Growth of Japan and the Pacific Rim Nations

Read the following article, follow the instructions, and answer the questions

Growth of Japan and the Pacific Rim Nations

Japan



During the 1980s and 1990s, Japan led East Asia in what many called an economic miracle. One Japanese advantage came from large industrial groups called keiretsu (formerly known as zaibatsu). A large commercial bank is at the center of each group, providing to all the members and often on favorable terms unavailable to outsiders. Those groups draw companies from every industrial sector. Each company has separate ownership and its own board of directors. Often, companies within the group own shares in other member companies, sell their products to other group members, buy raw materials and equipment from other group members, and encourage executives to meet and coordinate their business strategies.


Close relationships between business leaders minimize competition. Banks and businesses nurture a long-term, mutually supportive relationship. Sometimes, those structures go by the name of "crony capitalism."

Four Tigers

Led by Japan, other Asian nations followed in their industrial success. South Korea, Singapore, Hong Kong, and Taiwan earned the nickname of the "four tigers" (or "little tigers") because of their aggressive economic and technological growth. Singapore's leader, Lee Kuan Yew, attributed their success to "The Asian Way," insisting that Confucian teachings encouraged people to "obey authority, take care of family, and work as hard as you can." While the four tigers may have led the pack, other tigers followed, coming from Indonesia, Malaysia, the Philippines, and Thailand.


If crony capitalism operated in Japan, it ruled in East Asia. Family relationships and political alliances controlled investments and financing arrangements. Asia also offered a large, cheap work force. With little training, workers could assemble athletic shoes or clothing. Higher skill levels—but still low wages—provided assembly lines for computers and electronic goods.


During the 1980s and early 1990s, the four tigers, Japan, and even Malaysia and Indonesia enjoyed growth rates of almost 8% per year. Despite that "Asian miracle," in many countries, that growth benefited mainly the economic and social elite.


Global Economy, Corporate Control


By the end of the 20th century, countries around the globe were interconnected economically. Corporations frequently grew larger than governments, and often, it seemed that business dictated terms to governments. Today, even large countries can no longer control the flow of capital in and out of their markets. Privatization, a favored form of globalization, means selling government-run businesses to private corporations. Often, the purchasing corporation is from a different country.



Along with businesses that actually produced goods for sale, financial markets boomed. Investors bought and sold currency, bonds, and loan paper. World financial markets came to look more and more like a giant casino.


Crashing into the Future

In about 1997, a financial crisis hit Asia. One country after another was forced to devalue its currency. Speculative investors, who had made huge paper profits buying and selling in international markets, quickly moved their money out of Asia.


As Asian countries devalued their currencies and watched investments leave, the International Monetary Fund and World Bank stepped in to attempt a rescue. They were willing to make emergency loans but only on the condition that Asian nations restructure their economies by minimizing government involvement in economic matters (deregulation), privatizing state-owned industries, and strictly limiting social expenditures by the government.


By 2001, economic recovery seemed to be in progress.




"Growth of Japan and the Pacific Rim Nations (Overview)." World History: The Modern Era. 2008. ABC-CLIO. 7 Oct. 2008 http://www.worldhistory.abc-clio.com/.

Instructions

To find out more about the economies of the "four tigers"—South Korea, Singapore, Taiwan, and Hong Kong—go to the U.S. Central Intelligence Agency's World Factbook(Link). Go to each country's name in the drop-down menu to find that country's information. (Go to "Korea, South" for South Korea; Taiwan is at the bottom of the list.) At the country information page, click on the "Economy" link at the right. That link will take you directly to economic information about the country.

Questions

Read the overviews, then answer the following questions for each country:

1. 
   
   What factors have caused this country to be an economic success?


2. 
   
   What factors have caused any economic downturns for this country?


3. 
   
   Does this country have any current economic problems? If so, what are they?


4. 
   
   What does the economic future look like for this country?

"Growth of Japan and the Pacific Rim Nations (Overview)." World History: The Modern Era. 2008. ABC-CLIO. 20 Oct. 2008 .

PS. In the 1990's Japan experienced a similar economic problem to the one were are currently going through. It was called a "bubble economy" (LINK) because many top economic thinkers though the economy of Japan would "pop". It took Japan nearly ten years to recover from this crisis. What does that mean for us, in the US? We will see.