Pacific and East Asian Economies and Economic Development
The achievement of high level of economic growth in the East Asia has been brought by many factors among them government intervention. Although the involvement of the World Bank to the East Asian affairs is credited to be the key element that is leading to the economic growth in the region, government involvement has spurred the structure of economic development in the region (Kojima 2000). Some of the policies that have been brought by East Asians governments to promote economic development include open economy policy, in which the policy is set to liberalize imports and to welcome the foreign investments (Kojima 2000). In addition, triangle trade has also become a key government policy in the East Asian country with the goal of promoting trade for the Asian countries, hence improving economic growth. Triangle trade is a standard trading policy in Japan, where countries such as Taiwan and Korea purchases capital goods and other inputs from Japan. Kojima (2000) says that many Asian countries recognize the need for government involvement in the affairs set to develop the East Asian economy. However, from the study Kojima (2000) point out not all East Asian country were suited by the government intervention strategy, as the researcher outlines that Japan and China are the key countries that have identified the need for government involvement to the task of developing the East Asian Economy.
For international countries to enter into Asian Pacific market there are specific modes that are used. Each mode of entry is significance but differs according to the benefits that it has to the country entering the market and the Asian Pacific region (Makino and Beamish 1998). The three key market entry modes include new venture mode (WOS), JVs, and acquisition mode. When the three modes of market entry are compared, it is evident that they have relationship and differences. Makino and Beamish (1998) argues that new ventures and JVs market entry mode are significance to the countries using them to enter into the Asian Pacific market. Compared to the acquisition mode, new ventures and JVs mode give the states joining the market a high financial performance in the market (Makino and Beamish 1998). This implies that both new ventures and JVs market entry mode outperform acquisition entry mode and international businesses should use either of them. Therefore, to manage the risks in the Asian Pacific market, the international businesses joining the market can use new ventures and JVs market entry mode. The two model gives the country joining the Asian Pacific market high chances of succeeding in the market.
Hoshi and Kashyap (2004) assert that over the years, the Japanese economy has underperformed radically. One of the causes of Japanese economic stagnation is the problem in the banking sector. Hoshi, and Kashyap (2004) note for more than ten years, the banking system in Japan has become a problem to the economic development affairs, as the banks in the country have continued to record low profitability. In fact, the researcher reveals for years, Japan’s banking industry has failed to record operating profit for the year 1993. The inflation rate is another factor that contributed to the Japanese economic stagnation. Kashyap (2004) outlines since 1981, the inflation rate in Japan had dropped, but in some years especially in 1992, the inflation rate in the increased, hence making the economic to be at its worse. However, recently the through different reforms and the intervention of the government in the economic development affairs, the Japanese economy has continued to develop (Kashyap 2004). For example, the aspect of banking system reforms has played a major role to the reformation of the Japanese economy. With the banking industry in Japan becoming more consistent with the affairs of shedding assets and profitable activities, this has spurred the growth of Japanese economy in the recent years.
On the case of China and economic growth, it is evident that over the years its economic growth has been better when compared to other East Asian countries such as Japan. In the research by Ding (2005), it is found that China has some weaknesses and strengths are likely to influence the economic performance. Looking at the current strengths that are likely influence the Chinese future economic performance, one can note that privatization is one of the major strength that China’s government is aiming to use to nature the economic performance in future. Privatization as an economic strength in China has led to a boom in real estate market, which is tipped to be one of the key drives of Chinese economic development. The increment of funding in Chin has also become a strength to the Chinese future economic development (Ding 2005). The funding has fueled investment in China and savings, which will be used to prosper the Chines future economic growth. On the context of strengths that are likely to influence the future of the Chinese economy, research shows that the issue of employment stands out to be a critical weakness to Chines economic development. Such challenge brought uncertainties in China, in which it can influence China’s growth in the future (Ding 2005). With many people in China experiencing the problem of jobs in China, this means a group of people will not contribute to the economic growth in the coming years.
Another important issue that is discussed by scholars in relation to the East Asian countries economic growth is the aspect of Doi Moi in Vietnam. As the affair was set to develop the Vietnam economic, studies has come up with policies that Vietnam can follow to build its economic with the implementation of Doi Moi. First, the concept of growth pole model can be used as a policy that will enhance growth in Vietnam, because the concept brings about several realities in the emerging market economy. Beresford (2008) says that the concept of growth pole model can influence the growth of urban agglomerations and as a government plan, the policy will ensure that the Vietnam government receive a share of investment. Social stratification is the other policy that can implement in Vietnam to ensure economic progression and growth (Beresford 2008). As such, this will make the government of Vietnam commits itself to social development, in particular developing the rural areas through the establishments of co-operatives that are characterized with economic development agendas.
Finally, in the East Asian region, the formation of the economic community has been a key factor to the success of the Asian countries economy. However, economic communities such as Association of Southeast Asia Nation (ASEAN) have become a success politically, but the association has failed economically. According to Green (2007), the formation of ASEAN set some problems to the economic development in the Southeast Asian countries. As such, the Association requires its members to execute economic planning through national rules and regulations. For this reason, researchers’ feels that the experience that is related to the ASEAN rules and regulation makes it difficult for the association members to achieve the economic goals set by the Asian governments (Green 2007). On the other hand, with the organization initially set for economic development purposes, some of the country members have intensely opposed the major affairs that were established by ASEAN, thus, making it appear more political than an association established for economic purposes.
Bibliography
Beresford, M 2008, ‘Doi Moi in Review: The Challenges of Building Market Socialism in Vietnam’, Journal of Contemporary Asia, 38(2). pp. 221-243.
Ding, L 2005, ‘Responses to Globalization from a Big Transition Economy: The Case of China’, Global Economic Review, 34(4), pp. 435-452.
Green, D.J., 2007. Bridging the ASEAN Development Divide: Challenges and Prospects-A Regional Overview. ASEAN Economic Bulletin, 24(1), pp.15-34.
Hoshi, T. & Kashyap, A.K. 2004, ‘Japan’s Financial Crisis and Economic Stagnation’, The Journal of Economic Perspectives, vol. 18(1), pp. 3-26.
Kojima, K., 2000. The “Flying Geese” Model Of Asian Economic Development: Origin, Theoretical Extensions, and Regional Policy Implications. Journal of Asian Economics, 11(4), pp.375-401.
Makino, S. and Beamish, P.W., 1998. Local Ownership Restrictions, Entry Mode Choice, and FDI Performance: Japanese Overseas Subsidiaries in Asia. Asia Pacific Journal of Management, 15(2), pp.119-136.
