SAUDI-ARABIA.pdf

SAUDI ARABIA: Economic Planning Strategy Saudi Arabia has historically been a major player in the global oil market, with its vast reserves driving significant economic growth. However, the country has recognized the need to diversify its economy to reduce its reliance on oil and e...

SAUDI ARABIA: Economic Planning Strategy Saudi Arabia has historically been a major player in the global oil market, with its vast reserves driving significant economic growth. However, the country has recognized the need to diversify its economy to reduce its reliance on oil and ensure long-term sustainability. In 2016, Saudi Arabia launched Vision 2030, an ambitious reform plan aimed at transforming the nation into a global leader in various sectors. This ambitious initiative seeks to reduce dependence on oil, develop new industries, and improve quality of life for its citizens. CENTRALIZED VS. MARKET-DRIVEN MODELS Historically, Saudi Arabia's economic planning was highly centralized, with the government playing a dominant role in key industries and sectors. This state-controlled model was largely successful in driving economic growth, but it also created certain limitations and vulnerabilities. In recent years, there has been a shift towards a more market-driven approach, emphasizing private sector participation, competition, and innovation. Saudi Arabia's economic planning now represents a hybrid model, combining elements of both centralized control and market-based principles. This approach aims to leverage the strengths of both models, while mitigating their weaknesses. KEY ECONOMIC POLICIES Driving Diversification and Growth Industrialization: 1. Focus on non-oil sectors: Saudi Arabia is actively promoting the growth of industries such as petrochemicals, manufacturing, tourism, and technology. 2. Mega-projects: The government has invested heavily in large-scale projects like NEOM and the Red Sea Project, aiming to create world-class destinations and attract foreign investment. Fiscal Policy: 1. Reduction of subsidies: The government has implemented measures to reduce subsidies on fuel, electricity, and other goods and services, aiming to improve fiscal efficiency. 2. Introduction of VAT: The introduction of a value-added tax has helped to increase government revenue and reduce reliance on oil income. 3. Fiscal deficit management: Saudi Arabia has taken steps to manage its fiscal deficit, including implementing austerity measures and exploring new sources of revenue. Monetary Policy: 1. Saudi Central Bank: The Saudi Central Bank (SAMA) plays a crucial role in managing the country's monetary policy. 2. Currency peg: The Saudi riyal is pegged to the US dollar, providing stability and predictability in the foreign exchange market. LYNDIE GRACE INOCENCIO Trade 1. WTO membership: Saudi Arabia is a member of the World Trade Organization (WTO), promoting free trade and international economic cooperation. 2. Bilateral trade agreements: The country has negotiated bilateral trade agreements with various countries to enhance market access and promote exports. 3. Export diversification: Saudi Arabia is actively working to diversify its exports beyond oil, focusing on products and services that have high value-added. Social Welfare: 1. Reform of social welfare programs: The government has implemented reforms to make social welfare programs more efficient and targeted. 2. Citizen Account Program: This program provides financial assistance to low-income families, helping to alleviate poverty and improve living standards. 3. Nitaqat program: The Nitaqat program aims to increase the employment of Saudi nationals in the private sector, promoting Saudization and reducing reliance on foreign labor. Technology: 1. Investment in technology infrastructure: The government has invested heavily in technology infrastructure, including broadband networks, data centers, and digital platforms. 2. Smart cities: Saudi Arabia is developing smart cities, such as NEOM, that utilize advanced technologies to improve efficiency, sustainability, and quality of life. 3. Digital transformation: The country is undergoing a digital transformation, promoting the use of technology in various sectors, including e-government, e-commerce, and fintech. RECENT ECONOMIC PERFORMANCE Navigating Challenges and Opportunities GDP Growth: Trends and fluctuations: Saudi Arabia's GDP growth has experienced fluctuations in recent years, influenced by factors such as oil price volatility and global economic conditions. Impact of oil prices and COVID-19: The pandemic and fluctuations in oil prices have significantly impacted the country's economic performance, leading to both periods of growth and contraction. Employment Rate: Saudization efforts: The government's Saudization efforts, aimed at increasing the employment of Saudi nationals, have had a positive impact on the unemployment rate. Unemployment rates: Despite progress, unemployment remains a challenge, particularly among certain demographics, such as youth and women. Income Inequality: Government initiatives: The government has implemented various initiatives to address income inequality, including social welfare programs, education reforms, and job creation initiatives. Challenges: Despite these efforts, income inequality persists, with a significant gap between the wealthy and the poor. LYNDIE GRACE INOCENCIO CHALLENGES AND