East Asian Economic Miracle

During 1960 to 1990, vitamin E Asia go through a immense transformation in its stinting phylogeny which is now widely referred to as the East Asiatic frugal miracle. This was generally a moderate of the fruit of eight economies known as the high gear-performing Asiatic economies, hereinafter HPAEs. These comprised japan, Hong Kong, the Republic of Korea, capital of capital of Singapore and chinaware, and the three newly industrialised economies (NIEs) which were Indonesia, Malaysia and Thailand. front to the 1960s, tensions surrounded by the regional powers were relatively high, which was evidently the legions issue of several major events including the Sino- Nipponese war, the wars amid lacquer and Russia and lacquer and Korea and the invasion and colonisation of certain regions. After 1960, however, a radical limiting in the interactions amongst these regional powers developed, arguably as a leave of the installation of organisations such(prenominal)(prenomi nal) as the railroad tie of southerlyeast Asiatic Nations (ASEAN) in 1967. This illust rank a significant relaxation of tensions which in effect go ond economic, social and cultural co-operation betwixt the member responsibilitys. 1 Nevertheless, the extent to which such tensions have diminished is questionable, especi on the wholey in light of the effects of both the Cold War and the Korean and Vietnamese wars. In assemble to develop a valuable synopsis which documents the regimeal implications of the East Asiatic economic miracle, it is first necessary to briefly sketch the preceding tensions which existed in order to measure the extent to which tensions subsequently relaxed. Prior to 1960, relations between chinaware and Japan were doubtlessly hostile.In 1964, china fought Japan in the Sino-Japanese war over the control of Korea which pass oned in the Japanese acquisition of chinaware and the Liaodong province and the in dependance of Korea. In 1931 Japan had inv aded Manchuria and was in occupation of this area by 1933. During this period atrocities such as the Nanking whipping took place which exacerbated tensions between Japan and China. In 1905 Japan and Russia were at war, and in 1910 Japan had colonised Korea which significantly contributed to regional tensions in East Asia. Nevertheless, in the post-World War II era, most of the colonised egions in East Asia had give out independent which arguably created the conditions for regional cooperation. However, when East Asia became engulfed in the Cold War, foster tensions emerged between China and Japan. In addition, this besides resulted in the creation of north and South Korea, and the Vietnamese civil war. Thus, these major events resulted in hostile tensions between the East Asian regional powers, which are arguably still unmistakable today. During the 1940s, relations between Japan and different East Asian regions appeared to deteriorate, curiously as a result of the Japanese creation of the East Asia Co-Prosperity Sphere.Arguably, this seemed to upraise relations in East Asia by unifying the region and scratch the end of European control. 2 However, this was not a universally held opinion as legion(predicate) regarded this as political propaganda which served merely to disguise Japanese intrusion and its underlying agenda for imperial domination3. It seems that it was not until the 1960s that relations between Japan and the South East Asian regions began to improve. Thus, the period between 1965 and 1975 aphorism the maturing of Japans own economic position and the beginning of Japans large carapace investment in the region. 4 Arguably, Japan realize the need for co-operation with the South-East Asian regions in order to take prefer of crucial raw materials such as rubber and oil. Consequently, Asia became the largest recipient of Japans manufacturing investment which resulted in large economic development in the South-East. Throughout this time of development, South-East Asia introduced many tariffs and inducements in order to push domestic industrialisation and enhance relations throughout Asia.This large scale investment not sole(prenominal) initiated rapid economic development, but it also highlighted the necessity of divided emergence across the East Asian regions. As a result, east Asian leaders formally gifted the pattern of shared growth, declaring that if the saving expanded all free radicals would benefit5. However, in light of the legion(predicate) stages involved in implementing such policies, serious coordination problems emerged. For example, it was first necessary for all the leaders to prolong initial support from economic elites and then to deport them that it was necessary to share the benefits of his growth with the poor and middle classes. Secondly, it was essential to get the co-operation of the poor and middle classes by demonstrating how they would benefit from this growth. This was seen i n Korea and Taiwan where extensive land reform was carried out, in Indonesia where rice and fertiliser price policies were make practice session of to raise rural incomes, in Malaysia where wealth sharing policies were introduced, and in Hong Kong and Singapore where huge public housing programs were implemented. 6Nevertheless, during this insane asylum of shared growth in East Asia the relations between the South-East regions handled to improve, and in 1967 the Association of Southeast Asian Nations (ASEAN) was created. Its founding members were Indonesia, Thailand, the Philippines, Singapore and Malaysia. After 1995, Vietnam, Laos, Myanmar and Cambodia also joined. ASEANs initial butts can be summarised as fol low-spiriteds to alleviate intra-ASEAN tensions, to reduce the regional influence of external actors, and to promote the socioeconomic development of its member states as a shape up hedge against Communist insurgency. 7 It is important to note that its creation had fo llowed recent hostile relations between the South-East Asian powers, break open as a result of Indonesias confrontation with the new state of Malaysia, and the Philippines claim over the Malaysian state of Sabah. 8 Therefore it was an important quality forward in the co-operation of these regional powers in which shared development could be promoted.In 1976, ASEAN adopted the Treaty of Amity and Cooperation (TAC) which called for signatories to commit to non-interference in the indwelling affairs of one anformer(a), a renunciation of the threat or use of force and the settlement of disputes by peaceful means. 