Economies Economic Growth in East

Economies

Economic Growth in East Asia

The economic growth of the countries in East Asia has been the subject of debate for numerous specialized sociologists and economists, amongst which most tend to associate it with increased industrialization and modernization in the region. "Historically, modernization is the process of change towards those types of social, economic and political systems that have developed in Western Europe and North America from the seventeenth century to the nineteenth and have spread to other European countries and in the nineteenth and twentieth centuries to the South American, Asian and African continents" (Eisenstadt, 1966).

Economists tent to agree that growth is possible only if three major forces occur simultaneously and work together to generate positive effects upon a country's economy. However they often disagree on the role played and proportion held by each one of the three forces, they all seem to agree on the delimitation of these forces into:

the rate of physical capital accumulation the rate of human capital accumulation, and the rate of technological progress" (Siamwalla)

And this is where the debate over the economic growth in the East Asian regions occurs, for some economist state that capital accumulation was the primary generator of growth, whereas others argue in favor of technological advancements as the force behind growth, and other mention labor force development as the primary force. "Everyone agrees that the economies of East Asia, and particularly the Four Tigers, have grown spectacularly over the past generation, but nobody seems to agree on why" (Sarel, 1997)

In regard to the capital accumulation, it can easily be observed that the levels increased significantly in both economies of the population as well as national and international investments. The population's economies generally increased due to the large rates of interest, which directed the population towards bank savings in the attempt to secure their money and earn the interest. Then, in countries such as Taiwan and Korea, the government manifested strong involvement in the process of allocating the investment funds towards those industries that needed development. In these countries then massive industrialization had occurred. On the other hand, in countries like Thailand or the Philippines, the state powers did not intervene in the fund allocation process. Therefore, the banks placed their money based on their own preferences and as a result, in these countries, the market of banking and financial institutions grew exponentially (Siamwalla).

Then, another major part in the growth of the region was due to the government's interest towards educating their youth in the desire to create specialized and skilled workforce. "On the impact of schooling, there is little disagreement in the literature. Two salient points are broadly accepted, firstly, schooling enhances productivity and therefore economic growth significantly, and secondly, very few would advocate the use of untrammeled market forces in determining the level and direction of investments in schooling" (Siamwalla).

The changes in the population's behavior have also influenced the economic growth as more and more Asians found work outside the home and were committed to contributing to the country's economic stability. And those that remained within their households became specialized on agriculture and produced high quality products, aided of course by the newer and more efficient machineries. Furthermore, yet another major player was represented by the state authorities, which reconsidered their protectionist policies and opened the region for international trade. However several import regulations were still valid, the region's exports boomed.