Economic Growth in East Asia

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Questions and Answers

What percentage of traded goods do agricultural products represent?

10% (correct)

20%

15%

Which category of goods has seen the most significant increase in export share from developing countries over the past 50 years?

Agricultural products

Services

Minerals

Manufactured goods (correct)

What is one reason the United States relies less on international trade compared to other countries?

More frequent border crossings

Less economic power

Higher agricultural exports

A larger size and diversity of resources (correct)

Which of the following factors does NOT affect the value of trade between two countries according to the gravity model?

Political stability Signup and view all the answers

Why do Canada and Mexico rank as the United States’ biggest commercial partners?

Geographical proximity and trade agreements Signup and view all the answers

Which aspect of geography affects trade by making transportation and trade easier?

Ocean harbors Signup and view all the answers

What general trend has occurred in the export composition of developing countries over the past 60 years?

Shift towards manufactured goods Signup and view all the answers

In a gravity model of trade, what commonly influences transportation costs?

Distance between markets Signup and view all the answers

What is a significant downside of protectionism?

Creation of market distortions like tariffs Signup and view all the answers

What does Export Oriented Industrialization (EOI) primarily focus on?

Increasing manufacturing exports Signup and view all the answers

What role does competition play in the context of clusters according to Marshall?

It works alongside cooperation to drive cluster efficiency. Signup and view all the answers

Which of the following best describes vertical collective actions?

Actions between producers and their upstream or downstream agents. Signup and view all the answers

In a mixed ISI – EOI strategy, what significant factor does the timing and speed of change affect?

The achievement of desired economic results Signup and view all the answers

What is the main benefit of collective action for small businesses?

It provides access to external economies and economies of scale. Signup and view all the answers

Which type of enterprise model is represented by companies like Samsung and Hyundai?

Chaebols Signup and view all the answers

What aspect of competition is emphasized in the content?

It encourages a collaborative approach towards innovation. Signup and view all the answers

Before the industrial revolution, craft workshops were primarily characterized by which of the following?

Family involvement in production Signup and view all the answers

What is one potential consequence of a government adopting an EOI strategy?

Resistance from domestic industries Signup and view all the answers

What type of collective action involves the sharing of knowledge and workforce training?

Horizontal actions. Signup and view all the answers

In the context of Guangdong’s cluster, what fraction of global toy production occurs in Chenghai?

30% Signup and view all the answers

What limitation might affect Special Economic Zones (SEZs) in a mixed EOI strategy?

Restrictions on foreign firms Signup and view all the answers

Which type of enterprise is characterized by state ownership and control, such as China National Petroleum?

State-owned enterprises Signup and view all the answers

What does multilateral collective action primarily focus on?

Support and services offered by local collective institutions. Signup and view all the answers

How does competition affect the innovation process according to the content?

It halts the process if there are no competitors. Signup and view all the answers

What is structural change primarily concerned with?

Shifting resources between sectors Signup and view all the answers

Which of the following best describes international economics?

The study of how nations trade and finance Signup and view all the answers

What challenge can arise from rapid structural changes in an economy?

Workforce displacement Signup and view all the answers

What has been a significant trend in U.S. exports and imports over the past 60 years?

They have significantly increased Signup and view all the answers

What percentage of world trade consists of manufactured goods as of a 2017 study?

70% Signup and view all the answers

What aspect does international finance primarily focus on?

Balance of payments and capital markets Signup and view all the answers

Which of the following describes a potential government strategy during structural changes?

Training displaced workers Signup and view all the answers

Which economic factor became notably impacted by the recession in 2009?

Both imports and exports Signup and view all the answers

What concept introduced by David Ricardo allows countries to engage in win-win international exchanges?

Comparative advantage Signup and view all the answers

How did Adam Smith perceive the function of the market in society?

As an 'invisible hand' facilitating exchange Signup and view all the answers

What term describes the conflict between the industrial bourgeoisie and the urban proletariat, according to Karl Marx?

Capitalist conflict Signup and view all the answers

Which model suggests that the productivity of labor is fundamental for explaining international trade?

The Ricardian model Signup and view all the answers

In the context of Marx's theories, what did he consider necessary for managing conflicts between the bourgeoisie and the proletariat?

Perpetual global growth Signup and view all the answers

What major social transformation occurred as a result of the Industrial Revolution, according to the content?

The formation of two new classes Signup and view all the answers

What does the Heckscher-Ohlin model examine in addition to technology?

Labor skills and physical capital Signup and view all the answers

What was the impact of the English Revolution of 1688-89 on the Industrial Revolution?

It facilitated economic and political changes Signup and view all the answers

What was Alfred Marshall's contribution to the field of economics?

He marked the shift from Political Economy to Economics. Signup and view all the answers

According to Keynes, what is the role of the state during a crisis?

The state should increase spending to influence expectations. Signup and view all the answers

What does Marshall suggest about cooperatives in terms of production organization?

Cooperatives offer a promising alternative to capitalist firms. Signup and view all the answers

In 'The Economic Consequences of the Peace,' what does Keynes warn against?

Imposing heavy reparations on defeated nations. Signup and view all the answers

What concept did Keynes critique in his 'General Theory of Employment, Interest and Money'?

The belief in completely free and unregulated markets. Signup and view all the answers

What does Marshall's idea of organization of production contribute to?

The theory of prices in economics. Signup and view all the answers

What is emphasized in the political economy of production?