SUCCESSES CHALLENGES Dependence on oil: Despite diversification efforts, Saudi Arabia's economy remains heavily reliant on oil exports, making it vulnerable to fluctuations in global oil prices. Labor market issues: Balancing the need for foreign labor with the goal of Saudization (increasing employment of Saudi nationals) poses significant challenges for the labor market. Economic diversification: While progress has been made, achieving full economic diversification remains a long-term goal. Income inequality: Despite government efforts to address income inequality, the gap between the wealthy and the poor persists. SUCESSES: Infrastructure development: Saudi Arabia has made significant investments in infrastructure, including transportation, energy, and telecommunications, which has improved its competitiveness and quality of life. Economic reforms: The government has implemented various economic reforms, such as reducing subsidies, promoting privatization, and improving the business environment. Global economic integration: Saudi Arabia has actively sought to integrate into the global economy through trade agreements, foreign investment, and international cooperation. Vietnam's Economic Planning Strategy Economic Planning Strategy Mixed Economy with Socialist Orientation Historically *state-controlled*, with significant market reforms starting in the late 1980s (Đổi Mới reforms). The government maintains a strong role, especially in key sectors like banking and energy. Increasing openness to private sector and foreign investment. Key Economic Policies Industrialization Focus: Shift from agriculture-based to manufacturing and services. Encouragement of foreign direct investment (FDI) to drive industrial growth. Fiscal Policy: Government spending on infrastructure and public services. Monetary Policy: Managed inflation and stable currency to attract investment. Trade: Emphasis on export-driven growth. - Member of key trade agreements like CPTPP and ASEAN. Social Welfare: Gradual improvements, but still challenges in rural areas. LYNDIE GRACE INOCENCIO Technology: Investment in tech parks and encouraging startups. Recent Economic Performance GDP Growth: One of the fastest-growing economies in Asia; strong growth averaging around 6-7% annually. Employment Rate: Low unemployment, but underemployment remains a challenge. Income Inequality: Rising inequality, especially between urban and rural areas. Successes and Challenges Successes: Transformation into a major manufacturing hub, particularly in textiles and electronics. Significant poverty reduction over the last few decades. Challenges: Dependence on foreign investment and exports. Environmental degradation and urban-rural income gap. Corruption and inefficiencies in state-owned enterprises. Impact of Economic Planning on Development Development: Rapid economic development since Đổi Mới, lifting millions out of poverty. Stability: Relatively stable, though susceptible to global economic fluctuations Growth: Sustained high growth rates but faces challenges from slowing global demand SUMMARY Vietnam’s strategic economic reforms have led to impressive growth and development. Ongoing reforms and addressing inequalities will be crucial for sustained progress. Japan Economic Planning Strategy Economic Planning Strategy Japan aims to enhance investments in people, green and digital transformations, science, technology and innovation to foster economic growth and address societal issues like wage stagnation and climate change. Basically it is a MARKET DRIVEN ECONOMY. They plan and aim to improve individuals’ ability to acquire new skills and knowledge by providing reskilling opportunities KEY ECONOMIC POLICIES Monetary Policy Extended considerable credit to business firms for investment in stocks and other financial assets. LYNDIE GRACE INOCENCIO  Bank maintained an expansionary monetary policy in view of the stability of general flow prices and the weakness of economic activity through the CPI and WPl as pilot indicators to gauge inflation. Bonds and other financial assets to increase the Money supply and lower interest rates. The BoJ targets an inflation rate of around 2% as a sign of a healthy есоnomу. TRADE POLICY ▪ JAPAN is one of the country who signed and ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Fiscal Policy ▪ Ministry of Finance advocate for "growth first" approach, with a high proportion of government spending and revenue. Social Welfare Policy drastically strengthen Japan’s defense capabilities strengthen support for children and child-rearing ▪ supporting initiatives that contribute to regional development ▪ comprehensive initiates for disaster prevention and mitigation to make the national land more resilient. ▪ focus on infrastructure development and other measures to improve the nation’s productivity. ▪ Conversion of land to farmland to strengthen food security ▪ Provide financial support to businesses in difficult circumstances due to the effects of soaring prices. INDUSTRIALIZATION POLICY Government Support: The Japanese government provided substantial financial support for firms and Japanese continued to work closely with industry to promote innovation and competitiveness. Technological Innovation: Have heavy investment in research and development to improve efficiency and competitiveness and maintain high-quality products and efficient Manufacturing