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Miracle Economics

Miracle Economics In his book Asias Miracle Economies, Jon Woronoff examines the dramatically quick economic growth of five Asian countries. The five countries examined are Japan, Taiwan, Korea, Singapore, and Hong Kong. Through his study the author demonstrates that there was no miracle involved in these countries growth. They applied specific strategies that were adapted to their local environment. Some of these strategies worked some didnt.

The author says that by examining these nations, one may be able to repeat there success. The book is divided into three parts. In Part One: Places the author tells where these countries started from. Some were poorer than average. Some had little natural resources.

The people of these countries had different outlooks on the world thus different behavioral tendencies. Part I is divided into five chapters each examining a countries. Woronoff begins Chapter 1 Japans Two Miracles, by discussing Japans first industrial revolution. In 1853 when Commodore Perry opened Japans ports to foreigners, Japan was feudal society. It was not very evolved nor very modern. Agriculture was good but not enough for the growing population.

Japan wanted to learn from the West. Japan sent many students to Europe and the United States. Soon Japan began industrializing. Groups called zaibatsu formed. These zaibatsu dominated industry and commerce. They manipulated politics to suit their own needs. Japan soon began concentrating own building a War Machine. After the Russo-Japanese War, the country went into a recession.

But after the First World War, Imperial Japan began growing up until the end of the WWII. The war left Japan resouceless and heavily overpopulated. The victorious Allies gave or rather imposed democratization onto Japan. The zaibatsu were disbanded. Japan was left weak.

The United States provided much financial support. Japans economy then began growing very fast. The Japanese protected themselves by implementing quotas and then non-tariff barriers. Companies such as Sony, Honda, and YKK improved production methods. Businessmen and bureaucrats worked together. Many firms formed keiretsu.

Keiretsu was a sort of lateral conglomeration of banks and companies loyal to each other. The author concluded that the 1980s, Japans economy had surpassed those of France and Britain and rivaled the United States economy. The Japanese could now purchase many luxury consumer goods, but at what price. Their obsession with production as their prewar obsession with military might had its drawbacks. Lack of urban planning has led to urban congestion with subsufficient pluming and sewage. Their economic success came at the cost of living conditions, human relations and natural beauty. The author begins Chapter 2 Taiwan, Industrial Island with a brief history of Taiwan.

Taiwan, the island of Formosa was once a Dutch trading center. Then it became a part of the Chinese province of Fukien in 1683. With this Chinese began immigrating. In 1895, Formosa was ceded to Japan. The Japanese realized the agricultural potential of the island. They built roads, railways and harbors. After the Second World War, the islands economy which had been based on exporting food and raw material to Japan was now greatly weakened.

In 1949 when the Kumintang moved to the island , so came over one million refugees, fleeing from the communist mainland. The first priority of the new Republic of China was its military. Aid came from the U.S. in 1953 in the form of the Mutual Security Treaty. Taiwan attempted many things to help its economy.

These implementations made matters worse. The Nineteen Point Program of Economic and Financial Reform enabled local businessmen to act more efficiently and purposely. Despite many factors against it the Republic of China has been able to steadily grow economically and is likely to continue to survive into the future. In chapter 3 Korea Man-Made Miracle the author explores the history of Korea. Korea has long had a history of Chinese domination. But as China became more an more under western spheres of influence, Korea began to be dominated by Russia and Japan.

Soon after Japan took control. Japan used Korea as mercantilist colony. Japan did build roads and develop the economy. After the war, Korea was left in bad shape. The country was divided into a U.S.

zone and a USSR zone. The zone formed two separate nations. North Korea had all of the industry and the South had all of the agriculture. Soon the North invaded the South. The U.S.

came the aid of the South, driving the communists back north. The United States provided financial assistance for reconstruction in 1954. Economic progress was slow coming. In 1961, General Park takes charge. He was a military man. He wanted the country to emphasize economic growth. Under his influence, the government played the major role i! n all industries.

Often directing in which sectors the economy would grow. Under Parks leadership the economy grew rapidly, yet he overstayed his welcome and was assassinated in 1979. Koreas economy continued to grow throughout the 1980s. Chapter 4 Singapore, Capitalist Haven tells of Singapore. In 1819, the British set up a little trading port on the island Singapore. It was a sparsely inhabited island, with no visible wealth.

