Transcript Should nations use military means to deal with economic problems?

CHAPTER 11
REGIONAL
ANALYSIS OF
ASIA
1.
2.
3.
4.
5.
Asian Economy PRISMs
Is the “Protestant Ethic” the
universal model of national
economic development?
Should nations use military means
to solve economic problems?
Is a nation’s economic or political
stability more important?
Should nations that don’t like each
other cooperate economically?
Should nations use military means
to deal with economic problems?
ASIAN EXPORTS AS A % OF 2004 NATIONAL GDP
CHINA: 190%
INDONESIA: 31%
JAPAN: 12%
Malaysia: 44%
South Korea: 121%
Thailand: 71%
Taiwan: 65%
ASIAN IMPORTS AS A % OF 2004 NATIONAL GDP
CHINA: 89%
INDONESIA: 27%
JAPAN: 10%
Malaysia: 100%
South Korea: 40%
Thailand: 66%
Taiwan: 53%
ASIAN “PROTESTANT ETHIC” VALUES
1. Family solidarity
2. Nationalistic trade
competition built on product pride
3. High savings rate &
postponement of consumption
4. Strong commitment between
company & employees
5. High value placed on education
6. The 5 “Protestant Ethic” values
seem to be the key to economic
development in all cultures, not just
Protestant ones.
7. Western Europe & the USA have
gravitated away from the
Protestant Ethic over the past half
century (family instability, low
savings, shaky relations between
company & employees), raising
questions about future Western
growth & prosperity.
The Asian Flying Formation
Of Evolving Economic Development
• Japan
• The 4 Tigers
Hong Kong
Singapore
Taiwan
South Korea
• Malaysia
• Thailand
• Indonesia
• Philippines
• Vietnam
• China: the
“joker card”
THE ASIAN FLYING GEESE FORMATION
1. Japan has led the way in Asian’s
economic development, showing other
nations how to develop net exporting
economies & providing financial &
technological assistance to successive
waves of Asian economic development.
2. The “4 Tigers” followed Japan in their
wave of development, then the smaller
Asian nations. China was “last in line,”
but is quickly muscling its way to the
front of Asian economic power.
1. Hong Kong: Gateway to China:
the world’s largest emerging
market
2. Singapore: Asian headquarters for
Western companies
3. Taiwan: Computer hardware
4. South Korea: Hyper-aggressive
risk-taking competition to compete
against Japan
ASIAN ENTREPOT NATIONS
1. Entrepot (“importing/exporting port”) nations
serve as an export gateway to a neighboring
nation that is difficult to directly trade with
due to political problems or a poor business
infrastructure.
2. Hong Kong (& to a lesser extent, Taiwan,
Singapore, & Macau) have always served as
entrepots to mainland China due to their
excellent port transportation services,
insurance companies, & ethnic connections to
the mainland.
3. The reality that entrepot nations are
dependent on trade with China, puts China “in
the driver’s seat” of future regional growth.
ASEAN
Association of Southeast Asian
Nations: Beginning of Asia’s First Free
Trade Zone?
1.The smaller Asian economies
(Singapore, Malaysia, Indonesia,
Vietnam, Brunei, Thailand, Philippines)
originally formed ASEAN to protect
themselves against giants Japan &
China, but no free trade agreement
exists.
2.“ASEAN + 3” includes China, Japan, &
South Korea in the trade talks, hoping
to promote cooperation between the
larger & smaller Asian economies.
3.The new Asian-Pacific Economic
Cooperative (APEC) is made up of
the largest Asian & Western
economies who may eventually
develop some degree of crossregional free trade, this pulling the
global triangle of trade (NAFTA +
EU + Asia) closer together.
4.China has become the largest export
market for other Asian nations, &
China exports even more within
Asia than it does to the U.S.
ASIA’S OVERDEPENDENCE ON WESTERN
MARKETS
1. Modern Asian economies were built on
Western materialism/debt
2. Western economies are now maxed out
on both materialism & debt
3. Western population growth is stagnant
4. The West now consumes more services
than manufactured goods, but Asia
exports few services
5. Western companies are more innovative
than Asian companies
Crank out the inventions!
Major Asian cities are overpopulated, creating congested
business conditions
ASIA’S FOOD MINE FIELD
1. Un-enforced food safety standards throughout
many parts of Asia have endangered the
health of many unsuspecting Asian consumers.
2. Numerous deadly chemicals have found their
way into Asian food, medicine, & toiletries.
3. Formaldehyde (used in embalming) has been
used to lengthen the shelf life of noodles.
4. Borax, a common ingredient of plastics &
detergents, is often used to preserve fish &
meats.
5. Diethylene glycol (the “sweetening” agent in
anti-freeze) has been found in Chinese
toothpaste & in Asian cough syrups & drops.
6. Industrial dyes have been found in Asian ice
cream sold in schools, & farmers frequently
shine up their vegetables for market using
deadly banned herbicides.
7. “It could very well be that polluted products
consumed today might not even show
perverse health impacts for another decade.”
8. Asian government officials claim they have
kept exports free of such pollution, but no one
can say for certain.
9. Some health officials in the West worry that
the growing drug manufacturing industry in
China & India (which produce 20% of generic
pharmaceuticals sold in the U.S.) may contain
adulterated fillers active ingredients and
fillers.
CHINA, THE JOKER CARD
1.China is competing against other
Asian nations for global customers
& FDI. This will disrupt the overall
Asian economy just as a Joker card
disrupts a card game.
2.China wants to eclipse Japan as
Asian’s economic leader, another
unpredictable, destabilizing force
in Asia’s future
3. China is also a joker card for
developing nations, stealing away
their off-shoring operations due to
China’s unrivaled low labor costs.
4. Mexico’s electronics industry is
operating at just 60% of capacity
due to jobs stolen away by China.
5. China’s $600M annual investment in
biotech labs is sucking away high
value-added business from
industrialized Western nations.
KOREAN
COMPETITIVE
STRATEGY
KOREAN COMPETITIVE STRATEGY
1. Chaebol: large family-networked
corporations diversified into multiple
unrelated industries
2. Until the late 1990s, the giant chaebol
sought to compete against arch-rival
Japan through taking large strategic
risks to compensate for less advanced
SK technology & global market shares
3. Risks included price-cutting, high debt
financing, unrelated diversification, &
rapid expansion of factories
CHAEBOL REFORMS SINCE THE ASIAN
CURRENCY CRISIS OF THE LATE 1990s
1. Downsizing & limiting areas of
diversification
2. Reducing employee
expectations of lifetime
employment
3. A new emphasis on innovation
& entrepreneurial start-ups
Korea’s largest company,
Hyundai also owns Kia
Motors. Daewoo is
owned by America’s GM,
while France’s Renault
acquired Samsung
motors.
Will South & North Korea
eventually unite similar to
West & East Germany?
The short-term strain on
South Korea to rebuild its
northern neighbor would be
greatly overshadowed by
its magnified long-term
economic size &
competitive clout.