processes Export-oriented Strategy: Sustainable Transportation - Encouraging public transport, walking, and cycling. Recent Economic Performance GDP GROWTH: Japan's GDP growth was approximately 1.7% in 2022, with projections for 2023 suggesting a slight improvement as global economic conditions stabilize and domestic demand increases (International Monetary Fund (IMF), 2023). Employment Rate: The employment rate in Japan has remained stable at around 60% as of 2023. The unemployment rate was approximately 2.6%, reflecting a tight labor market, influenced by labor shortages due to an aging population (Ministry of Internal Affairs and Communications, 2023; OECD, 2023). Income Inequality: Japan's Gini coefficient, a measure of income inequality, was around 0.33, indicating a slight increase in inequality in recent years. While Japan has lower income inequality compared to many OECD countries, disparities persist, particularly among part-time and non-regular workers (OECD, 2023; World Bank, 2023). Conclusion LYNDIE GRACE INOCENCIO Japan's economy is characterized by steady but slow growth, low unemployment, and rising concerns regarding income inequality, particularly among part-time workers. Continued policy Measures are needed to address labor shortages and social disparities. Challenges and Sources Aging Population Japan faces a significant demographic challenge with one of the oldest populations in the world. This leads to a shrinking workforce, increased healthcare costs, and pressure on pension systems (OECD, 2023). Low Birth Rate The declining birth rate contributes to labor shortages and hinders economic growth. Policymakers are struggling to encourage higher birth rates through family-friendly policies (Ministry of Health, Labour and Welfare, 2023). Public Debt Japan has one of the highest levels of public debt relative to GDP, exceeding 250%. This limits the government's ability to implement fiscal stimulus (IMF, 2023). Income Inequality While Japan has traditionally had low income inequality, recent trends show a rise in disparities, particularly among non-regular workers (OECD, 2023). Economic Planning and Its Impact Japan's economic planning, particularly its Monetary and fiscal policies, has had Mixed effects on development, stability, and growth Abenomics Launched by former Prime Minister Shinzo Abe, Abenomics aimed to revitalize Japan's economy through a combination of aggressive monetary easing, fiscal stimulus, and structural reforms. While it initially boosted growth and consumer confidence, the long-term effectiveness remains debated (Kuroda, 2023). Monetary Policy The Bank of Japan's ultra-loose Monetary policy has aimed to combat deflation and stimulate growth. While it has successfully kept interest rates low, challenges remain in achieving sustained inflation (Bank of Japan, 2023). Structural Reforms Efforts to reform labor markets and increase productivity have been slow. Although there are initiatives to attract foreign workers and improve labor conditions, implementation has been uneven (OECD, 2023). Sustainable Development Goals Japan has committed to the United Nations Sustainable Development Goals (SDGs), focusing on sustainability and inclusive growth. However, balancing economic growth with environmental concerns remains a challenge (United Nations, 2023). LYNDIE GRACE INOCENCIO Thailand's Economic Planning Thailand's economic planning follows a mixed model approach, balancing both state-controlled and market-driven strategies. The country has embraced the "Thailand 4.0" initiative, which focuses on transforming the economy into a more innovation-driven, high-tech, and environmentally sustainable model. Key Economic Policies: Innovation and Sustainability Thailand 4.0 This ambitious strategy emphasizes innovation and green technology, focusing on industries like advanced agriculture, next-generation automotive, biotechnology, and medical tourism. Bio-Circular-Green (BCG) Model This model promotes sustainability by reducing waste and enhancing resource efficiency, driving towards a more environmentally responsible economic model. Fiscal and Monetary Policies These policies, along with free trade agreements, aim to support economic growth and integration into global markets. Recent Economic Performance GDP: has been relatively modest. In 2023, the economy grew by approximately 2.7%1. This growth rate reflects a recovery from the impacts of the COVID-19 pandemic, although it remains below pre-pandemic levels. Unemployment rate: has shown improvement. The unemployment rate was around 1.5% in 20232. This low rate is partly due to the informal sector, which employs a significant portion of the workforce Income inequality: The Gini coefficient for income inequality was 43.3% in 20212, indicating a high level of inequality. The wealthiest 10% of the population holds over half of the country’s wealth. Challenges and Successes Successes Economic growth And poverty Reduction Social Development Infrastructure Development Challenges Economic Slowdown Income Inequality Vulnerability to external shocks Conclusion Thailand's economic planning demonstrates a commitment to innovation and sustainability. The "Thailand 4.0" strategy and the BCG model aim to transform the economy into a more technology-driven and environmentally responsible model. While significant progress has been made, challenges such as income inequality