The port attracted traders almost immediately because the British ran it as a free port which welcomed all ships. In the 1860s, after the opening of the Suez canal is when the port became truly popular. It became a frequented coaling station. Many goods came there from Europe. These goods were broken down to smaller lots for redistribution throughout the region.

By the twentieth century it was a bustling commercial center. The Japanese occupation of 1942-45 ended all that. After the War, Singapore had lost it trade links. It tried to form a federation with Malaysia, but it fell apart shortly after. In 1965, Singapore started all over again.

There was a large population, no agriculture, and little natural resources. Singapore sought foreign investors. It provided incentive for companies to come in. Banking is one of the industries that bloomed. Singapore became the Asian Switzerland. Singapore steady economic growth helped its citizens, whose per capita GDP had become the second highest in Asia by 1982.

Chapter 5 Hong Kong, Capital Paradise, tells of the history of the former British possession. Hong became a crown possession in 1841. It was a small piece of territory with no intrinsic worth. The British established a free port there. That soon began to thrive.

It became integrated into the Japanese empire for a short time during the War. Afterwards it returned to Crown. Hong Kong rulers followed a strict policy of non-intervention in the economy. The laissez-faire policy was successful. Free- enterprise has truly worked. There has been steady growth in exporting as well as low unemployment. The standard of living has all around improved.

In Part II Polices of his book Woronoff tells of how these countries did not possess some sort of natural endowment that led to their success. It was their policies and how these policies were carried out that did it. Each country had different policies geared toward their local environment. These policies varied from much government involvement to the opposite scenario of complete laissez-faire. Chapters 6, 7, and 8 discuss the way that economic growth were strong goals in these countries.

The author goes further to explore the different way of which counties varied capitalism. Korea where the government not only encouraged the economy towards certain sectors, at times it deliberately directed the direction of the economy. Japan and Taiwan were the government and business often worked together. The other extreme were Singapore with its very liberal policies and Hong Kong, the epitome of laissez-faire. The industries that developed were different depending on the nations goal. Some nations built up specific industries in order to avoid foreign dependence.

Chapters 9 and 10 examine the importing and exporting strategies of these nations. Exporting has been especially successful for these nations for to reasons. One reason for their success they have consistently working at competitiveness, improving their products. Second the world economy has been growing. Thirdly these countries have been trading more amongst themselves.

Then the author discusses the Asian use of import substitution. In Chapters 11 and 12, the author tells of how the Five used technology to help them advance. These countries successfully adopted western technology and production strategies. They then went on to devise strategies of their own. The author further notes how many under developed countries had more resources but were unsuccessful at adopting these strategies.

The failure of many others is what makes the success of the Five seem miraculous. In Part III Prospects, the authors tells of the economic conditions throughout the world since the Second World War. He discusses the worldwide growth in the first two decades after the war. Then the oil crisis and recession of the 1970s slowed down all but a few economies, the Five were among those which continued to prosper. In chapters 13 and 14, the author introduces the problems of the future. He say that getting a strong economy is one thing but keeping it strong is another.

In the coming years will the Five work together as allies or will they become rivals for competing markets. Chapter 15 tells of influence the Five are having not only their region but worldwide. They are becoming models for other Asian countries. Chapter 16 East Confronts West discusses the effects the growth of these nation has had on the Europe and the United States. The West has felt the effects of these nations greatly.

The West once had unchallenged access to the Asian market for sales as well as the allocation of raw material. The Five is bringing new competition. In the future a Pacific Economic Community may present many challenges to the West. In the Epilogue: Keeping the Miracles Alive, the author restates the main points of his analysis. He calls these points lessons. Lesson 1 is there is no magic formula for success. Lesson 2 is no matter how good a policy is one must remain flexible in using it.

Lesson 3 is heed to economic laws. Lesson 4 is pragmatism takes many forms or if it does not work, change it. Lesson 5 is one must learn from others. Finally lesson 6 is deeds not words lead to success. Jon Woronoff, in his book Asias Miracle Economies , provides a look at the successful growth of the economies of Japan, Singapore, Taiwan, Korea, and Hong Kong.

He shows how these did not perform miracles. They each had different political situations as well as different resources to work with. These nations followed specific policies that fit there position. They made their share of mistakes. They manage to learn from their mistakes and succeed. Back to start Economics.