THE ECONOMIC MIRACLE
Economic miracle is an informal economic term commonly used to refer
to a period of dramatic economic development that is entirely unexpected
or unexpectedly strong. The term has been used to describe periods in the
recent histories of a number of countries, often those undergoing
an economic boom, or described as a tiger economy.
CHINA’S ECONOMIC DEVELOPMENT
•
China’s meteoric rise over the past half century is one of the
most striking examples of the impact of opening an
economy up to global markets.
•
Over that period the country has undergone a shift from a
largely agrarian society to an industrial powerhouse. In the
process it has seen sharp increases in productivity and
wages that have allowed China to become the world’s
second-largest economy.
•
The socialist market economy of the People's Republic
of China is the world's second largest economy by
nominal GDP and
the
world's
largest economy by
purchasing power parity. Until 2015, China was the world's
fastest-growing major economy, with growth rates
averaging 6% over 30 years.
•
China is the world's largest manufacturing economy
and exporter of goods. It is also the world's fastestgrowing consumer market and second-largest importer of
goods.[31] China is a net importer of services products.[32] It
is the largest trading nation in the world and plays a
prominent role in international trade[and has increasingly
engaged in trade organizations and treaties in recent years.
JAPAN’S DEVELOPMENT
The Japan's postwar economy developed from the remnants of an
industrial infrastructure that suffered widespread destruction during
World War II. In 1952, at the close of the Allied Occupation, Japan was a
“less-developed country," with per capita consumption roughly one fifth
that of the United States. Over the following two decades, Japan averaged
an annual growth rate of 8 percent, enabling it to become the first country
to move from “less developed” to “developed” status in the postwar era.
The reasons for this include:
•
high rates of both personal savings and private sector facilities
investment
•
a labor force with a strong work ethic
•
an ample supply of cheap oil
•
innovative technology
•
and effective government intervention in private-sector
industries.
Japan was a major beneficiary of the swift growth attained by the
postwar world economy under the principles of free trade advanced
by the International Monetary Fund and the General Agreement on
Tariffs and Trade, and in 1968 its economy became the world's
second largest, following that of the United States [Source: WebJapan, Ministry of Foreign Affairs, Japan]
CHINA’S SOCIAL MARKET ECONOMY
•
The socialist market economy (SME) is the economic
system and model of economic development employed in
the People's Republic of China. The system is based on the
predominance
of public
ownership and state-owned
enterprises within a market economy.[1] The term "socialist
market economy" was introduced by Jiang Zemin during
the 14th National Congress of the Communist Party of
China in 1992 to describe the goal of China's economic
reforms.[2] Originating in the Chinese economic reforms
initiated in 1978 that integrated China into the global
market economy, the socialist market economy represents
a preliminary or "primary stage" of developing
socialism.[3] Despite this, many Western commentators
have described the system as a form of state capitalism.
STATE CAPITALISM
•
State capitalism is an economic system in which
the state undertakes commercial (i.e. for-profit) economic
activity and where the means of production are organized
and
managed
as state-owned
business
enterprises (including
the
processes
of capital
accumulation, wage labor and centralized management),
or where there is otherwise a dominance
of corporatized government agencies (agencies organized
along business-management practices) or of publicly listed
corporations in which the state has controlling shares.
THE NEWLY INDUSTRIALIZED ECONOMIES (NIES) OR THE ASIAN
TIGERS
•
The Four Asian Tigers, Four Asian Dragons or Four Little
Dragons,
are
the
economies
of Hong
Kong, Singapore, South
Korea and Taiwan,
which
underwent
rapid industrialization and
maintained
exceptionally high growth rates (in excess of 7 percent a
year) between the early 1960s (mid-1950s for Hong Kong)
and 1990s. By the early 21st century, all four had developed
into high-income
economies(developed
countries),
specializing in areas of competitive advantage. Hong Kong
and
Singapore
have
become
world-leading
international financial centers, whereas South Korea and
Taiwan
are
world
leaders
in
manufacturing electronic components and devices. Their
economic success stories have served as role models for
many developing countries, especially the Tiger Cub
Economies of southeast Asia.
