of Geography the Pacific Rim Notes March 7, 2006 Political Economy and Development in East Asia All the Asian countries have the same agenda: to promote economic development and wealth creation. The prosperity of the people is the most important thing to these countries. This is so dominant to them because only North Asian countries (in the past) have been able to break out of the third world thing. The State itself is important: (how did the typical east asian "developmental" state achieve economic expansion and successfully integrate itself in the world's economy? Japan, defeated in the second world war, now it is second only to the United States (and they have half of our population). South Korea, Taiwan, Singapore, etc. Even now in the south Malaysia, Indonesia, Thailand, they are all copying the early developers of Japan and Korea. They have been so successful thus far that they are being called "economic miracles". Even China, who only opened itself up for trade in 1978 has had a 9-12% growth in its GDP making it the second leading producer in the world. Previously the IMF gave them money and then could say that Africa should emulate these Asian countries. In 1997 East Asia had a financial crisis the so called 1997 Asian Financial crisis, the collapse of Thailand's currency, then Indonesia, and ending up with South Korea. (So right as the world was telling everyone to emulate Asia, Asia collapsed.) Then those who had said THIS is the reason the Asians are rich, were now saying THIS is the reason they collapsed. Many started asking, if everyone did imitate East Asia's rise, is it universal? Or is East Asia unique, and it wouldn't work for other countries? Even if the East Asian model can be copied, is it something we should do? East Asias export led way, isn't this ultimately self gain. If everyone produces like China, who would be able to purchase the articles? What are some of the distinctive features of development in East Asia? How the west developed: Capitalism slowly developed, we had no competitors, so we had the luxury of time to build everything and create things. But the rest of the world are considered to be "late developers". That is, the West was way ahead of everyone else. The later a country starts its development path, the greater the role of the state (to compensate for the fact that they are late). Also Imperialism (specifically Western) played a huge role in East Asia. Because of Imperialism the governments in Asia HAD to be strong, and had to be able to maintain order. Another key factor that distinguishes the governments in the Pacific Rim, is the cultures. In east Asia, Asians focus on the collective good, the group over the individual (whether it's the family, or the state, its over the individual). Because Asians focus on the group constrate they had to narrow their pursuits. Furthermore this implied that Asians were much more willing to accept Authoritarian government. Because Asians see their country more as an extended family (with government as patriarchal father), and Asians are used to obeying the people at the top. Just as in an extended family then, the government ensure should smooth harmony and functioning of the state. 4 Models of Political Economies The Capitalist Economy: (or market) Classic Adam Smith (The Wealth of Nations), according to this model economic activity is separate from politics. The economy should have its own rules, and the state shouldn't be involved in the economy at all (or at least to a minimum). Private ownership is paramount. It is guided by the rules of competition. And value is determined not by the state but by supply and demand. It is very demand oriented. "The Invisible March 7, 2006, Page 1 of 2
Hand", that by allowing individuals the freedom to pursue their own profit, ironically the public good is achieved. Example: The bread maker who makes awesome bread for the sole reason of wanting to be rich (which in the end benefits the whole village because they get awesome bread). The job of the state in this economy: The role of the state is to create and preserve a stable environment in which individuals can grow and their property can be protected, where there are courts for issues to be handled in. The state is responsible for the military to keep the nation safe, to print money. They are involved in market failures. When certain things aren't optimally created, the state comes in and taxes you and thus creates freeways and airports with this revenue. One is also supposed to try to get their comparative advantage. Make the stuff you're good at. (Japan should make cars, we should STOP making cars, produce ipods, movies, sports, etc.) The Planned Economy: (Former Communist States) The state takes total control over all factors of the economy. The state draws detailed plans for what good will be produced, for how many, and for how much. Thus it is supply oriented (opposed to demand). They make decisions based on supplying citizens with goods and services they think are good for them. The state is focused on guiding every aspect of the society (political, social, economic, etc). Why does it do this? Because planned economies argue that they must be this involved in order to catch up with the dominant capitalistic economies. The states must be this involved because they have to make up for now having a big entrepaneurial class. Also that poor countries can't become wealthy by being capitalistic. They say that poor countries in the "periphery" can't be capitalistic because they will always be exploited because capitalistic economy was created for rich economies. The mixed Economy: (Hybrid Model) Attempts to combine the strengths, and avoid the weaknesses of the both the market and planned economy. Significant sectors of the economy is owned or controlled by the state, but the rest of the economy is in private hands. Such as banking, transportation, or communication. Furthermore the state is involved and is much more likely to regulate the private economy (set up minimum wages) and is much more likely than a market economy to regulate the actions of private individuals. ----- these were considered the 3 Economic ways. THEN Asia happened....-------------The Developmental State Economy (see the next day. March 9, 2006)
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