East Asian Labor Markets and the Economic Crisis Impacts - Literature review Example

Economic Growth ID Location Introduction Economic growth is a desirable quality in any country that anticipates fame across the world. The ability to foster a high economic growth qualifies a country to be a superpower. However, sustaining the economy of the country such that it is always reliable is very difficult. Therefore, those countries that can maintain a high economy once they have attained have a competitive advantage in the world market. The other countries also come to respect and adore them since they motivate them towards working to achieve the same high standards. Economic growth is a measure of how hardworking the citizens of a country (Blank, 1999). The economy of the country is a crucial aspect used in determining the progress of the country. It shows that the policies in that country are of very high standards. Therefore, they have the capability of achieving high targets set by the country. The ability of most countries to experience high economies is paramount to achieving a sustainable income for the people of that country. Therefore, all world countries must to work towards ensuring that their economies are worth talking about by other nations. The economies that have poor growth are subject to many problems such as poverty. In addition, such economies witness economic issues such as inflation and depreciation of their currencies against the major world currencies (Lam, Qin & Yang, 2013). The countries in East Asia have recorded high and sustainable economic growth in the past years. Therefore, they have become the center of attraction in the whole world since they are worth emulating and associating with by other countries. The growth is an attribute to the policies that those countries use to ensure that they achieve success in their operations. The process of coming up with such policies is very lengthy. Therefore, the countries have to input enough time into the process of formulating workable plans. After that, the policies undergo an implementation for them to yield results (Leipziger & Thomas, 1993). The implementation of policies that are suitable to achieve a high economic growth in the country is not enough to guarantee success. Therefore, after the implementation of those policies, the relevant authorities have to ensure that they integrate other factors that are fundamental in ensuring a success. The integration of support factors works towards guaranteeing outcomes that are representative of the inputs. Therefore, for any country to have helpful outcomes, that country must use both the policies and other relevant factors as the primary pillars for success (Ghosh & Chandrasekhar, 2001). The East Asia countries have achieved a recommendable economic growth because of the integration of the relevant factors to achieve economic development. Their working policies pertaining economic growth are no doubt very strong to have guaranteed those countries’ economies that other countries admire (Manning, 1998). Some of the countries in East Asia that have high economic growth include Korea, Taiwan, Malaysia, Vietnam, Thailand, and Laos. Whereas Korea and Taiwan are the “Tigers,” Malaysia, and Thailand are the newly industrializing economies in East Asia. The high economic growth in the countries has earned them the name “Asian Miracles.” The six countries collectively have their similarities and differences that have enabled them achieve success in terms of economic growth. The policies and factors influencing success in the countries are similar in one way and others work differently to achieve success for the six countries (Blank, 1999). East Asia countries The East Asia countries in this case are four namely Korea, Taiwan, Korea and Taiwan economies have their success stories. Therefore, coming up with individual similarities and differences for each set of countries is an arbitrary process. The set is known as the “Tigers.” It has its similarities in policies, the factors that influence success and the resultant outcomes. Both Malaysia and Thailand were newly industrializing economies. The set includes Malaysia and Thailand countries that are the embodiment of success in the third world countries. The set has its similarities and differences pertaining policies, the factors influencing success and ultimately the outcomes. Two sets collectively fall under the East Asia group (Hira, 2007). Similarities The primary factor enhancing economic growth in the two East Asia countries is the ability to realize the required strategies to boost their economy. In essence, what was mandatory for the realization of high economic growth was a private domestic investment a growing human capital. Therefore, the domestic investment and rapidly growing human capital were the primary investments to the realization of a remarkable economic growth. The countries had some of the best and most educated labor force. In addition, they also had very effective systems for public administration. The two factors pioneered success in the East Asia countries (Chang, 2006). Sound development is a major development policy in any country. The policy enhanced rapid economic growth in the East Asia countries. The macroeconomic performance and management