Economy of East Asia
Encyclopedia
The economy of East Asia
is one of the most successful regional economies of the world. It is home of some of the world's largest and most prosperous economies : China
, Japan
, Hong Kong
, Taiwan
and South Korea
.
Major positive factors have ranged from favorable political-legal environments for industry and commerce, through abundant natural resources of various kinds, to plentiful supplies of relatively low-cost, skilled and adaptable labor.
In modern societies, a high level of structural differentiation, functional specialization, and autonomy of the economic system
from government is a major contributor to industrial-commercial growth and prosperity. Currently in the Far East, trading systems are relatively open; and zero or low duties on imports of consumer and capital goods etc. have considerably helped stimulate cost-efficiency and change.
Free and flexible labor and other markets are other important factors making for high levels of business-economic performance.
East Asian populations have demonstrated rapid learning capabilities – skills in utilizing new technologies and scientific discoveries – and putting them to good use in production. Work ethic
s in general tend to be highly positive.
Finally, there are relatively large and fast-growing markets for consumer goods and services of all kinds.
The economic entities of East Asia are thus Japan
; the Democratic People's Republic of (North) Korea; the Republic of (South) Korea; the People's Republic of China
and its special administrative regions Hong Kong
and Macau
; Republic of China
(Taiwan
); and the 10 ASEAN members: the Philippines, Vietnam, Cambodia, Laos, Thailand, Burma, Malaysia, Singapore, Brunei, and Indonesia. The lack of useful statistical data makes including East Timor problematic, and so unless otherwise indicated, it will be omitted.
in the late 19th century when Japan rapidly transformed itself into the only industrial power outside Europe and the United States. Japan's early industrial economy reached its height in World War II
when it expanded its empire and became a major world power. After its defeat and economic collapse after the war, Japan's economy recovered in the 1950s with the post-war economic miracle
in which rapid growth in the Japanese economy propelled the country into the world's second largest economy by the 1980s.
In the early 1960s, the then British colony of Hong Kong
became the first of the four Asian Tiger economies by developing strong textile and manufacturing economies and by the 1970s, had solidified itself as a global financial center and was quickly turning into a developed economy. Following in the footsteps of Hong Kong, the nations of South Korea, Taiwan, and Singapore soon quickly industrialized thanks to government policies. By 1997, the four Asian Tiger economies joined Japan as East Asia's developed economies. Present growth in East Asia has now shifted to China and the Tiger Cub Economies
of the Southeast Asian economies of Thailand, Indonesia, Malaysia, and the Philippines. As of 2010, Japan, Hong Kong, and Singapore are the only East Asian nations that are considered developed markets in all economic indexes.
The North-east / South-east divide holds for other demographic indicators, too. The average age in the North-east was 33.1 years in 2005, and 26 years in South-east Asia. Life expectancy (74.1 years vs. 70) is not as distinctly different, although infant mortality rates differ by nearly a third: 21.8 per 1,000 in North-east Asia vs. 28.3 in South-east Asia.
Related organizations
East Asia
East Asia or Eastern Asia is a subregion of Asia that can be defined in either geographical or cultural terms...
is one of the most successful regional economies of the world. It is home of some of the world's largest and most prosperous economies : China
Economy of the People's Republic of China
The People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
, Japan
Economy of Japan
The economy of Japan, a free market economy, is the third largest in the world after the United States and the People's Republic of China, and ahead of Germany at 4th...
, Hong Kong
Economy of Hong Kong
As one of the world's leading international financial centres, Hong Kong has a major capitalist service economy characterised by low taxation and free trade, and the currency, Hong Kong dollar, is the ninth most traded currency in the world. Hong Kong has remained as the world's freest economy,...
, Taiwan
Economy of Taiwan
Taiwan has a developed capitalist economy that ranks as the 19th largest in the world by Purchasing power parity and 24th in nominal GDP of investment and foreign trade by the Republic of China government which governs Taiwan. In keeping with this trend, most large government-owned banks and...
and South Korea
Economy of South Korea
South Korea has a market economy which ranks 15th in the world by nominal GDP and 12th by purchasing power parity , identifying it as one of the G-20 major economies. It is a high-income developed country, with a developed market, and is a member of OECD...
