reasons -> U.S. fears China’s use of the money for military build up eg)http://www.presstv.com/detail/2013/12/14/339949/us-urged-to-devise-war-plan-for-china/
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*Why would U.S. buy from East Asia, not manufacture Goods?
• Protecting U.S. jobs was no longer the first priority of the U.S. government after the L.A. Riot.
• Protecting U.S. jobs-> Expensive Domestic Goods-> a Falling Real Standard of Living of the Poor -> Poverty/Social Unrest
• Getting Manufactured goods at the lowest possible prices leads to social stability
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• Which country or countries can manufacture goods of the quality fitting U.S. consumer culture, in a massive quantity and at lowest possible prices?
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• It has to be a Big Country with an abundance of labor forces -> A massive amount of outputs
• The labor forces should be disciplined -> A low labor cost/prices
• U.S. Technology should be implanted in non-propagating/non-transferring manner -> The circle is more or less permanent.
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• Which country or countries fit all these conditions?
• What should be the structure to ensure the long-run sustainability?
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• Workers with a High level of work ethics
• Workers Tolerant/Internalizing and not prone to Violence
• An Institution Dynamic yet Conducive for Social Harmony ensuring a Long-term Stability
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The third aspect of the closest economic relationship between U.S. and E.A. is the integration of the trans-pacific region’s ‘Supply Chain’.
• U.S. ‘s fundamental/scientific technology feeds• Japan’s Industrial technology, which feeds• Taiwan and Korea’s industry, which depends• China’s assembly lines in factories
eg) Mobile Phones; Apple i Phone; Samsung Phones
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• Can we generalize the East Asian Economic Growth experiences into a theory or model?
• What would be the key factor?
• Can we transfer/transplant the East Asian Economic Growth Model to other countries?
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• Neo-Confucianism of East Asia(Japan, Taiwan, Korea, and China)
• My PPPs discuss Its impacts on Economy in the context of the “Endogenous Economic Growth Theories”.
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• Conventional Economic Growth Theories do focus on K, L, and T, and do not recognize contribution by institutions.
• Endogenous Economic Growth Theories look for the ‘4th contributing factor’.
• The East Asian Economic Growth Theory as one of many Endogenous Economic Growth models focuses on positive impacts of Neo-Confucianism on individuals and institutions.
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*Why does the U.S. feed China with technology through Foreign Direct Investment?
• Jim Mann, Beijing Jeep: A Case of Western Businessmen in China, 1997 summarizes all.
http://www.amazon.ca/Beijing-Jeep-Study-Western-Business/dp/081333327X
-There is no property right protection in China;-Chinese are hard-bargainers.
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What is the U.S.’s solution to the above problem?
• U.S. Supply Chain (structure)
-> “Flying Geese Model” in Japanese
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Is the Supply Chain solid among E.A.?
• So much ‘Nationalism’ (Historical Legacy)
• Yet, the economic relationship among is very solid
Han, Lee and Lee (2012)’s work on the Peace and Conflicts, and Trade among E.A. countries
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• Why is it the most efficient and most effective production system for U.S.?
- Most Efficient -> Lowest Cost- Most Effective -> Massive Amount
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The Key is Neo-Confucianism
Think of the Characteristics of Confucius in contrast to his competing social philosophers/policy-makers/politicians;
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The Key is Neo-Confucianism
Think of the Characteristics of Confucius in contrast to his competing social philosophers/policy-makers/politicians;
- Pacifistic; Non Coersive- Meritorious
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*The specific economic/institutional manifestations of Neo-Confucian Ethics
• Frugality – high Savings ratio and Capital Accumulation
• Hard work – Labor Input quality and quantity• Harmony – Low social transactions cost/ high
social capital• Good Leadership – Effective and efficient/
non-self serving government; Noblesse Oblige
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• It runs parallel to Max Weber’s idea of “The Protestant Ethics and the Spirit of Capitalism.”
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• Max Weber pioneered a study on the interaction between various religious belief (institution) and economic behaviours(economy).
• He identified a particular set of ethics as a core part of religious belief, which is conducive for a sustainable modern capitalism: “The Protestant Ethics.”
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• The East Asian Economic Growth Model in general argues that Neo-Confucian ethics is similarly conducive to a rapid economic growth.
• The East Asian Economic Growth Model of this course says that Neo-Confucian ethics is conducive for partnership with the U.S. and its design of the international division of labor.
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• We will also reflect on the East Asian Economic Growth Model’s possible extension and limitations:
-Order vs. Oppression -Hard work vs. Competitiveness -Internalization vs. Self-destructive -Material Abundance vs. Lack of Welfare or
Happiness -Harmony vs. Inequity