How society organizes itself to achieve specific goals. Signup and view all the answers

What does Keynes argue is necessary for achieving stable employment levels?

Active government intervention through public investment. Signup and view all the answers

Study Notes

Economic Growth and Development in East Asia

Asia will contribute 70% of global growth, with China being the main driver (around 35%)
The World Economic Outlook highlights this contribution
The theories of growth and development from the West are being applied to countries in East Asia (e.g., Japan, China, South Korea)
There is debate on whether these theories apply equally to East Asian nations and how these theories influence them.

Trade Openness

The graph shows the development of trade openness since the birth of capitalism and the industrial revolution.
Trade openness experienced a peak around 1915, then had a significant drop between WWI and WWII.
A consistent upward trend in trade openness began in the 1990s and continued until the 2008 financial crisis.
The 2020 Covid-19 pandemic also impacted the trend, causing a slight slowdown.

History of Economic Thought – Adam Smith

Smith's work founded the study of economic systems
Political Economy, a unified discipline, developed from moral philosophy
Smith's key publications include: "The theory of moral sentiments" (1759), and "An inquiry into the nature and causes of the wealth of nations" (1776).
Smith observed the shift from a feudal society to a capitalist society and described the concept of a "market economy", where equal individuals exchange property rights.
The "invisible hand" of the market was a concept Smith introduced to show how self-interest in the economy benefits society by driving a more efficient distribution of goods and services.

History of Economic Thought – David Ricardo

Ricardo introduced the concept of comparative advantage, which allows countries to mutually benefit from trade.
Comparative advantage means that countries should specialize in goods they can efficiently produce with relatively less labor input compared to other countries.
International exchanges of goods are possible and beneficial even between countries where one country has no absolute advantage in producing any good compared to the other.

History of Economic Thought – Karl Marx

Karl Marx analyzed the conflict between the bourgeoisie (capitalist class) and the proletariat (working class) in an industrial society.
He argued that perpetual global growth is necessarily coupled with conflicts between early-stage and late-stage capitalist countries, as well as conflicts between capitalists and working class inside countries.
The class struggle in capitalism is the central dynamic, and conflict is unavoidable.
Marx believed that the ultimate solution was the proletarian revolution and transition to communism, which would resolve the underlying conflict and create a more equitable society.

History of Economic Thought – Alfred Marshall

Alfred Marshall was a key figure in the Neoclassical or Marginalist revolution.
Economists shifted away from political economy towards a more scientific and objective approach.
Economics was redefined for the study of choice and supply and demand in markets by individual agents.
He focused on organization of production on local and regional levels (instead of the national level).

Growth vs. Development

Growth is a means to achieve development, which is the final objective.
Economic development involves a multidimensional expansion of human capabilities, not just economic output.

GDP (Gross Domestic Product)

The market value of newly produced goods and services in a country during a specific period.
It is used as a basic metric to evaluate the performance of a country, but it misses items that cannot be valued as part of the market, like household work, and quality of life and leisure factors.

Human Development

Development should focus on expanding capabilities and functionings of each individual.
It is multidimensional (consider things like capabilities and entitlements, not just monetary measures).
Key figures in this school of thought include Amartya Sen

Poverty and Inequality

Poverty and inequality have been consistent issues of concern in economics
The gap between the richest 1% and the rest of the population is a valid topic of concern and possible research area.
Globalization's impact on cost and benefit distribution is a field for research.

International Economics

International economics studies national interactions in trade, finance, and investments.
The topic includes international trade (that focuses on transactions of goods, services, and money), as well as international finance (involving monetary transactions).

U.S. Exports and Imports

U.S. Exports and Imports are an increasingly important part of the U.S. economy, growing substantially over the past 60 years, however, they both declined during the 2009 recession and 2020 pandemic.
The composition of world trade is dominated by manufactured goods.

Borders and Trade

Formal processes for crossing borders (like customs and currency) add costs that influence trade.
Distance, transaction costs, and exchange of currency all play important roles in the trade between countries

International Capital Markets

Capital markets are arrangements for exchanging money now for promises of future payment.
International financial markets include foreign investments and regulations surrounding the transactions.

Enterprise Models and Organization of Production

Different models of business organization exist (e.g., corporations, zaibatsu, chaebols, cooperatives).
Enterprise groups and clusters are types of organization associated with economies where there are lower costs to coordinate and conduct trades.
Enterprise groups are structured in different forms, like informal networks, global value chains, captive networks, and relational networks, all of which influence transaction costs within the organization.
Hierarchical organization of production is a mechanism for controlling costs in enterprises.
Cooperation and competition can be complementary. Businesses can benefit from collective action in addition to competition.
Industrial districts are geographically concentrated business areas that are crucial for production organization post-Industrial Revolution.
Various benefits arise from clustering, such as lower production costs, access to skilled labor, and knowledge sharing.

External Economies

External economies are sources of benefits stemming from agglomeration of industries in a particular place, such as the shared knowledge among enterprises and the proximity of suppliers and customers.
External economies (pecuniary and technological) arising from the cluster are beneficial features.

Industrial Policy

Industrial policy is a set of government actions to influence the development of industries.
The purpose is to coordinate structural change towards specific long-term economic and social goals.

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Description

This quiz explores the economic development and growth theories in East Asia, focusing on the contributions of countries like China, Japan, and South Korea. It discusses the application of Western economic theories and the historical trends of trade openness impacting these economies. Test your knowledge on how these factors shape the region's economic landscape.