9 The sign language of the TAC was a major attempt in further uniting the South East Asian regions and establishing an effective agenda for the political development of the ASEAN countries. Thus, it effectively created additional foundations for the cooperation in the economical development of the ASEAN region.In 1977, the Agreement on ASEAN Preferential Trading Arrangement s (PTA) was signed in a bid to promote intra- ASEAN trading. Therefore, the PTA prescribed the use of a range of preferential tariffs, exporting assurance support using preferential interest rates and long depot quantity contracts. Nevertheless, the extent to which this agreement was effective is questionable. For example, it seems that around of the product groups that legitimate preferential treatment often had little importance as imports. 10 As a result, it was agreed that the ASEAN content requirement should be reduced in order to allow preference margins to be increased.Furthermore, it was thought this would encourage dialogue of the reduction of non-tariff measures between ASEAN countries. 11 This resulted in three agreements12 in which the primary objective was to boost the industrial cooperation between ASEAN countries. Subsequently, the TAC and other intra-ASEAN trading initiatives seemed to reduce tensions between the South-East regions, although it should be noted that intra-ASEAN trading accounted for only a base percentage of total ASEAN distribute as most countries relied heavily on the export of primary goods to Japan and the USA.In addition, as trade became progressively competitive it appears that trade relations also became more aggressive and hostile. However, it has been suggested that in the early development of the ASEAN, it deliberately deemphasised the goals of political and military collaboration13 in order to avoid exacerbating opposition from communist led countries such as China. Consequently, many East Asia regions came to recognise that a market tender strategy would be an effective way of enhancing the strength of their economies whereby governments would provide passable investments in people.Furthermore, this would result in a competitive climate for secluded enterprise, allow the sparing to re principal(prenominal) open for international trade and conserve a stable macroeconomy. 14 many a(prenominal) of these policies were implemented in east Asian regions in order to promote economic development at a sure-fire rate, combined with selective intervention in order to repoint privy-sector resource allocation. This created a competitive environment with the benefits of co-operation between the government and private sector. 15 In 1992 ASEAN leaders endorsed the idea of an ASEAN free trade area (AFTA) which would piecemeal lift the tariffs for manufactured goods produced by these members in order to enhance ASEAN economic cooperation. The AFTA would remove barriers to trade and investment and at that placefore also present an bonus for orthogonal investment. However, the AFTA did not fully strain its objectives due to pre-existing low tariffs, and on that pointfore only rattling few intra-ASEAN traders took advantage of the reduced tariffs. 16 Consequently, it seems that there were only minor noticeable improvements in relations in the ASEAN.However, in Northeast Asia, Japan, South K orea, Taiwan and the Peoples Republic of China there was a massive economic development during the East Asian Economic Miracle period. By the 1960s many regarded Japan as having a relatively mature industrialised economy in comparison with other East Asian countries. 17 During the 1950s and 1960s the idea emerged that Japan should use the flying geese model to support other Asian countries in their development. As a result, other regions would be able to replicate Japans developmental experience and adapt it to their own regions.For example, manufacturing with lower skill rates were transferred from Japan and invested into lower performing economies. Thus, by utilising Japans economic development experiences, combined with the major Japanese investment in other East Asian regions, the basis for regional economic cooperation was created. Prior to the development experienced by South Korea and Taiwan, both countries had possessed high trade deficits. It was only with the combination o f heavy investment from Japan and aid received from the U. S. that they were able to offset these trade deficits and sustain high levels of investment. 18 This was achieved partly as a result of the South Korean and Taiwanese governments engaging in import substitution, which meant that instead of relying on importing nondurable consumer goods, they manufactured these products domestically. This was a exceedingly successful strategy, and in order to further develop their market economies they switched to an export orientated strategy following Japans example. This success has been shared with other export orientated economies which have achieved higher rates of growth in comparison to those countries that have pursued an import substitution strategy.Thus, despite the fact that tensions may have initially increased as a result of competitive economic relationships between Japan, South Korea and Taiwan, arguably the result has been a significant relaxation of regional tensions. In a ddition, powerful government agencies have also been instrumental in determining the tone of regional relations, as is evident from an analysis of policies implemented by South Koreas Economic Planning Board, Taiwans council for Economic Planning and Development, Taiwans and South Koreas model agency and Japans Ministry of International Trade and Industry (MITI).The MITI have many useful constitution tools, including the power to screen foreign investment and regulate foreign exchange. Their main objective was to maintain national independence in industries such as energy, steel, computer and telecommunications, etc. whereby they attempted to guide firms towards what was termed sunrise industries which included electronics and education systems. Thus, Japanese firms were encouraged to improve their technological capabilities and relocate industries where national fighting was declining, such as in Taiwan and South Korea.These industries tended to have high labour intensity, there fore by transferring these industries Japan was able to avoid change magnitude labour costs. Throughout this period of development Japan also provided Taiwan and South Korea with some of the necessary machinery and components which was essential for their industrialisation. Consequently, South Korea was recognised as the most successful of the East Asian regions, and in 1996 South Korea was bedded as the twelfth largest economy in the world. 