Economic Growth without Employment in Asia - Case Study Example

nоmiс Growth without Еmрlоymеnt in Аsiа University’s Name Submitted by Names: Tutor: Date: Introduction Economic growth or development is the overall rise in the level of economic activities in a given country, region, or continent. Over the recent past, majority of the least developed countries have been realizing a lot of development in various sectors of their economy. Asian countries are just but good examples of such countries. One of the countries that have continued to register a lot of economic development is the Asian countries. These include countries such as China, India, Philippines, among others. Nonetheless, as these countries’ economies continue to improve, majority of them have failed to register corresponding job creation opportunities. Conversely, this has led to increased number of unemployment cases. Therefore, this paper intends to establish whether indeed it is feasible to have economic development while in unison creating jobs to the citizens. Economic Growth and Unemployment First, employment opportunities are wide and available within a short term period. However, the situation becomes different when it comes to the long term basis due to the nature of labour requirement within a given city or a country. As a country develops, new sectors are created. These sectors require totally different technical manpower which may at times be lacking locally. For instance, jobs are skewed towards one sector1. In most cases, economic development leads to concentration of jobs in certain industries especially the service industries. Most of these new created jobs are categorized are white collar job or occupation. Conversely, the overall job increment leads to decrement in the number of job opportunities in the manufacturing sector2. As a result, majority of the developing countries have seen a decrease in the level of blue collar employment opportunities. As such, local workers who are in the blue collar sector live under threat when a country is on the verge of take off in terms of economic development. Job creation in the manufacturing industries remains negative, thus, worsening the situation3. Economic development paves way to urbanization of a country. Therefore, more industrial land is encroached as the local authorities urbanize most of this land. Therefore, manufacturing industries are phased out, leading to massive job loss. However, blue collar employment opportunities can still be found in areas that are not fully developed. A sizeable population relies on the blue collar employment as compared to those who rely on the white collar one. Therefore, economic development may lead to massive loss of job opportunities due to its interference with the industrial land. Therefore, a large population loses its employment as a result of economic development in a given country. The few employment vacancies in the white collar sector may go to foreigner due to limited or lack of local technocrats to handle these jobs’ requirements. It is worth noting that employment opportunities that are numerous now may continue diminishing as times goes. The local diversity in terms of employment opportunities will continue decreasing as a result of more concentration in the service industries. However, this phenomenon takes place on a gradual pace as a country becomes more economically developed. Majority of those who are affected by the economic development are the low skilled as well as those who have low levels of education4. Economic development is normally accompanied by creation level of job creation that requires a lot of technical skills in addition to adequate education5. It leads to industrialization of a country and hence in the process leading into reduced level of competitiveness of the locals. Majority of Asian countries have been hit hard by the loss of jobs in the blue collar sector due economic development which has become rampant in the continent. Countries such India and China have continued to experience more economic development and hence as a result continued to experience low level of job creation especially to people who are less educated or semiskilled. On the contrary, white collar job creation has continued to rise as a result of this industrial development or economic growth. Propensity of people falling under the blue collar jobs far outweighs the possibility of being employed in the white collar sector. Continuous development of this scenario may lead a country into a crisis. Here, there will be creation of a very large population that will remain unemployed due to lack or low level of technical skills. The Okun’s Law The scenario is what exactly is addressed in the Okun’s law. The law is all about addressing the type of relationship that exists between the level of output growth and the unemployment rate. Briefly, the law tries to relate the changes in the unemployment rate. Therefore, the general law states that there exists a relationship between the level of unemployment and growth output. The relationship is highly critical in trying to measure the level of the potential output. Okun’s law is based on the fact that potential output cannot be said to be the optimal output that an economy of a country can produce6. Instead, the law favours evaluation of the potential output that ought to be measured at the stage of full employment. The law classifies the potential output as the employment level that is usually absent in the form of inflationary pressures. Moreover, it is also referred to as the non-accelerating employment rate. As a