Essay/Term paper: Rapid economic growth in east asian countries

Essay, term paper, research paper:  Economics

Rapid Economic Growth In East Asian Countries


Over the past decade, there has been rapid long-term economic growth
for East Asian countries. These newly industrialising countries are
experiencing growth rates in GDP per head at around 6% to 7% compared to the 2%
to 3% for most industrial economies. If this growth continues, South Korea and
Taiwan might take away America's distinction as the world's richest country.
This rapid economic growth is a result of several economic and political factors.
The pace of economic development, growth in world trade and communications,
and the investment in physical capital and education have all played a role in
the sudden rise of the East Asian economies.
One factor which has helped the long-term economic growth of South Korea
and Taiwan is the pace of economic development. The pace has accelerated over
time. As time progresses, countries seem to be able to grow at a much more rapid
rate. From 1780, it took Great Britain 58 years to double its real income per
head. It took America 47 years to double in the 1800's while Japan took 34
years from the late 19th century. Finally, South Korea was able to double its
real income per head in an amazing 11 years from 1966. It would seem that the
later a country has industrialised, the faster it has been able to do so.
Another important factor is the degree to which a country is behind the
industrial leaders. In the case of the East Asian countries, South Korea and
Taiwan, both started out with an extremely low income per head. This allowed
much faster growth when copying the leaders. It is important to realize that
these growth rates should slow as the countries catch up.
An area in which East Asia is investing much of its GDP is in physical
capital and education. Compared to the industrial leaders, the East Asian
countries have sustained a much higher investment in these areas. South Korea
invests 35% of its GDP which is more than double America's capital spending.
The East Asian countries have placed much emphasis upon education. Education
is the key to mastering the technologies which they have been borrowing from the
economic leaders of the world. The standards of education for these countries
have improved as rapidly as their economies.
Another factor which has helped the long-term economic growth of these
East Asian countries is the global market. No longer is a country's economy
hurt by a small domestic market. World trade has grown tremendously over the
past few decades. Exports account for about 30% of South Korea's GDP and 40% of
Taiwan's. This growth in world trade has allowed technology to become more
available today than in the past. The growth in international communications
has helped spread new technology throughout the world.
South Korea and Taiwan should continue to experience long-term economic
growth in the next several years. Both countries are investing heavily in
education and physical capital; areas which are key for economic development.
They also are benefiting from world trade and the diffusion of new technologies.
All of these factors should help continue their recent economic success.