•
The East Asian model (sometimes known as statesponsored capitalism)[1] is an economic system where the
government invests in certain sectors of the economy in
order to stimulate the growth of new (or specific) industries
in the private sector. It generally refers to the model of
development pursued in East Asian economies such
as Hong Kong, Macau, Japan, South Korea and Taiwan.[2] It
has also been used to classify the contemporary economic
system
in Mainland
China since
the Deng
Xiaoping's economic reforms during the late 1970s.[3]
•
Key aspects of the East Asian model include state control of
finance, direct support for state-owned enterprises in
strategic sectors of the economy or the creation of privately
owned national champions, high dependence on the export
market for growth and a high rate of savings. It is similar
to dirigisme.
•
This economic system differs from a centrally planned
economy, where the national government would mobilize
its own resources to create the needed industries which
would themselves end up being state-owned and operated.
East Asian model of capitalism refers to the high rate of
savings and investments, high educational standards,
assiduity and export-oriented policy.
THE TIGER CUB ECONOMIES
•
A developing country is a nation that fares poorly on the
HDI and has low levels of industrialization. HDI stands
for Human Development Index. A developing country is
less developed than a developed country.
•
A developing country is a relatively poor agricultural
country that is trying to become more advanced
economically. It is also seeking to become more advanced
socially.
•
•
Tiger Cub Economies collectively refer to the economies of
the developing
countries of Indonesia, Malaysia,
the Philippines, Thailand and Vietnam, the five dominant
countries in Southeast Asia.
Tiger Cub Economies are so named because they attempt
to
follow
the
same export-driven model
of technology and economic
development already
achieved by the rich high-tech industrialized developed
country of South Korea and nation Taiwan along with the
wealthy financial centers of Hong Kong and Singapore,
which are all collectively referred to as the Four Asian
Tigers.
THE TIGER CUB ECONOMIES
EAST ASIAN DEVELOPMENT MODEL
MEASURING GROWTH
GDP & GNP
WHAT IS GDP?
•
Gross Domestic Product (GDP) is the total monetary or
market value of all the finished goods and services
produced within a country's borders in a specific time
period. As a broad measure of overall domestic production,
it functions as a comprehensive scorecard of the country’s
economic health.
•
There are several types of GDP measurements:
MEASURING GROWTH AND DEVELOPMENT
•
For many years economic development was considered
synonymous with economic growth.
•
Economic development is broader and much more
encompassing view that economic growth.
•
Economic development relates levels of social and
humanitarian achievement and income distribution, as well
as a narrower measure of per-capita income.
•
Nominal GDP is the measurement of the raw data.
•
Real GDP takes into account the impact of inflation and
allows comparisons of economic output from one year to
the next and other comparisons over periods of time.
•
GDP growth rate is the increase in GDP from quarter to
quarter.
•
GDP per capita measures GDP per person in the national
populace; it is a useful way to compare GDP data between
various countries.
GDP EXPLAINED
GROSS DOMESTIC PRODUCT/GDP is the market of all goods and
services produced within a country in a year.
GDP IN CONSTANT US DOLLARS FOR SELECTED ASIAN
COUNTRIES
WHAT IS GNP?
•
Gross national product (GNP) is an estimate of total value
of all the final products and services turned out in a given
period by the means of production owned by a country's
residents. GNP is commonly calculated by taking the sum
of personal consumption expenditures, private domestic
investment, government expenditure, net exports and any
income earned by residents from overseas investments,
minus income earned within the domestic economy by
foreign residents. Net exports represent the difference
between what a country exports minus any imports of
goods and services.
GNP EXPLAINED
One of the many metrics economists use to measure a country’s
economic output.