and environmental concerns remain Continued efforts are crucial to ensure the benefits of economic development reach all segments of society and the country remains on a sustainable path. SINGAPORE Economic Planning Strategy: LYNDIE GRACE INOCENCIO Singapore's economic planning is best described as a mixed model that incorporates elements of both market-driven approaches and strategic state intervention Foreign Investment: Attracts FDI through favorable policies. Trade Policy: Open to international trade, with numerous FTAs. Sectors: Trade, Infrastructure, Technology, and Service State-Owned Enterprises SOEs: Government stakes in strategic industries example Temasek Holdings and the Government of Singapore Investment Corporation (GIC). Public Services: Active in housing housing (through the Housing and Development Board, or HDB), Programs like the MediShield Life insurance scheme basic health insurance plan administered by the Central Provident Fund (CPF) Board and SkillsFuture are examples of this investment. According to inland authority in singapore Key Economic Policies Fiscal Policy: Singapore practices prudent fiscal management, maintaining budget surpluses and low levels of public debt. The government uses fiscal policy to support economic stability and invest in infrastructure and social programs. Ex. Goods and Services Tax (GST) Monetary Policy: Managed Float System: Singapore’s Monetary Authority of Singapore (MAS) or central bank of Singapore manages monetary policy primarily through the exchange rate rather than interest rates. The Singapore dollar is allowed to float within an undisclosed band, with the MAS adjusting the nominal effective exchange rate to ensure price stability and economic competitiveness. Free Trade Orientation: Singapore has a highly open trade policy, with numerous Free Trade Agreements (FTAs) and membership in key international organizations. The country’s strategic location and port infrastructure make it a global trade hub. Social Welfare Public Housing: The Housing and Development Board (HDB) provides affordable public housing, which is a cornerstone of social policy in Singapore. MEDISHIELD Life Insurance – Singapore citizens must Avail (encourage) Technology Smart Nation Initiative: Singapore has embraced technology through its Smart Nation initiative, which focuses on digital infrastructure, innovation, and the use of technology to enhance urban living and economic competitiveness. Initiatives are based on 3 key pillars: 1. Digital Economy 2. Digital Government 3. Digital Society Recent Economic Performance GDP Growth: Growth Rates: 13 August 2024. The Ministry of Trade and Industry (MTI) announced 2024 forecast: 2.0% - 3.0%. Employment Rate: High, with challenges in integrating foreign workers Income Inequality: Addressed through progressive policies and social programs Challenges and Successes LYNDIE GRACE INOCENCIO Success as a global financial center; challenges with inequality and aging. according to Gini Coefficient of Singapore. Stability: Stable economy with low inflation; social stability through welfare programs. Growth: Sustained by innovation and adaptability. NORWAY Norway is considered a mixed economy for several reasons, reflecting a combination of market- driven and state-controlled elements Government Involvement in Key Industries Welfare State Fiscal Policies Social Policies Key Economic Policies Industrialization Focus on Oil and Gas: Norway has successfully developed its oil and gas sector, which is the backbone of its economy. The government promotes sustainable practices in this industry. Fiscal Policy High Taxation: Norway employs a progressive tax system to fund extensive public services and welfare programs. The country uses oil revenues to maintain fiscal sustainability. Monetary Policy Central Bank Independence: Norges Bank (the central bank) manages monetary policy to target inflation, currently around 2%. Interest rates are adjusted to maintain economic stability. Trade Policy Open Economy: Norway has a liberal trade policy, benefiting from its participation in the European Economic Area (EEA), which provides access to the EU market. Social Welfare Comprehensive Welfare State: Norway provides universal healthcare, free education, and extensive social security benefits, funded through high taxation. Technology and Innovation Investment in R&D: The government invests in research and development, particularly in green technologies and digitalization, to drive innovation. Recent Economic Performance GDP Growth Norway's GDP growth was 3.7% in 2022, but it slowed to 0.7% in 2023. Projections suggest a recovery to 0.8% in 2024 and 1.8% in 2025. Employment Rate The employment rate for those aged 15 and over was 63.3% in 2022, with a low unemployment rate of 3.6% reported in 2023 Income Inequality LYNDIE GRACE INOCENCIO The Gini coefficient for income inequality was 0.285 in 2021, which is lower than the OECD average of 0.316 Inflation Inflation peaked at 7.5% in October 2022 and is projected to decline gradually, reaching around 3.7% in 2024 Challenges and Successes Challenges High Dependency on Oil and Gas Norway's economy is heavily reliant on oil and gas revenues, making it vulnerable to fluctuations in global energy prices. This dependency can lead to economic instability during downturns in the energy market. Inflation and Cost of Living Recent inflationary