.
Major positive factors have ranged from favorable political-legal environments for industry and commerce, through abundant natural resources of various kinds, to plentiful supplies of relatively low-cost, skilled and adaptable labor.
In modern societies, a high level of structural differentiation, functional specialization, and autonomy of the economic system
Economic freedom
Economic freedom is a term used in economic and policy debates. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom...
from government is a major contributor to industrial-commercial growth and prosperity. Currently in the Far East, trading systems are relatively open; and zero or low duties on imports of consumer and capital goods etc. have considerably helped stimulate cost-efficiency and change.
Free and flexible labor and other markets are other important factors making for high levels of business-economic performance.
East Asian populations have demonstrated rapid learning capabilities – skills in utilizing new technologies and scientific discoveries – and putting them to good use in production. Work ethic
Work ethic
Work ethic is a set of values based on hard work and diligence. It is also a belief in the moral benefit of work and its ability to enhance character. An example would be the Protestant work ethic...
s in general tend to be highly positive.
Finally, there are relatively large and fast-growing markets for consumer goods and services of all kinds.
Definition
Various organizations and disciplines define "East Asia" in different ways. The United Nations classifies South-east Asia (the 10 ASEAN members plus East Timor) as a distinct region, but other sources add North-east and South-east Asia together, which is the practice in this article.The economic entities of East Asia are thus Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
; the Democratic People's Republic of (North) Korea; the Republic of (South) Korea; the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
and its special administrative regions Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and Macau
Macau
Macau , also spelled Macao , is, along with Hong Kong, one of the two special administrative regions of the People's Republic of China...
; Republic of China
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
(Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
); and the 10 ASEAN members: the Philippines, Vietnam, Cambodia, Laos, Thailand, Burma, Malaysia, Singapore, Brunei, and Indonesia. The lack of useful statistical data makes including East Timor problematic, and so unless otherwise indicated, it will be omitted.
Theory
A 1997 Asian Development Bank (ADB) study identifies three conventional theories as to how and why Asia developed so much faster than other regions. The classical theory identifies outward orientation and relatively strong property rights protection as key ingredients, as well as access to good ports and major markets. The neoclassical theory emphasizes rapid capital accumulation and the opportunity for high returns on investment that shortages presented. The third, endogenous growth theory credits superior economic institutions such as lifetime employment and consensus building as the superior attributes of the Asian culture. The study then notes that none of these theories attaches sufficient importance to demography, particularly changes in age structure, dependency ratios and overall population growth rates. This, according to the authors, is where much of the explanation lies.Modern History
East Asia became an area of economic power starting with the Meiji RestorationMeiji Restoration
The , also known as the Meiji Ishin, Revolution, Reform or Renewal, was a chain of events that restored imperial rule to Japan in 1868...
in the late 19th century when Japan rapidly transformed itself into the only industrial power outside Europe and the United States. Japan's early industrial economy reached its height in World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
when it expanded its empire and became a major world power. After its defeat and economic collapse after the war, Japan's economy recovered in the 1950s with the post-war economic miracle
Japanese post-war economic miracle
The Japanese post-war economic miracle is the name given to the historical phenomenon of Japan's record period of economic growth following World War II, spurred mainly by Japanese economic policy, in particular through the Ministry of International Trade and Industry...
in which rapid growth in the Japanese economy propelled the country into the world's second largest economy by the 1980s.