strategies were very outstanding for the countries. Therefore, the strategies successfully guaranteed economic growth in all the East Asia countries that is worth talking about in other countries. The strategies were good in the sense that they ensured the provision of fundamental frameworks that enhanced private investments (Tu, 1996). Although the fundamental policies cannot elaborately narrate the entire success story, government intervention was available. The intervention was systematic through various relevant channels. Therefore, the intervention paved way for the development of certain industries that were important for economic growth to take place at all levels in the countries. Such interventions were in the form of subsidization of the selected industries and maintained the borrowing rates levels. In addition, the respective governments considered it necessary to keep the rates of depositing low and protect the domestic substitutes (Manning, 1998). The government interventions in the East Asia countries led to high and more equalized economic growth. The governments developed some institutional mechanisms that enhanced the establishment of a clear performance criterion for selective interventions and performance monitoring (Stiglitz & Yusuf, 2001). The interventions take place in a manner that is performance-like. In addition, the intervention costs were not high to stop such activities. Such interventions were necessary for many situations. For instance, when the fiscal policies strongly threatened the macroeconomic stability of Malaysia and Korea, the governments considered pulling back as the best strategy. Therefore, the government interventions did play significant roles in ensuring the success of the countries (Leipziger, 1997). The public policies played very significant roles in ensuring that the countries experience rapid productivity. In addition, other factors also came handy to aid the process of economic growth. Such factors include the market-friendly view of the country. The strategy of market friendliness places emphasis on the role of governance in ensuring that there are adequate investments in the citizens if the respective countries. The market-friendly interventions serve as critical guidelines in ensuring that economies grow to the required standards. This market-friendly approach is a key ingredient in the development of the East Asia economies. Therefore, the economies are very stable now, but the characteristics emerge from the numerous of numerous policing strategies (Lee & Chan, 2010). East Asia has the policy of accumulating both the human and physical capitals. The policy is fundamental while at the same time interventionist in nature. Therefore, it works best in achieving rapid accumulation of the human and physical resources necessary for economic expansion (Shaw & Liu, 2011). The fundamental strategies in this case include the past obligations of the governments such as the provision of infrastructural facilities. On the other hand, the intervention strategies include the repression of interest rates and socialization of any potential risks hindering economic growth. In addition, intervention also entailed having it mandatory to have saving plans for emergencies and future investments for all persons and organizations (Holcombe, 2011). The process of allocating and ensuring change that was productive came handy in enhancing the achievement of economic growth. There were policies that greatly favored accumulation in the East Asia countries. Such policies include the socialization of risks and repressing of finance (White, 2005). The allocation rules that the respective governments followed form the most controversial aspects in the success story of the countries because of the strategies that they employed in achieving success for the countries. For instance, in ensuring that the labor markets are flexible for the expansion of the economy, the East Asia authorities focused on increasing job opportunities and boosted the demand for workers in the economy. The consequential effect is an upsurge of the level of employment and ultimately the market. Then, there was an increase in productivity, leading to an increase in wage levels. The aforementioned factors greatly contributed to an increase in the growth of the economy (Yu & Xu, 2001). The East Asia countries managed to learn something very significant to their success history. The primary factor contributing to the success story of the nations had only two elements complementing each other, which enhanced their growth. The first element entails getting the fundamentals right. Therefore, the grasping of what was necessary to achieve economic growth had a major contribution to the success of the countries in terms of economic growth. Thus, it follows that the ability to learn what is require before taking a decision to undertake or plan something is necessary to counter any problems. Knowing what the country requires before venturing into improving its economic state will work well because already one knows the areas that require improvements (Harrold, Jayawickrama & Bhattasali, 1996). The interventions that a country uses in an effort to achieve economic success come at a cost. The costs can be either direct fiscal costs of