result, unemployment deviation could depict a relationship with the output’s deviation from the trend that it follows or forms. Okun gave out a formula below to represent the kind of relationship that exists between the rates of unemployment and the output gap. Below is the mathematical formula for Okun’s law *Retrieved from Okun’s Law Unevenness in Economic Development in China China is one of the fastest growing countries not only in the Asian continent but also across the world. China’s economy has continued to grow rapidly over the last three decades. As such, the move has seen it become the second largest economy in the world. Despite the country registering a lot economic growth, China has not been hit hard in terms of trying to create employment to its citizens. China case portrays a completely different scenario where by the country has completely defied the law of Okun. Despite China registering higher levels of economic growth and development, the level of employment creation has also been reaching satisfactory levels. China’s situation can be regarded as “growth with equality.” It represents both economic growth as well as social redistribution features. China special features in the course of its economic growth and development has made it become one of the most powerful nations economically. Strengthening of its economic status has helped it to tilt the world political landscape over years. Currently, China is leading in terms of economic development over the other East Asian countries. In a rare case, China’s economic upsurge has not only raised its total GDP but as well benefitted a large population of its people. Economic development has seen raised levels of income as well as people’s living standards. China’s successful balancing between the level of economic growth and that one of employment can be attributed to several factors. First, setting up of several numbers of multinational companies within China has provided blue collar jobs to a lot of the Chinese. One good example is the establishment of Wall mart in China due to the availability of cheap labour as compare to the United States. Setting up of a multinational company in China has ensured that a larger population of Chinese is employed regardless of the education status. Moreover, its governing laws and principles ensure that each and every single chance that can help to create employment to its people is utilized maximally. For instance, China has a program that allows prisoners to work while they are still serving their jail terms. Here, prisoners are provided with more than 30 different jobs7. Moreover, inmate who are about to end their jail term are already assured of securing a job before they are actually released. Moreover, China has been registering an improvement in the level of employment whereby rate of unemployment went as a low as 4.3% by June, 20098. This has helped to improve the status of China as one of few countries that considers the welfare of its people alongside economic development. McKinsey Economic Transformation in India India is another Asian country that has been first developing economically like China. The country has one of the highest numbers of people falling under the poverty line across the globe. Nonetheless, the condition has been changing rapidly due to the entry of a company referred to as the Mc Kinsey. The company serves both the Indian government as well as the country’s private sector9. It is a distinct company in that it offers advisory services to different institutions on how they can improve their service delivery. The advices are distinctive, lasting, as well as being substantial in terms of improving performance of an institution10. Currently, the firm has set up regionally offices across India in order to offer its services effectively. These are in states such as Delhi, Chennai, Bangalore, as well as in Mumbai. The company’s entry in India has helped to empower majority of Indian from extreme poverty levels. Its expertise has been able to transform India by helping it increase job creation rate and also register higher level of economic growth. Additionally, the country has become more effective in improving its level of basic services delivery11. Indian government in conjunction with the company was able invent various economic reforms that could help to raise number of employment of its citizens. For instance, there was introduction of “the Empowerment Line” policy. Here, an “Access deprivation Score” was designed. Invention of the tool was highly critical in assessing basic services availability across the country. The bottom line was to ensure that as far as Indian continued to develop economically, job creation was growing upwards. The policy is extremely significant in ensuring that there is continued improvement in the level of standards of living across India. Conclusion It is worth noting that economic development can be both a curse as well as a blessing when viewed or handled different. In a time like this when almost all of the 3rd world countries are registering economic development, there is need to design ways of mitigating its side effects. Such countries can borrow ideas from China and India which have been successful at ensuring that there is both economic development as well as massive job creation at the same time. It should be no longer a worry that the two deliverables cannot be achieved at the same time. Therefore, it is critical to borrow these two countries ideas and policies in order to realize better economic development. 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