GDP VS. GNP
MEASURING ECONOMIC DEVELOPMENT
GDP is the market of all final goods and service produced within
a country for a given period of time. This only measured
everything produced in the country. (e.g. made in Australia)
•
GDP CARES ABOUT WHERE THE GOODS AND SERVICES ARE
PRODUCED
GNP is the market of all final goods and services produced by
permanent residents of a nation for a given period of time.
This only measures everything produced by the Australian
citizens in Australia and abroad. (made by australian)
GNP CARES ABOUT WHO PRODUCED THE GOODS AND
SERVICES
The Human Development Index (HDI) is a statistic
composite index of life expectancy, education, and per
capita income indicators, which are used to rank countries
into four tiers of human development. A country scores a
higher HDI when the lifespan is higher, the education level
is higher, and the gross national income GNI (PPP) per
capita is higher. It was developed by Pakistani
economist Mahbub ul Haq, with help from Gustav Ranis of
Yale University and Meghnad Desai of the London School of
Economics, and was further used to measure a country's
development by the United Nations Development Program
(UNDP)'s Human Development Report Office
HUMAN DEVELOPMENT INDEX
HEALTH LIFE EXPECTANCY
•
•
environment such as global warming and depletion of the
ozone layer, should also be deducted, but these damages
are hard to estimate.
A measure used World Health Organization (WHO)
summarizes the expected number of years to be lived in
“full health”. The years of ill-health are weighed according
to severity and subtracted from the overall life expectancy
rate to give the equivalent years of healthy life.
GREEN GNP
•
According to the latest data available from the WHO,
Japanese men have the longest healthy life expectancy of
72 years among 191 countries, compared to 27 years for the
lowest ranking country Sierra Leone.
The Green National Product aims to allocate the omitted
environmental degradation and resource depletion in the
computation of the gross national product.
•
The green national product indicates whether the activities
involved in the production process benefits or harms the
economy and the welfare.
•
It revolves around social and economic factors which have
been points of focus for many green movements.
•
The green national product is different from the traditional
GNP because it addresses both sustainability and the
welfare of the planet and its inhabitants. Thus, the aspect
of green accounting has gained considerable attention in
recent years around the world.
MAKING COMPARISONS BETWEEN COUNTRIES
•
HUMAN DEVELOPMENT INDEX
•
One of the more recent approach developed to address
that inherent shortcoming of GDP and GNP as growth and
development measures is based on what is known as the
“green” system of national accounting. GNP is the informal
name given to national measures that are adjusted to take
into account the depletion of natural resources (both
renewable and non-renewable) and environmental
degradation.
The type of adjustment made to standard GNP would
include the cost of exploiting natural resource and valuing
the social cost of pollution emissions. Damages to the global
•
PPP method gives higher estimates of living standards for
developing countries compared with exchange rate
method. The reason is that GDP based on exchange rate
valued depend only on their relative price of traded goods,
whereas PPP method considers a basket of goods that
include both traded and nontraded goods.
•
Nontraded goods are generally much cheaper in developing
countries and this helps to lift the estimate of GDP for these
economies.
•
PPP method is unaffected by exchange rate changes.
•
PPP method has become the preferred measure of GDP for
country comparison.
•
One difficulty of PPP method is that it is costly to maintain
since price movements need to be updated on a regular
basis.
EXCHANGE RATE METHOD
Uses the rate between the local currency and the US dollar to convert
the currency into US dollar equivalent. A country’s GDP and GNP per
capita would then be valued accordingly, in US dollars.
•
•
PURCHASING POWER PARITY (PPP) METHOD
Develops a cost index for comparable basket of consumption goods in
local currency and then compares with this prices in US for the same
set of commodities. It is defined as a number of units of the country’s
currency required to buy the same amount of goods and services that
a dollar would buy in the US. Because PPP method uses a basket of
many goods and calculates the relative price of these goods, many
economists view this as a better measure of the relative standard of
living than the conventional exchange rate method.