Transcript The East Asian economic Miracle

The East Asian economic
core area: Japan
dr. Jeney László
Senior lecturer
[email protected]
Economic Geography
I. International Business bachelor study programme (BA)
Autumn term 2015/2016.
CUB Department of Economic Geography and Futures Studies
The area of the East Asia and Far
East

Far East (Wider East Asia)
– Northeast Asia (Siberia,
Russian Far East)
– East Asia (Japan, Korea,
China, Mongolia)
– Southeast Asia (Mainland SEA,
Insular SEA)

Large World region: East
Asia
– Territory: 12 mn km2 (8% of
the World)
– Population: 1,6 bn (23% of
the World)  WR1.
2
East Asian miracle




Late 20th century: reemergence of East Asia
Political, economic and cultural impacts
Refocuses the global economic growth and political
power on the Pacific Region
Interactas to the globalization trends and
3
The Japanese way to the
economic miracle
Japan: more than 2000 years old
historical past

Till the early 18th cent. XVII.: empires (tenno)
– Cultural and trading relations to other East Asian areas (mainly
China, but Korea as well)
– Capital: Kyoto

Power of army (leader shogun)  totally isolation
(dynasty of Tokugawa shogun)
– Centralized, on feudal basis
– Capital: Edo (today: Tokyo)

Late 18th century: unsuccessful economic contacts by
Europeans
– Mid-19th century: successful contacts by the USA
– Followed by the English, Dutch, French, Russian traders

1868–1912: restoration of the power of empire
(Mutsuhito tenno)
– Meiji period
5
Reforms of education


Till that time the majority of society was
analphabetic
Introduction of compulsory elementary
education (earlier than more developed
countries)
– 1880s: 6–13 years old boys 54%, girls 19% attended
school
– 1900: 95% alphabet

More skilled manpower  adoption of Western
technologies
6
Meiji reforms: civil change, rapid
catch-up


Instead of feudal system  former peasantry  cheap
manpower for the modernizing economy
First manufactures
– Initially capital concentration in the richest feudal families 
monopole organisations

Important role of state
–
–
–
–
–
–
Stabilization of the capitalist order
Central Bank: development of heavy industry, transport
Cancellation of the feudal social hierarchy
New administrative system (46 prefectures)
Permission of free movement of citizens
Cancellation of inner tolls  single market of the country
7
The East Asian economic Miracle

The only one world region in the focuses of the
world economy starting not on the basis of the
Western civilization
– Maintenance of its own culture and traditions

Japan: the way to the economic power
– Under a historically uneven short period
– An outstanding rapidly growing economy for decades


Korea, Taiwan and Southeast Asia: follow the
Japanese sample
China: political-military, cultural, and
increasingly economic power
8
The Japanese economy changed
massively after WWII



Post-war period: present government, economy
and constitution were put in place
1960–1990: contribution to total world GDP
grew from 3.5 to 14 %
1960–2002:
– Primary sector declined from 33 to 1 percent
– Service sector rose from 38 to 68 percent

From 1990s: Japanese economy slowed
– China’s GDP 1.5 times higher
– But per capita GDP remained much higher in Japan
($35.000) than in China ($6.000)
9
After reconstruction

Reconstruction
– WWII: Japanese industry destroyed
– After war: US poured money to rebuild the industries and
infrastructure
– Cold War, Communist takeover in China, Korean war  US
became opened to Japanese products


Advantageous environment for Japan
Cheap raw material on world markets
– Transportation innovation: building large oil tankers and carriers
(oil from SW-Asia, iron ore from Australia)




Own low-cost, young labour force
1960s: 10 % economic growth
Firms indorsed profits back into new developments
Better wages  Japanese consumers could buy a range
10
of home-made products
1970s: increasing costs and „just
in time”


1970s: increased oil prices
–
–
Japan depended on imported oil for 70 % energy needs
reduced costs of hydroelectricity and nuclear power
–
–
Factory closures  social problems, unemployment (e.g. Osaka)
Investments to light industries (producing cameras, household
appliances)
Firstly copied others’ technologies and designs, later initiator
Older industries (steelmaking, shipbuilding, petrochemicals, cement
making) suffered from overcapacity on world markets
–


By 2000 half of the world’s industrial robots (4x installed than in
the US)
„Just-in-time” deliveries cut warehousing costs
–

Toyota: employed more human skills instead of indiscriminate use of
robotics (  too expensive)
1980s huge export income  caused the yen to double in value
compared to other currencies
–
–
Japanese export became more costly for other countries
Imports became cheaper
11
From 1980s: global investments




Large yen trading surpluses  Japanese
corporations invested more
Firstly: bought out foreign mineral suppliers
Later: established Japanese factories abroad
Answer to quotas on import of home-made cars
– First major investments in US and GB, from late
1980s then in Southeast Asia  economic growth of
NIC countries
– Mid-1990s investments in cheap-labour assembly-line
factories by moving design and research facilities to
SEA
– Early 2000s: increasing investments in China (mainly
to Dalian) – huge trade deficit to China
12
Renewed economic challenges








Early 2000s: J faced a need to change
Investments resulted huge debts  banking system
under pressure
Western countries imitated Japanese production
processes (Toyotism)
Japan looked more closely at Western ways in relation
to financial control
Trade surplus  rapid growth of financial and business
services
1986: Tokyo became the second financial centre 
further population increases
Increase in service occupation  widened range of
employment
13
Diversified economy  not so dependent on
fluctuations of world markets