East Asian Capitalism Flashcards
(22 cards)
“Rising Tigers”
China, Taiwan, Japan, South Korea
Japan’s context for Economic recovery
Macarthur land reform campaign - very successful - fewer peasants renting the land + more money -> consumerist-oriented peasantry
American Aid in 1940s
Korean War - good for Japan’s economy
1949
Japanese government kick economy into overdrive via
Emphasis on heavy industry getting back to producing large # of steel, chemicals, machinery + Ships -> did this successfully - by 60s worlds biggest ship-building power - later became worlds biggest steel maker
Why did Japan realize they needed to earn a lot of foreign exchange + abroad export markets
have to earn foreign currancy due to having to pay to bring in raw materials, have to pay to bring in food and technology - need to export to do this
Japan changing exports
shift away from textiles (low value added product, not a lot of skilled labour involved in production)
steel + consumer products are high-value-added products
Japan big believers in supply-side economics
if yo produce things the market will follow, especially if you study the situation
Japan economics 1960s + US impact
US was cultivating them as an ally - lots of technology transfer - Japan was the hinge inbuilding up coalition of anti-communist countries
so access to 1st class US tech + they dev their own 1st rate class of engineers + technicians who could improve on this tech -
□ GNP shot up dramatically - 10% per annum - by late 60s 13% p/a - per capita GDP income doubled in 50s, then 5x in 60s -> become a wealthy country - a ‘developed’ country
Japan’s economy in the 70s/80s
restructure to still expand in this era, even with less favorable conditions - why?
- oil price shocks threatened to undercut productivity of their industry (inc transport + production cost
- Labour + pay standards going up - now countries could (S Korea, China, Taiwan) flaunt cheaper labour - suffer from outsourcing their own manufacturing capacity -> mainland China to take advantage of cheap labour
◊ S Korea take over in ship production in 1980s
- ® Japan was hurt by dramatic decrease in the value of Yen - until 1993 currency was est to be over-valued - for a period 100Yen:1USD - Bretton woods era set exchange rates -> 360Yen:USD now from this it has inc a lot -
1992 Japanese recession
never entirely recovered - been in a lag since
What did Japan do in response to challenging economic environment
◊ Resp by restructuring etc - E saving tech for industry - hold line on wage settlements - diminution in the power of trade unions in the late 20th c - private trade unions in particular
◊ Co’s diversified - shift away from heavy industry -> consumer goods production - spec knowledge-intensive industries *high-tech) also less dependent on foreign technology
Japanese sectors that heavily focused on exports
automotive in reaction to 2nd oil shock - wanted smaller more efficient cars
Japanese international reception to consumer goods product
famous for quality - spec for now had good reputation for their consumer goods products in particular - spec stereo, TV, calculators etc
Japanese economic dominance in the 70s + 80s
Worlds largest exporter of automobiles (had been US for a long period 80 years) - later outstripped by China - in the 80s Toyota single greatest car manufacturer in the world
– Germans + US for Cameras, rivaled US in production of silicon ships, passed Swiss in producer of watches
– 12billion exports -> 270 billion by ‘89
– GNP likely surpassed USSR
Japanese economic GNP in mid 1990s
their econ GNP was getting up to half to size of US (pop was less than half US) exceed US in GDP per capita - has not been maintained
7 factors for Japans economic success
1) culture that was heavily given towards hard work + sacrifice, highly literate + educated + retain thriftiness of a more conservative society
- company loyalty, + generous companies
- saved a lot of $ -> huge pool of investment capital in banks
2) big population, 80 million in 1950 = resivoir of available labour
- spec because of MacArthur land reform - self sufficient peasants facilitated modernization of agriculture - inc production + dec cost of production = freed up labour from countryside to move into cities
3) US includes Japan in security screen can honour stipulation ni constitution that they well not dev armed force in large way (constitution had been imposed upon them) - or big navy - limited defense $ to 1% of GNP - however US reversed in the 50s, wanted Japan to spend more on mili - Japan declined
® Yoshita Shigeru - declined US mili expansion
Take resources + devote to more constructive purposes
4) US for a while opened up its markets to Japanese products - minimal barriers to trade + allowed Japanese to protects its markets - not a lot of reciprocity
® Led to US resentment of this relationship - Japan nipping at their heels - this concession now becomes resented
® Book: 1979: Japan as #1 - as cold war recedes -> Japanese econ challenge becomes more tangible to the US - lack of reciprocity becomes an issue
5) Benefitted from boom of world trade
6) advantage of being politically stable during this period - from 55-93 run by one political party: Liberal Democratic Party (still running it) - for 40 years - formed as a fusion of the 2 largest parties in Japan, Liberal + Democratic
- A party in this position gets corrupt - close assc with business community - defeated in ‘93 - PM were chased out of office for taking bribes etc
7) Q of the govt role in the economy - how much they contribute - Japanese govt played big role in the econ - Japanese also believed that to govt played a big role - Indicative planning
Japan: what is indicative planning
govt playing a direct role - no nationalization but govt is trying to direct business efforts - powerful finance ministry such as MITI (ministry of international trade and industry 1989) powerful role - MITI is what org surge towards world dominance in steel manufacturing due to Ministry control over raw materials - + producers desperately need these - allocated to firms they wanted to favour - Fuji + MKK
China + market economic domination time period of change
bw Mao’s death in ‘76 and the year 2000 - country transforms in this period
Effect of Mao’s death on Chinas economy post 1976
§ Had been destabilized by Mao’s death - disorg state industries, outdated tech - lacking in exports, most of what they did was agricultural - command economy - life expectancy 62 - many people were impoverished - 45% literacy rate - country relatively isolated + remote
□ Agricultural production was - 100s of millions of people facing chronic malnutrition
China’s economic turn around
§ By 1990 - things are in the process of reversal - exporting 62 billion products /year - exporting capacity expands -start of huge expansion we see at beginning of 21st c
Major agri reforms (no more starving) - big expansion of consumer goods *access - literacy rates 70% and rising - reintegrated into world econ - bringing more foreign investment into country
Deng Xiaoping
re-emerged - had done damage reduction for the Great Leap Forward - brought back in mid 70s - Mao’s Widow Jiang Qing tried to contest him, but he prevailed and was in charged by ‘78
3 effects of Deng Xiaoping did before dying in 1977
(1) changed agricultural system - got rid of communes + made responsibility was peasant households - now peasant power govt leased plots of land to do whatever on long-term leases - still state control of agricultural land - lifetime leases + peasants treated land like their own - if made improvements could claim the benefit - own own tractors, trucks etc
Agricultural production exploded -
doubled in 80s - by end malnutrition
not a problem
(2) allowed for more production of private property under industry - intro private ownership of business + industry
(3) allowed more production along the coast - expansion production + foreign investment
What does China’s introduction into market economy
Not parallel by a shift towards democracy - market-driven econ but no dem