subsidies or the costs of the forgone revenues. The respective governments ensured that in an effort to achieve economic success that would make a historical headline, they obviously had to employ the best strategies. Therefore, they met the required costs in order to have a positive achievement in the economy (Watson, 1997). It is worth noting that the cost forgone in ensuring that the countries achieve a reputable economic growth did not go to waste. In addition, the countries continue to incur more costs both directly and indirectly in order to ensure that the economy is improving. Therefore, the expenses that the countries forgo act as fundamental inputs to the achievement of success. The success of the East Asia countries broadens the understanding of individuals about the range of policies that have consistent developments. In addition, the success teaches other nations that unless there is a willingness to experiment something and adapt to the relevant policies, then success is hard to come by whether for an individual or nation (Chowdhury & Islam, 1993). The outcome of a remarkable economic growth in the Korea and Taiwan is outgrowing to twice the rest of East Asia. The growth accounts for a three times growth as fast as the Latin America and South Asia. In addition, the economic growth of the two countries significantly outperformed the growth of the industrialized economies in the Middle East that are oil-rich. The growth also accounts of a more than twenty-five times fast growth relative to the growth of countries in the Sub-Saharan Africa. The countries witnessed a high per capita income with a spreading growth (McLeod & Garnaut, 1998). Both Malaysia and Thailand have been positive in sharing their economic success. Their Gross Domestic Product per capita income shows that the two countries did enjoy a high per capita income. During this time, there was an improvement in the income per person for the country. However, the improvements did not affect countries like Taiwan and Korea that are the “Tigers” in East Asia. The economies have a high growth irrespective of the declining inequality that that exhibit (Pomerleano & World Bank, 1998). Differences Different factors actively contributed to the success of the East Asia countries. The factors may have just been motivators to the elimination of the existing financial crisis. For instance, the devaluation of currencies in Thailand placed the government authorities in a dilemma. Therefore, the manufacturers and the exporters required to cut the value of their currency irrespective of the deteriorating performance of the exports. The devaluation of the currency had an effect of increasing the debt burden for the county. The abandonment of the attempt to maintain the dollar rate by the Thailand government led to the falling of the currency. The devaluation of the Thailand currency had an effect on other currencies within East Asia. The Malaysian currency also fell due to that effect as the investors worked hard in order to protect their assets or minimize any liabilities (Rohwer, 1995). The fall in the equity markets undermined the domestic financial systems. In addition, the falling asset values did undermine the banks and other organizations while the dollar debts increased substantially. Even though there was a possibility of averting a crisis in Thailand, or contain it by the help of the Thai authorities, the extent to which the inflow of the short-term funds would have benefited the domestic development is not clear. Therefore, Thailand was extra-vigilant to control its strategies for lending. The emerging mechanisms put in place after the situation enhanced the avoidance of the crisis. Thus, the crisis contributed to the success in the sense that Thailand learnt from currency and equity issues in order to have a policy that saw it achieve success (World Bank, 2000). On the other hand, the crisis in Korea resulted to the inappropriate importation of economic liberal agendas. The main effect of those agendas was to undermine the strength of the country. Korea was not a developing country like Thailand since it joined the industrialized nations in the year 1998 (Singh & Delios, 2005). The industrialization was a result of high domestic savings that the country had in the past. Therefore, there was also a significant lending from the pool of savings. The Korean companies in this case worked hard towards ensuring that their projects perform well nationally. The result of the gearing was a positive trend in the economy. Therefore, for Korea, Industrialization played a key role in ensuring a positive transformation in terms of what the country was able to achieve economically (Betcherman & Islam, 2001). Vietnam and Laos The second group of countries in this case is Vietnam and Laos. Just like the other aforementioned sets of countries, Vietnam and Laos have their similarities and differences in terms of policies, factors that enhanced the achievement of a remarkable economic growth. Therefore, both the similarities and differences worked to ensure success for the two countries. Vietnam and Laos are situated in South East Asia. Their economic success stories are an attribute to the outstanding policies implemented during the time that they greatly required to improve