Term Paper on "Economies Economic Growth in East Asia"

Term Paper 5 pages (1700 words) Sources: 1+

[EXCERPT] . . . .

Economies

Economic Growth in East Asia

The economic growth of the countries in East Asia has been the subject of debate for numerous specialized sociologists and economists, amongst which most tend to associate it with increased industrialization and modernization in the region. "Historically, modernization is the process of change towards those types of social, economic and political systems that have developed in Western Europe and North America from the seventeenth century to the nineteenth and have spread to other European countries and in the nineteenth and twentieth centuries to the South American, Asian and African continents" (Eisenstadt, 1966).

Economists tent to agree that growth is possible only if three major forces occur simultaneously and work together to generate positive effects upon a country's economy. However they often disagree on the role played and proportion held by each one of the three forces, they all seem to agree on the delimitation of these forces into:

the rate of physical capital accumulation the rate of human capital accumulation, and the rate of technological progress" (Siamwalla)

And this is where the debate over the economic growth in the East Asian regions occurs, for some economist state that capital accumulation was the primary generator of growth, whereas others argue in favor of technological advancements as the force behind growth, and other mention labor force development as the primary force. "Everyone agrees that the economies of East Asia, and particularly the Four Tigers, have grown spectacularly over the past generation, but nobody seems to agree on why" (Sarel, 1997)

In regard to the capital accumulation, it can easily be observed that the levels increased significantly in both economies of the population as well as national and international investments. The population's economies generally increased due to the large rates of interest, which directed the population towards bank savings in the attempt to secure their money and earn the interest. Then, in countries such as Taiwan and Korea, the government manifested strong involvement in the process of allocating the investment funds towards those industries that needed development. In these countries then massive industrialization had occurred. On the other hand, in countries like Thailand or the Philippines, the state powers did not intervene in the fund allocation process. Therefore, the banks placed their money based on their own preferences and as a result, in these countries, the market of banking and financial institutions grew exponentially (Siamwalla).

Then, another major part in the growth of the region was due to the government's interest towards educating their youth in the desire to create specialized and skilled workforce. "On the impact of schooling, there is little disagreement in the literature. Two salient points are broadly accepted, firstly, schooling enhances productivity and therefore economic growth significantly, and secondly, very few would advocate the use of untrammeled market forces in determining the level and direction of investments in schooling" (Siamwalla).

The changes in the population's behavior have also influenced the economic growth as more and more Asians found work outside the home and were committed to contributing to the country's economic stability. And those that remained within their households became specialized on agriculture and produced high quality products, aided of course by the newer and more efficient machineries. Furthermore, yet another major player was represented by the state authorities, which reconsidered their protectionist policies and opened the region for international trade. However several import regulations were still valid, the region's exports boomed.

But there are those economists and sociologists that intensively deny the role played by capital accumulation and improvements in the human resource, stating that the primary generator were the technological advancements (Solow, 1956). "In this view, these economies have succeeded because they learned to use technology faster and more efficiently than their competitors did" (Sarel, 1997).

It can then be concluded that the tremendous economic growth in the countries in East Asia, growth which continues to follow its ascendant trend even today, was primarily based on investments and advancements in capital, labor and technologies. These were also backed by other economic and non-economic features, such as a greater emphasis on the educational system, openness to international trade, market liberalization, through the limitation or even complete elimination of the taxes and fees, and also by the government's subsidizing of various industries and sectors.

References

Eisenstadt, S.N., 1966, Modernization: Protest and Change, Englewood Cliffs, Prentice Hall

Sarel, M., 1997, Growth in East Asia - What We Can and What We cannot Infer, International Monetary Fund, http://www.imf.org/external/pubs/ft/issues1/index.htm. Retrieved on March 28, 2008

Siamwalla, a., Markets and Economic Growth in East Asia, Global Development Network, www.gdnet.org/pdf/429_A-Siamwalla99.pdfon March 28

Solow, R., 1956, a Contribution to the Theory of Economic Growth, Quarterly Journal of Economics, Number 70, pp. 65-94

B. Impacts of Borderland Economic Development upon the United States and Mexico

The borderlands between the United States and Mexico are the result of a war that took place more than a century ago, when the U.S.'s desire to expand led to the movement of the border into Mexico. "Violence and the expansionist ambitions of the U.S. shifted the border southward so that in 1848 it was not Mexicans who crossed the border, but the border that crossed them" (Prieto, 1999) the region is a highly dynamic one, market by violence and the development of new survival techniques. It is in the words of Antonio Prieto, the intersection of first and third word countries. "Five basic conditions characterize the borderlands:

1) Unequal but interdependent economies;

2) Antagonistic government policies;

3) Different social value systems;

4) Cultures that clash and mix;

5) Xenophobic nationalism" (Prieto, 1999) most important issue to discuss here is the migration movement from Mexico to the United States. In this particular sense, numerous Mexicans have left their country in hope to find a better life in the States. But their migration affected all borderlands, Mexico and America. Anthropologist Robert Hackenberg at the University of Colorado describes this issue as Hispanics' and Indians' movement from local ecology into the global economy (Hackenberg, 1997). To the United States, the migration of the Mexican population represents first of all the economic benefit of extremely cheap workforce. On a social level, the movement often generates reticence as the native born Americans fear to lose their jobs. Even more, the rates of criminality ever since the massive migration from Mexico have increased significantly. And the most eloquent proof in this sense is given by the state of California, where most Mexicans establish their homes. On a fiscal level, the integration of the illegal immigrants and their provision of basic care (healthcare, education and incarceration) cost the American government up to $10.5 billion per annum (Longley, 2004). Then, these costs are supported by all legal American citizens, who are now being taxed larger amounts of money by the state budget - situation which generates tensions and complaints.

For the Mexican state, the massive migration towards the U.S. implies fewer workforces - for it is generally those able to work that leave the country, leaving the children and the elderly behind. Then, the state has to provide for these categories, but finds it difficult for there is limited workforce onto which to impose taxes and establish a federal budget. And it is not only the financial situation of the remaining ones that decreases, their morale also drops. They feel abandoned and left in a country that is incapable of caring for them. Also, the rate of teenage criminality has increased mostly because the parents are working in the U.S. And their children are improperly supervised, if at all.

But is not only the population that migrates. Globalization of international economies has opened the door to the transfer of capital and commodities as well - and this is most common for the U.S. - Mexico borderland (Coleman, 2004). The movement of the capital generated beneficial effects upon the Mexican economy in the meaning that it managed to aid the industrial development in the country. In other words, the American investors recognized the potential of the Mexican economy, its assets and its labor force and took this opportunity to purchase numerous companies and develop their operations. And these investments helped both the locals as well as the investors. The Mexicans and their economy benefited from additional jobs, reduced unemployment rate and generally increased living standards, whereas the American investors operating there benefited from cheap labor force and even cheap commodities if bough internally. The American worker on the other hand felt the negative impacts of borderland outsourcing materializing in lower paid jobs and reduced employment opportunities. The U.S. small and medium size entrepreneurs were also negatively impacted as they were no longer targeted by investors. This meant that the founding opportunities significantly reduced and entrepreneurs were forced to contract bank loans. But in the context of a real estate crisis and a devaluing dollar, some of them had declared bankruptcy.

Much could still be said about the U.S. - Mexico Borderland, but fact remains that the region encompasses numerous individuals, both Mexicans and Americans,… READ MORE

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