East Asia’s economy is one of the most successful regional economies of the world. It is the home of some of the world’s largest and most prosperous economies such as China, Japan, Hong Kong, Taiwan, and South Korea. Those countries are collectively called the ‘Asian Tigers’.
Some of the factors that account for the rapid development of these countries in Southeast Asia are:
1. High savings rate: The Asian Tigers embarked on a very high savings rate and that meant that they were able to have a very high investment rate with investments that they funded. Savings are more important because they a means to an end and reasonable way to fund investment. They invest in hard things—plants, properties, equipment, infrastructures, roads, airports, seaports, education, and in people-skills and these are all the things that make them more productive. They don’t go have to go begging around the world, paying high-interest rates or worry that all the other economies that invested in them would pull out. They save for themselves, and that is not easy to do. In savings upward of 30–40% of the gross domestic product per year, the Tigers embarked upon a plan of huge investments that transformed the economy. Massive increases in the productivity of labour generally came from a big increase in investment.
2. Stable and relatively low wages: The Tigers kept their wages very low. This means that they produce more products at low prices to consumers around the world. To keep the wages low, meant that they had to engage in macroeconomic policies that kept their currencies relatively cheap and to sustain political support in delivering goods that made the economy richer, while not receiving high wages, yet the later was seen as part of the plan, and it is something that really worked. It wasn’t just cheap goods for a richer West and Japan, but a way of holding together the economy.
3. A relatively open trading system: There was a relatively open trading system in the Far East, which considerably helped to stimulate cost-efficiency and changes.
4. Presence of an abundance of natural resources: There was an abundance of various kinds of natural resources. Agricultural and mineral resources were abundantly available for the Tigers to use which aided the economic development of the Asian countries.
By Apeh Emmanuel
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