In the early 1960s, the then British colony of Hong Kong
British Hong Kong
British Hong Kong refers to Hong Kong as a Crown colony and later, a British dependent territory under British administration from 1841 to 1997.- Colonial establishment :...
became the first of the four Asian Tiger economies by developing strong textile and manufacturing economies and by the 1970s, had solidified itself as a global financial center and was quickly turning into a developed economy. Following in the footsteps of Hong Kong, the nations of South Korea, Taiwan, and Singapore soon quickly industrialized thanks to government policies. By 1997, the four Asian Tiger economies joined Japan as East Asia's developed economies. Present growth in East Asia has now shifted to China and the Tiger Cub Economies
Tiger Cub Economies
The term Tiger Cub Economies refers to the economies of the four dominant countries in the Southeast Asia after Singapore.The Tiger Cub Economies are: Indonesia Malaysia Philippines Thailand...
of the Southeast Asian economies of Thailand, Indonesia, Malaysia, and the Philippines. As of 2010, Japan, Hong Kong, and Singapore are the only East Asian nations that are considered developed markets in all economic indexes.
Share of Global GDP PPP (%)
| Region | 1950 | 1960 | 1970 | 1980 | 1990 | 2000 |
|---|---|---|---|---|---|---|
| West Asia (15 economies) | 2.0 | 2.3 | 3.0 | 3.8 | 3.4 | 3.7 |
| East Europe (7 economies) | 3.5 | 3.6 | 3.4 | 3.4 | 2.4 | 2.0 |
| Africa (57 economies) | 3.8 | 3.6 | 3.6 | 3.6 | 3.3 | 3.2 |
| Latin America & Caribbean (47 economies) | 7.8 | 8.1 | 8.3 | 9.8 | 8.3 | 8.4 |
| East Asia (10 economies) | 10.4 | 12.6 | 15.2 | 17.5 | 22.5 | 26.5 |
| Rest of the World | 64.4 | 61.9 | 58.5 | 53.3 | 50.7 | 45.4 |
Policy
Among the major policy choices commonly adopted in East Asia, and noticeably less so elsewhere in the developing world are openness to foreign trade, significant levels of government savings and an emphasis on education for both boys and girls. While these attributes were far from universally applied, they are conspicuously present in the region to a much larger degree than is the case elsewhere.Population
In 2005, East Asia had more than one-third of the world’s population, an estimated 2,075 million people. Growth during the decade is expected to 0.79% per annum, pushing the total to 2,154 million by 2010. South-east Asia is expected to grow more than twice as fast (1.32% p.a.) as North-east Asia (0.60% p.a.). 65.5% of the population is working age (15-59), slightly higher than the global average 61.4%.The North-east / South-east divide holds for other demographic indicators, too. The average age in the North-east was 33.1 years in 2005, and 26 years in South-east Asia. Life expectancy (74.1 years vs. 70) is not as distinctly different, although infant mortality rates differ by nearly a third: 21.8 per 1,000 in North-east Asia vs. 28.3 in South-east Asia.
| Region | Infant mortality ratio (per 1,000 live births) |
|---|---|
| Africa | 82.6 |
| South-Central Asia | 56.3 |
| South-East Asia | 28.3 |
| Western Asia | 29.9 |
| South America | 21.4 |
| Latin America and the Caribbean | 21.8 |
| Eastern Asia | 21.8 |
| Europe | 7.2 |
| North America | 5.8 |
See also
Economies- Economy of the People's Republic of ChinaEconomy of the People's Republic of ChinaThe People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
- Economy of TaiwanEconomy of TaiwanTaiwan has a developed capitalist economy that ranks as the 19th largest in the world by Purchasing power parity and 24th in nominal GDP of investment and foreign trade by the Republic of China government which governs Taiwan. In keeping with this trend, most large government-owned banks and...
- Economy of MacauEconomy of MacauThe economy of Macau has remained one of the most open in the world since its reversion to China in 1999. Apparel exports and gambling-related tourism are mainstays of the economy. Since Macau has little arable land and few natural resources, it depends on mainland China for most of its food, fresh...
- Economy of Hong KongEconomy of Hong KongAs one of the world's leading international financial centres, Hong Kong has a major capitalist service economy characterised by low taxation and free trade, and the currency, Hong Kong dollar, is the ninth most traded currency in the world. Hong Kong has remained as the world's freest economy,...
