The Economic Growth Of Asia Essay, Research Paper

World War 2 in the mid-90’s drew a hard blow and left a serious

and lasting effect to many Asian countries. This however, did not

hamper the growth of countries such as China, Japan and Vietnam as

their government were taking serious steps to recover economically.

Thus, the global market cannot deny a place for these ‘Asian Dragons’,

because these countries are growing at a tremendous pace to the extent

of being capable in emerging as global market leaders.

China’s capitalism and boom was born when their president, Deng

Xiaoping permitted the provinces to dismantle their communes and

collective farms. This led China to venture into free-market

economics, although they were still under the communist political

system. When President Deng announced that they needed Western money

and expertise, China flung their trade doors wide open and China went

on a capitalist drive without ever looking back. By mid 1960’s, the

Chinese Revolution settled down to the job of ruling China. Its main

goal was essentially nationalist: a prosperous modern economy. While

there continued to exist substantially economic inequalities,

distribution of wealth was probably a bit more equal than in most

Western countries. ( Moise 171 ) While there were great variations in

income between different villages, and between different jobs in the

urban sector, the overall averages showed a clear pattern: the cities

were much richer than the countryside. Most capital investments were

going into urban industries. The urban workers, using considerable

amount of heavy machinery, had a much higher average level of

productivity compared to the rural workers. The natural consequences

was for the city people to arrange themselves an average income level

twice as high as that of the people in the countryside.

The most obvious way to attack this poverty problem was to

increase production, in all sectors of the economy. Though the easiest

way to increase production was to increase capital inputs, China could

only afford a limited amount of capital construction. In accordance to

this, China went on a construction binge. Whole factories were

purchased from abroad while others were built with local resources. By

1978, the frenzy for new projects reached a level that reminded some

people of the Great Leap Forward. In an effort to promote agricultural

production, the government released many of the restrictions on the

’spontaneous capitalist tendencies’ of the peasantry. (173) In the

late 1980’s, the government decided to expand the scope of private

marketing. Then the next step was to increase the amount land assigned

to the peasants. The peasants were now not responsible to the

government for the use they made to the private plots. They simply

could grow what the wished, for the sale to the government or to

private markets. This led to furious rebuilding and inflow of foreign

investments. All this enabled China to remake itself into Asian’s hub

of finance, trade and culture.

By 1984, they were producing more than $1 million worth of rice

and a range of side products, including rice wine. Their residential

earning was up to about $200 a year. ( Prager 52 ) This meant that

they could begin replacing their mud-and-straw hats with solid brick

houses. Shanghai today is a vast construction site with more than

20,000 projects, with 27,000 companies building bridges, tunnels,

flyovers, ring roads, hotels, villas, golf courses and also public

housing. This sparked national growth of about 10% a year.( 53 ) The

Chinese now are going home with fat wallets, stocks, bonds and large

bank accounts. Banks are reporting that savings have increased

sixty-fold and is still growing. This has led China to join the world

economic community and has become the globe’s third largest economy.

China is now ranked 11th in the world in exports of trade goods. (54)

Of the coast of China, there was another growing country. Japan

recovered tremendously well after the bombing of Hiroshima in World

War 2. Under post war conservative governments, Japan made a

remarkable economic recovery. American aid of $2 billion gave an

initial boost and then the Korean War acted as a further stimulant by

creating a demand for military hardware. (Rich 191) By the early

1970’s, Japan was the world’s third biggest steel producer, one of the

biggest ship builders, and ranked very high as a manufacturer of

general engineering and chemical goods. Japan’s motorcycles were

winning import races in Europe, and Japanese cameras, transistor

radios, cars, sewing machines, TV sets and optical goods competed

successfully in the global market.

Japan’s economy is second only to the U.S in absolute terms with

a G.D.P of $3,385 billion dollars. By 1987, the Japanese were richer

than the Americans with per capita income of almost $20,000. ( World

247 )This was because the Japanese saved five times as much from their

paychecks as did the Americans. Lower military spending, a consequence

of the Yoshida doctrine, was an essential contributor to Japan’s

economic advancement. Japan net assets rose to about $1 trillion and

thus making Japan effectively the world’s banker. In the 50’s through

to the 70’s, the Japanese economy was averaging 11% of growth. (250)

The Bank of Japan backed commercial banks in providing capital for

investments. Economic growth rates were the highest in the world based

on high levels of savings and investments, rapid productivity growth

and remarkable social consensus.

Japan was willing to forego immediate reward for long term

benefits. Therefore, in large sections of world manufacturing, notably

electronics, Japanese producers had no rivals. Manufacturing was the

mainstay of the economy, improving quality and price. Japan has

continually upgraded its economy and shifted from heavy industry with

high-energy requirements to high technology, high value added

industries such as semi-conductors, industrial robots and computers.

Japanese manufactures than began investing heavily in foreign

countries because of it’s own rising yen. This massive outflow of

money pushed many Japanese financial institutions to the top of the

global financial markets. Japan was also the world largest importer of

agricultural products where 60% of its food is imported. (Rich 192).

