The Impact of East Asian Countries on the Global Economy

The Impact of East Asian Countries on the Global Economy

Over the past several decades, East Asia has emerged as a core area of the world economy. East Asia comprises of China, Taiwan, Japan, South Korea, and North Korea. The region’s significance in the world economy is attributed to its advanced economy and its huge population. One of the countries that has undergone never seen before economic transformation is China, which currently competes with traditional world economic superpowers like the United States. On the other hand, Japan, Taiwan, and South Korea are also emerging as the world’s trading strongholds. East Asia countries were divided along political lines and brought together by cultural similarities. The emergence of capitalist developments, a growing population, and access to the outside world have bolstered the region’s global significance by offering it access to the larger and more dynamic global market.

China’s transformation and integration into the global economy have played a significant role in improving the country’s role in the global economy. Following the Communist Party’s rise to leadership following a civil war, multiple changes were designed to integrate the country into the world economy. Among the policy changes that played a significant role in re-introducing China into the global economy was the introduction of enhanced export trade, designed to enhance the country’s role in the international economy. Agricultural products such as tea brought significant revenue to the country’s bottom line. Also, the entry of China into the World Trade Organization in 2001 bolstered trade liberalization (Rowntree 379). The World Trade Organization boosts international trade and facilitates international economic changes. After it entered into the WTO, China accessed a broader global market for its products, hence solidifying its position in the international market.

Also, China’s industrial reforms and special economic zones (SEZs) encouraged foreign direct investment. For instance, the Shenzhen Special Economic Zone that borders Hong Kong was largely successful. After noting the benefits of special economic zones and their contribution to the national economy, the country soon opened more special economic zones, especially in the country’s coastal regions (Crane et al., n.p). The basic strategy and motivation for setting up these economic zones was to attract foreign companies that would manufacture and export products, generating export income for the country to use in infrastructural development. China has since become one of the world’s leading manufacturing hubs due to the availability of cheap labor and the government’s policy of non-intervention in foreign investments and trade. Apple Inc., a leading smartphone and electronics company, conducts a majority of its manufacturing work in China, contributing to China’s GDP and creating jobs for the local population. Based on these capitalist developments, the Chinese economy grew at an annual growth rate of 10% from the early 1990s to 2010 (Rowntree 379).

Another influential economic power in East Asia that has impacted the global economy besides China is Japan. After World War II and the exit of the empire, Japan initiated aggressive capitalist policies designed to boost the economy (Rowntree 376). One such policy was the export of manufactured products to other countries. Japan started by exporting consumer goods and later advanced to export high-end cameras, automobiles, electronics, machine tools, and computer equipment, among other technological products. The policy was so effective that by the 1980s, Japan led the global high-tech economy. Japan’s export policy post World War II is similar to China’s since both are based on the aggressive export of locally manufactured products.

However, Japan has experienced some difficulties that have slowed the country’s economy since the 1990s. First, Japan’s inflated real estate economy collapsed, leading to a banking crisis (Nanto 10). Besides, many Japan-based companies relocated to China as the country faced a financial crisis. In an attempt to facilitate economic recovery, the Japanese government has put in place a massive state spending policy, but this has made matters even worse as it has led to massive deficits (Nanto 10). Another contrast between Japan and China is that while is on population prospects. While China is endowed with high fertility rates and exponential growth of a young population, Japan is experiencing low fertility rates and a shrinking working population (Rowntree 377). Nonetheless, both East Asian giants still control the world’s economic systems.

In conclusion, the influence of East Asia on the global economy over the past several decades is significant. East Asia comprises of Taiwan, Japan, China, South Korea, and North Korea. In economic terms, the influence of China and Japan is phenomenal. On the one hand, China’s rise in the global economic systems started when the country initiated capitalist developments after the end of the civil war. The creation of special economic zones with limited government interference attracted foreign direct investments and bolstered export trade. On the other hand, Japan’s growth started post-World War II after the exit of the empire. The country, which started as an exporter of inexpensive consumer goods, later started exporting automobiles, machine tools, and other high-end technological products. However, the 1990s banking crisis and a shrinking working population have affected Japan’s fortunes in the global economy. Nonetheless, the influence of East Asia countries on the global economy is overwhelming.

References

Crane, Bret, et al. “China’s special economic zones: an analysis of policy to reduce regional             disparities.” Regional Studies, Regional Science 5.1 (2018): 98-107.

Nanto, Dick K. “The Global Financial Crisis: Lessons from Japan’s Lost Decade of the 1990s.”    United States: Congress: Congressional Research Service (CRS), 2009.

Rowntree, Lester. “Globalization and diversity: Geography of a changing world.” (2014).

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Explain how the economic growth of countries comprising East Asia has and continues to transform the global economy. Specifically, compare and contrast the role of Japan’s post-WWII to the 1990s era and present-day China. Include specific examples, evidence, and statistics that support your claims.

The Impact of East Asian Countries on the Global Economy

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