- Economy of South KoreaEconomy of South KoreaSouth Korea has a market economy which ranks 15th in the world by nominal GDP and 12th by purchasing power parity , identifying it as one of the G-20 major economies. It is a high-income developed country, with a developed market, and is a member of OECD...
- Economy of JapanEconomy of JapanThe economy of Japan, a free market economy, is the third largest in the world after the United States and the People's Republic of China, and ahead of Germany at 4th...
- Economy of SingaporeEconomy of SingaporeSingapore has a highly developed state capitalist mixed economy; the state owns stakes in firms that comprise perhaps 60% of the GDP through entities such as the sovereign wealth fund Temasek...
- Economic integrationEconomic integrationEconomic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place within the borders of each state...
- Free trade areaFree trade areaA free trade area is a trade bloc whose member countries have signed a free trade agreement , which eliminates tariffs, import quotas, and preferences on most goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be...
- Common currency
- Asian Currency Unit
- Monetary regime
- Asian Bond MarketsAsian Bond MarketsAsian Bond Markets are growing rapidly as Asian borrowers switch away from short term bank loans towards longer term debt financing. Although Asia also includes countries of the Middle East, some CIS countries and the vast majority of the land mass of Russia and Turkey, in financial markets it is...
- Intra Regional TradeIntra Regional TradeIntra Regional Trade refers to trade which focuses on economic exchange primarily between countries of the same region or economic zone. In recent years countries among economic-trade regimes such as ASEAN in South-East-Asia for example have increased their level of trade and commodity exchange...
- Japanese post-war economic miracleJapanese post-war economic miracleThe Japanese post-war economic miracle is the name given to the historical phenomenon of Japan's record period of economic growth following World War II, spurred mainly by Japanese economic policy, in particular through the Ministry of International Trade and Industry...
- Taiwan MiracleTaiwan MiracleThe Taiwan Miracle or Taiwan Economic Miracle refers to the rapid industrialization and economic growth of Taiwan during the latter half of the twentieth century...
- Miracle on the Han (South KoreaSouth KoreaThe Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
) - Heavy-Chemical Industry DriveHeavy-Chemical Industry DriveThe Heavy-Chemical Industry Drive was an economic development plan enacted in the 1970s under the regime of South Korean dictator Park Chung Hee.-Background:...
(South KoreaSouth KoreaThe Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
) - 1997 Asian Financial Crisis
- Economy of AsiaEconomy of AsiaThe economy of Asia comprises more than 4 billion people living in 46 different states. Six further states lie partly in Asia, but are considered to belong to another region economically and politically...
- Four Asian Tigers
Related organizations
- East Asia SummitEast Asia SummitThe East Asia Summit is a forum held annually by leaders of, initially, 16 countries in the East Asian region. Membership will expand to 18 countries including the United States and Russia at the Sixth EAS in 2011. EAS meetings are held after annual ASEAN leaders’ meetings...
- East Asian CommunityEast Asian CommunityEast Asian Community is a proposed trade bloc for the East Asia countries that may arise out of either ASEAN Plus Three or the East Asia Summit .- Prior to the EAS :...
- Pacific Economic Cooperation CouncilPacific Economic Cooperation CouncilThe Pacific Economic Cooperation Council is a network of member committees composed of individuals and institutions dedicated to promoting cooperation across the Asia Pacific region...
- Association of Southeast Asian NationsAssociation of Southeast Asian NationsThe Association of Southeast Asian Nations, commonly abbreviated ASEAN rarely ), is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has...
- ASEAN Plus Three
- Chiang Mai InitiativeChiang Mai InitiativeThe Chiang Mai Initiative is a multilateral currency swap arrangement among the ten members of the Association of Southeast Asian Nations , the People's Republic of China , Japan, and South Korea...
- Asia-Pacific Economic CooperationAsia-Pacific Economic CooperationAsia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region...
- Asian Development BankAsian Development BankThe Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...