19 Taiwan has also experienced remarkable success in terms of the growth of its economy and has achieved a decrease in inequality of income. The ratio of incomes between the top twenty percent of households to those of the lowest twenty percent was estimated to be 20. 47 in 1953 which subsequently decreased to 5. 33 in 1964 where this figure has remained stable since, and has only risen slightly over time. 20 Both of these economies have experienced successful development in implementing the same growth strategies seen in Japan.With the effec tive use of foreign investments, improved technologies, government policies and agencies, South Korea and Taiwan have modernistic their economies and become major competitors in the global economy. Thus, as a result of the aid and guidance received from Japan, relations between these regions have undoubtedly improved. Throughout the economic miracle many of the East Asian regions received foreign investment from the U. S. and Japan. Western investment was viewed y some as part of a wider effort to build opposition against the communist-led countries deep down East Asia, such as the Peoples Republic of China ( chinaware). Therefore the mainland China sought investment from other countries with similar political ideology, such as the Soviet Union who were able to provide loans, technology and advisors in order for the PRC to improve its communication infrastructure and heavy industrial foundation. 21 Nonetheless, by the late 1970s the PRC had not achieved its initial goals and its e conomy was unstable.In the early 1980s the PRC government changed its strategy in order to achieve economic development by liberalising the economy. Therefore, the government began deemphasising the need for substitution planning and encouraging local initiatives, and later began to follow the models set by the East Asian regions that had already shown significant development. Consequently, the PRC opened its economy to foreign investment, technology and trade which ultimately strengthened its economic performance. originally the 1980s, relations between the PRC and other East Asian nations had been hostile, curiously as a result of their conflicting political ideologies. It may be argued, however, that after this boost in its economical development, relations between the PRC and other East Asian regions began to relax as a result of the increase in the cooperation of these regions. Nevertheless, some commentators argue that the PRC increased tensions as a result of its economic g rowth which encouraged competitive relations.Similarly, some security study texts indicate that the strengthening of the PRC resulted in moves to transfigure its economic power into political-military power. 22 Thus, it is questionable whether the development of the PRCs economy merely exacerbated tensions with other East Asian regions in light of a perceived military threat. After the East Asian economic miracle, the doorway of ASEAN plus three (APT) has been recognised as significantly increasing regionalism within East Asia.Although not an official organisation, it is a basic framework for East Asian cooperation which has enabled the integration of the East Asian regions whereby the policy of mutual dependence is prioritised. Furthermore, after the Asian financial crisis in 1997, it seems that there have been further calls for the enhancement of East Asian cooperation which subsequently led to recent suggestions for the establishment of an East Asian Free Trade Area (EAFTA).How ever, it should be emphasise that the creation of such an agreement will be difficult to achieve unless further policies can be implemented to support such a move, for example, an increase in sub regional agreements and bilateral FTAs. 23 However, it should also be noted that in 2001 it was announced that ASEAN and China would establish their own FTA onwards 2010 which suggests that the prospects of an EAFTA being established are not altogether slim. Thus, it is evident that there have been dramatic improvements in East Asian relations as a result of the increased economic cooperation.Nevertheless, as the APT group consists of both advanced market economies and less developed economies many tensions continue to exist which is arguably compounded by the existence of the conflicting political ideologies in countries such as the PRC and Vietnam. Nevertheless, it is undeniable that the East Asian Economic Miracle has transformed East Asias economies whereby many East Asian countries h ave now confirmed their position as major contenders in the global market.Throughout this period the HPAEs have grown at a faster rate than most other developing countries in the world. This has been a result of numerous factors, but in particular it seems that this success is largely attributable to the regionalism that has occurred across East Asia. It seems that relations between the East Asian regions have rapidly developed, especially as those countries that have adopted a trading strategy have tended to outperform others that have given primacy to the ideas of military assertiveness and territorial control. 24 Thus, in order to compete in an more and more global environment, it has proved to be essential to minimise military conflicts and establish trade relationships that will benefit the region as a whole. Many of the HPAEs have taken note of Japans developmental example, and accordingly, severally have similar economic characteristics. Arguably, this has been instrumental in enabling organisations such as the ASEAN to emerge, as well as encouraging the implementation of many major policies which have enhanced intra trade relations.Nonetheless, a deeper level of analysis reveals that major tensions continue to exist within East Asia, such as the North Korean threat, Japanese tensions with its neighbours and disputes between China and South Korea regarding historic legacies. Nevertheless, it seems that the cooperation and shared development which has resulted from the East Asian economic miracle has, at the very least, created the foundations for progressive trade relations in the future.