pressures have affected household purchasing power, particularly for low-income families. Rising costs in housing and essentials pose challenges to economic stability. Ageing Population An increasing proportion of the population over 65 adds pressure on public finances and the welfare system. This demographic shift necessitates reforms in pensions and healthcare to ensure sustainability. Strong Fiscal Management Norway has maintained a robust fiscal framework, including the Government Pension Fund Global, which helps cushion the economy against oil price shocks. This fund allows for long-term investment in public welfare and infrastructure. High Living Standards The country consistently ranks high in quality of life indicators, supported by comprehensive social services, including universal healthcare and education. This has fostered a well-educated and healthy workforce. Stable Economic Growth Despite recent challenges, Norway has experienced steady GDP growth, driven by strong domestic demand and investment in infrastructure. The government's focus on diversifying the economy beyond oil is gradually paying off. NORTH KOREA Economic Planning Strategy North korea operates a high centralized and state-controlled economy, where the government, led by the Workers' Party, dictates production, distribution, and consumption, prioritizing heavy industry and military development. Key Economic Policies North Korea's industrialization has primarily focused on heavy industries, such as steel, coal, and military production, driven by the government's emphasis on self-reliance and defense capabilities. LYNDIE GRACE INOCENCIO Fiscal policies are tightly controlled, with state-set prices and wages. While there have been recent attempts to increase technology and improve trade relations, these efforts are often hindered by international sanctions and isolation. North Korea's monetary policy is tightly controlled by the state, with the central bank managing the money supply and interest rates to support government objectives rather than market needs. North Korea's social welfare system is largely state-controlled, providing basic services such as healthcare, education, and housing to its citizens. North Korea's trade is heavily restricted and largely dependent on a few key partners, primarily China, which accounts for the majority of its imports and exports. North Korea's technological development has been heavily focused on military applications, particularly in missile and nuclear technology, reflecting the regime's prioritization of defense over civilian innovation. Recent Economic Performance North Korea's recent economic performance has been challenging, marked by stagnant GDP growth, high unemployment rates, and significant income inequality. In 2023, North Korea's GDP had increase of 3.1 percent. North Korea unemployment rate for 2023 is 3.00%, a decrease from 2022, 3.07% 60% of all residents lived in absolute poverty Challenges North Korea's economy faces significant challenges, including chronic food shortages, widespread poverty, and infrastructure decay, largely exacerbated by mismanagement and natural disasters. Additionally, international sanctions and economic isolation limit trade and foreign investment, further stifling growth and contributing to an unstable economic environment. SUCCESS Despite numerous challenges, North Korea has achieved some successes in specific sectors, particularly in military technology and heavy industry, showcasing advancements in missile and nuclear capabilities. GERMANY’S DISTINCTIVE ECONOMIC PLANNING Germany employs a Social Market Economy model, which combines elements of a free market with social policies aimed at ensuring fair competition and social welfare. This model is characterized by a decentralized market system where decisions are primarily made by market participants, contrasting sharply with the centrally planned economy that existed in East Germany. The Social Market Economy promotes individual entrepreneurship while also ensuring that the benefits of economic growth are distributed fairly across society. KEY ECONOMIC POLICIES Industrialization The country emphasizes a strong industrial base, particularly in manufacturing and engineering, which is crucial for its export-oriented economy. Social Welfare Germany maintains a conservative fiscal policy, emphasizing balanced budgets and low public debt. This approach helps to stabilize the economy and build investor confidence. LYNDIE GRACE INOCENCIO The German social security system is based on the tradition of an insurance model that is supplemented by a needs-oriented minimum income. There are a variety of minimum-income benefit schemes, including income support for the unemployed (the so-called Hartz IV scheme) and disabled, and an old-age minimum income. Monetary Policy As a member of the Eurozone, Germany's monetary policy is largely influenced by the European Central Bank (ECB), which aims to maintain price stability across the Euro area. Trade Free Global Trade generates a great deal of employment and economic growth in Germany. Germany is one of the world's largest exporters, with a strong focus on high-quality manufactured goods. Trade policies are designed to enhance competitiveness and open new markets. Fiscal Policy In spring 2024, Germany’s fiscal policy is geared towards a return to normality and towards strengthening the