Transcript Overview of the Modern East Asian Economies in the International

Overview of the Modern East Asian
Economies in the International
Perspectives
J.D. Han
King’s University College
UWO
Current World Economy
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U.S. (Canada)
East Asian Economies
EU
Other BRICS; South Americas; Africa
-> The Closest Economic Relationship exists
between U.S., and East Asian Economies
Trade is only one aspect of the ‘Closest
Relationship between U.S. and East
Asia”
• The Largest Proportion of World Trade takes
between U.S. and East Asia
• The two regions, U.S. and the East Asia have
dove-tailing interests in terms of International
Division of Labor.
The second aspect of the closest relationship between
U.S. and E.A. concerns International Division of Labor
Between U.S.’s Financing and East Asia’s Maufacturing
• Take the example of U.S.-(it is the same for U.S.-Japan, U.S.-Taiwan, and
U.S.-Korea)
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My PPPP entitled “Bird Eye View of International Division of Labor
between U.S. and China”
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East Asia: Manufacturing Goods, selling goods for U.S. dollars
U.S.: Buying Goods with U.S. dollars
-To make the circle completely sustainable, the U.S. dollars (Trade
Surplus) should come from China back to U.S.
-The International Capital Outflows from China to U.S. is only possible
when S>I in China and S<I in U.S.
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U.S.: Managing International Finance/Investment
Why is it so important for U.S. to get the trade surplus
money back from E.A., particularly China?
• Economic Reasons
-> a long term sustainability
• Political Reasons
-> U.S. fears China’s use of the money for military build up
eg)
http://www.presstv.com/detail/2013/12/14/339949/us-urged-to-devise-war-plan-forchina/
*Why would U.S. buy from East Asia,
not manufacture Goods?
• Protecting U.S. jobs was no longer the first
priority of the U.S. government after the L.A.
Riot.
• Protecting U.S. jobs-> Expensive Domestic
Goods-> a Falling Real Standard of Living of
the Poor -> Poverty/Social Unrest
• Getting Manufactured goods at the lowest
possible prices leads to social stability
• Which country or countries can manufacture
goods of the quality fitting U.S. consumer
culture, in a massive quantity and at lowest
possible prices?
• It has to be a Big Country with an abundance of
labor forces -> A massive amount of outputs
• The labor forces should be disciplined -> A low
labor cost/prices
• U.S. Technology should be implanted in nonpropagating/non-transferring manner -> The
circle is more or less permanent.
• Which country or countries fit all these
conditions?
• What should be the structure to ensure the
long-run sustainability?
• Workers with a High level of work ethics
• Workers Tolerant/Internalizing and not prone
to Violence
• An Institution Dynamic yet Conducive for
Social Harmony ensuring a Long-term Stability
The third aspect of the closest economic relationship
between U.S. and E.A. is the integration of the transpacific region’s ‘Supply Chain’.
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U.S. ‘s fundamental/scientific technology feeds
Japan’s Industrial technology, which feeds
Taiwan and Korea’s industry, which depends
China’s assembly lines in factories
eg) Mobile Phones; Apple i Phone; Samsung Phones
• Can we generalize the East Asian Economic
Growth experiences into a theory or model?
• What would be the key factor?
• Can we transfer/transplant the East Asian
Economic Growth Model to other countries?
• Neo-Confucianism of East Asia(Japan, Taiwan,
Korea, and China)
• My PPPs discuss Its impacts on Economy in
the context of the “Endogenous Economic
Growth Theories”.
• Conventional Economic Growth Theories do focus
on K, L, and T, and do not recognize contribution
by institutions.
• Endogenous Economic Growth Theories look for
the ‘4th contributing factor’.
• The East Asian Economic Growth Theory as one
of many Endogenous Economic Growth models
focuses on positive impacts of Neo-Confucianism
on individuals and institutions.
*Why does the U.S. feed China with
technology through Foreign Direct
Investment?
• Jim Mann, Beijing Jeep: A Case of Western
Businessmen in China, 1997 summarizes all.
http://www.amazon.ca/Beijing-Jeep-Study-Western-Business/dp/081333327X
-There is no property right protection in China;
-Chinese are hard-bargainers.
What is the U.S.’s solution to the
above problem?
• U.S. Supply Chain (structure)
-> “Flying Geese Model” in Japanese
Is the Supply Chain solid among E.A.?
• So much ‘Nationalism’ (Historical Legacy)
• Yet, the economic relationship among is very
solid
Han, Lee and Lee (2012)’s work on the Peace
and Conflicts, and Trade among E.A. countries
• Why is it the most efficient and most effective
production system for U.S.?
- Most Efficient -> Lowest Cost
- Most Effective -> Massive Amount
The Key is Neo-Confucianism
Think of the Characteristics of Confucius in
contrast to his competing social
philosophers/policy-makers/politicians;
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The Key is Neo-Confucianism
Think of the Characteristics of Confucius in
contrast to his competing social
philosophers/policy-makers/politicians;
- Pacifistic; Non Coersive
- Meritorious
*The specific economic/institutional
manifestations of Neo-Confucian
Ethics
• Frugality – high Savings ratio and Capital
Accumulation
• Hard work – Labor Input quality and quantity
• Harmony – Low social transactions cost/ high
social capital
• Good Leadership – Effective and efficient/
non-self serving government; Noblesse Oblige
• It runs parallel to Max Weber’s idea of “The
Protestant Ethics and the Spirit of Capitalism.”
• Max Weber pioneered a study on the
interaction between various religious belief
(institution) and economic
behaviours(economy).
• He identified a particular set of ethics as a
core part of religious belief, which is conducive
for a sustainable modern capitalism: “The
Protestant Ethics.”
• The East Asian Economic Growth Model in
general argues that Neo-Confucian ethics is
similarly conducive to a rapid economic
growth.
• The East Asian Economic Growth Model of this
course says that Neo-Confucian ethics is
conducive for partnership with the U.S. and its
design of the international division of labor.
• We will also reflect on the East Asian Economic
Growth Model’s possible extension and
limitations:
-Order vs. Oppression
-Hard work vs. Competitiveness
-Internalization vs. Self-destructive
-Material Abundance vs. Lack of Welfare or
Happiness
-Harmony vs. Inequity