If counted based on efficiency however, per unit of land, Japan is the

most efficient in the world. Greater prosperity lead to a big demand

for consumer goods. Western style clothing became very common and

wheat products, meat and vegetables took the place of rice in many

Japanese dishes. Scotch whiskey was now drunk in place of the

traditional sake. The Japanese people now wanted to acquire more

twentieth century gadgets – color televisions, electric sewing

machine, washing machines, motor cars and so on. Western sports became

very popular – in the 70’s, there were already about 7,000 golf

courses. By September 1986, the Japanese had a massive current account

surplus of $10 billion U.S dollars. ( World 251). All this was a

result of deep government planning, growth with high depreciation

allowance, cheap loans, subsidies and light taxes. The Japanese

recovery from its defeat in the Second War presents a truly remarkable

story of persistence, determination and hard work by an entire

population, and considerable financial and diplomatic skill.

Vietnam was the latest among these countries to emerge as a

‘gold mine’. This was set back by the Vietnam War in the 60’s and the

70’s. The war practically crippled the country’s economy. Vietnam’s

economy grew based on a five-year plan system. This has brought

moderate success in repairing of three decades of war on

infrastructure, forest and farmland. By the mid-1980’s, the government

began to liberalize in an attempt to encourage new resources. In 1987,

businesses were given tax breaks in their first year, some companies

were allowed to obtain bank loan and set their own prices while

exporters were authorized to borrow foreign currency to import raw

materials. There were higher cash incentives for peasants and workers.

This lead farmers to earn almost 40% profits. ( Gibney 47). The

government too began awarding bonuses and piece-rate wages to reward

hard workers. In 1988, there were new investment laws that attracted

overseas capital. The main investors were Taiwan, Australia, France,

Hong Kong, the United States and also, Malaysia.

In 1989, as communism seemed to be collapsing elsewhere in the

world, Vietnam flung open its doors to foreign investment. The economy

has been growing at an annual rate of 7% to 8% over the past three

years. In February 1994, when the U.S. dropped its 19-year trade

embargo, aid and investment began to flood in. (49). This led

jetstreams of investors into Vietnam. Western companies such as

Coca-Cola, AT&T, and Motorola all invested heavily in the country.

This lead Vietnam to grow very fast. Population continued to grow by

about 1 million a year. By the 1990, the country’s exports were up to

about $800 million U.S dollars while imports totaled nearly $1

billion.( World 157). Vietnam’s most lucrative business were oil and

gas. In addition, it is in this sector of the industry that attracted

the most attention of foreign investors. British Petroleum was the

first western firm to make a significant contribution to Vietnam’s

growing economy. Tourism has helped Vietnam grow too. The Vietnamese

government were promoting tourism in an effort to earn more hard

currency. In addition, Vietnam succeeded in exporting 1.69 million

tons of rice making it the third largest exporters of rice in the

world. (Moise 49).

From the border with China in the north to the rice mills of the

Mekong Delta in the south, Vietnam is humming with activity. Hong Kong

investors have been allowed to open a casino near Haiphong, and

Westerners are bidding to develop tourist sites along the scenic coast

of Vietnam. Hanoi, long a city of bicycles and moldy old colonial

edifices, is now rich in motorcycles and office buildings. In Ho Chi

Minh City, as Saigon is now called, the April 30 parade marking the

end of the war will be set against a landscape bristling with

billboards and construction cranes. ( World 159). All this has brought

Vietnam to grow at a tremendous rate and there is no denying that soon

Vietnam will become a distinctive force in Asia. The country’s

recovery after the Vietnam War shows a truly dedicated nation

determined to wealth, success and most all, a better life for all the

Vietnamese.

This research has shown that these ‘Growing Asian Dragons’ are a

force to be reckoned with in the near future as these countries are

developing at breakneck speed. China, even before the merging with

Hong Kong, is currently the center of attraction in the business

world. Japan has already establish itself and become the most

influential partner in the business world while the ‘youngest’ of them

all, Vietnam, is already beginning to stamp its mark in South East

Asia and soon, without doubt, throughout the world.

—

Works Cited

Gibney, Frank. “Vietnam: Back In Business.” Time. April 24, 1995

Volume 145. No 17: 47-49

Mcgeary, Johanna. “The Next China.” Time. March 3,1997. Vol. 149. No.

9.

Moise, Edwin E. Moise “Modern China, A History.” The Economic Growth.

New York: Longman, Inc., 1986: 165-181.

Prager, Karsten. “China: Waking Up To The Next Superpower.” Time.

March 25, 1996. Volume 147. No 13: 51-54.

Rich, Joe. “Japan Since The Occupation.” Asia’s Modern Culture. 2nd

Ed. Sydney: Longman Inc., 1980: 190-193

“The World of Information.Asia & Pacific Review,1995.” 14th Ed.

London: Kogan Page Publishing: 153-256