economically. The similarities and differences in terms of policies and other factors influencing economic growth in Vietnam and Laos are below. Similarities The two South East Asia countries have outstanding performance in the world history in terms of economic growth diversification. In order to ensure that they foster an outstanding economic success, the countries maintained policies whose main aim was to work towards the achievement of success. Therefore, the first obligation was the identification of the problem leading to slow economic growth. After careful examination of the issues contributing to slow growth, the two economies decided to work on strategies geared towards economic expansion (Pecotich & Shultz, 2006) The economies of the two countries in South-east Asia incurred numerous expenses in order to achieve the present admirable economic situation. The expenses incurred were in the implementation of policies and the boosting of the enabling factors necessary to enhance economic growth. The policies include the strategies pertaining the flow of income to curb situations such as inflation. In addition, there were policies to enhance foreign trade and ensure the outcomes of foreign trading are not counterproductive. There were also subsidizations of the industrial economies in order to increase their productivity. The productivity ensured that the countries acquired remarkable growth (Ljunggren & Harvard Institute for International Development, 1991). Differences On the other hand, there were different strategies concerning the policies that Vietnam and Laos employed in achieving economic growth that was outstanding and sustainable. The policies and factors were independent for each country and they worked differently to ensure economic growth. For instance, the success of Vietnam had something to do with its socialist economy. The economy always strived to have a social orientation as opposed to embracing capitalism. The argument for the orientation was that it was a multi-sector economy. Therefore, it functions according to the mechanism in the market (Ljunggren & Harvard Institute for International Development, 1991). In addition, Vietnam has a strong, workable structure enhancing the market orientation to be purely socialistic in nature. Therefore, the market has remarkably made an outstanding history in the economic development of the Vietnamese country. In addition, the country had an economic organization that respects the economic rules of the markets. Therefore, it most readily works using the rules and allows the rules to govern its working strategies. The country’s economic sectors actively worked towards achieving a common goal for the advancement of the nation (Pecotich & Shultz, 2006). On the other hand, Laos has always achieve a remarkable and sustainable economic growth. However, this was not evident during the years that Asia suffered a severe financial crisis. The country relied heavily on subsistence farming that up to now accounts for almost eighty percent of its Gross Domestic Product. In addition, the farming accounts for a fair share of the employment opportunities in the country. Therefore, Laos is one of the greatest economic hubs within South East Asia, although it actively depends on foreign aid to boost its economy. Despite the aid, it can ensure that there is proper utilization of the money that it receives, which is part of the policies that enhance growth. In addition, the support structures that have ensured that there is an achievement of economic growth includes the state of the art infrastructures that it actively maintains through the foreign aid that streams into the country (Ljunggren & Harvard Institute for International Development, 1991) Conclusion In conclusion, the state’s economy is the key driver of the nation. Therefore, for the collective success of any nation, the nation has to ensure that there is an active participation of all the small economies to create a common pool leading to economic success. The application of the best strategies in ensuring that the country achieves and outstanding and sustainable economic growth shows the maturity of the economic personnel in that country. The failure to work effectively towards the achievement of a self-sustaining economy leads to the failure of all the economic realities of that country. Therefore, all economies must work towards ensuring that they achieve sustainable economic growth that is also sustainable. Bibliography Betcherman, G., & Islam, R., 2001, East Asian labor markets and the economic crisis impacts, responses & lessons, Washington, DC [etc], [World bank [etc.]. Blank, S. J., 1999, East Asia in crisis: the security implications of the collapse of economic institutions, Carlisle Barracks PA: U.S. Army War College. Chang, H.-J., 2006, The East Asian development experience: the miracle, the crisis and the future, London: Zed / TWN. Chowdhury, A., & Islam, I., 1993, The newly industrialising economies of East Asia, London: Routledge. Ghosh, J., & Chandrasekhar, C.P., 2001, Crisis as conquest: learning from East Asia, Hyderabad [u.a.]: Orient Longman. 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Yu, Z., & Xu, D., 2001, From crisis to recovery: East Asia rising again?, Singapore: World Scientific. Read More