sustainability of public finances and the efficiency of public spending, whilst at the same time maintaining the high level of investment spending to ensure that Germany is ready for the future. Technology Policy objectives include cybersecurity, the digitization of the German economy and the expansion of the German broadband network. RECENT ECONOMIC PERFORMANCE GDP Growth: Full Year GDP Growth in Germany decreased to 3.06 percent in 2023 from 7.03 percent in 2022. Full Year GDP Growth in Germany averaged 1.29 percent from 1991 until 2023, reaching an all time high of 13.04 percent in 2021 and a record low of -21.09 percent in 1991. Employment Rate: The unemployment rate has remained relatively low compared to other European countries, supported by strong labor market policies and vocational training systems. Germany's high unemployment rate has often been linked to high levels of employment protection, high labor costs, and strict regulation of labor markets. As a result, aggregate unemployment figures peaked in 2005. During that year, almost five million workers were on average unemployed in Germany. Since then, this number has been more than halved to about 2.3 million unemployed persons in 2018 Income Inequality: Inequality of income distribution was 4.44 in December of 2023, according to the EUROSTAT. Trading Economics provides the current actual value, an historical data chart and related indicators for Germany - Inequality of income distribution - last updated from the EUROSTAT on September of 2024. Historically, Germany - Inequality of income distribution reached a record high of 5.12 in December of 2014 and a record low of 4.30 in December of 2012. CHALLENGES AND SUCCESSES SUCCESSES Stability: The Social Market Economy has provided a stable environment for businesses and consumers, fostering long-term growth and social cohesion. Growth: The focus on industrial competitiveness and innovation has allowed Germany to remain a leading economy in Europe and a significant player in global markets. CHALLENGES LYNDIE GRACE INOCENCIO Integration of East Germany: The economic disparities between East and West Germany continue to pose challenges, with the former East struggling to catch up in terms of economic development and employment opportunities. Demographic Changes: An aging population presents long-term challenges for the labor market and social welfare systems, necessitating reforms to sustain economic growth and social security. SOUTH KOREA ECONOMIC PLANNING STRATEGY Mixed Model: South Korea combines elements of both centralized planning (government guidance, industrial promotion, infrastructure investment) and market-driven approaches (private sector participation, competition, foreign investment) The South Korean government continues to actively support the semiconductor industry through targeted investments, research grants, and tax incentives. This demonstrates the government's role in promoting specific industries, while simultaneously allowing for a competitive market environment. KEY ECONOMIC POLICIES Industrialization: promotion, and support for specific industries like shipbuilding, automobiles, and electronics. The government is currently investing heavily in the development of electric vehicles and related technologies, offering subsidies for electric vehicle purchases and promoting the development of charging infrastructure. FISCAL POLICIES: Expansionary during downturns, stabilization measures through tax adjustments and government spending programs. During the COVID-19 pandemic, the government implemented a significant fiscal stimulus package, providing aid to businesses and individuals to mitigate the economic impact. MONETARY POLICIES: independent bank of Korea sets interest rates and manages money supply for inflation control and financial stability. The Bank of Korea has recently raised interest rates to combat rising inflation, reflecting its role in managing monetary policy. Trade: export-oriented strategy, active negation of free trade agreements (FTAs) South Korea is currently negotiating a free trade agreement with the European Union, aiming to further expand its market access and promote trade. Technology: Heavy investment in research and development, particularly in ICT, promoting a digital economy. The government is investing heavily in the development of 5G networks and artificial intelligence, aiming to strengthen South Korea's position as a leader in the digital economy. South Korea's recent Economic Performance: GDP Growth: South Korea's GDP growth rate has slowed somewhat in recent years, but remains relatively strong compared to other developed economies. In 2022, South Korea's GDP. Employment Rate: Relatively low, but concerns about youth unemployment. - Example: While the overall unemployment rate remains low, South Korea faces challenges with youth unemployment, particularly among those with less education or vocational training. In 2022, South Korea's overall unemployment rate was 3.6%, but youth unemployment (ages 15-29) was 8.3%. LYNDIE GRACE INOCENCIO Income Inequality: A concern, but addressed through social welfare programs and minimum wage increases. Despite efforts to address income inequality, the gap between the rich and poor remains a concern, prompting the government to continue expanding social welfare programs and raising the minimum wage. South Korea's Economic Challenges Conglomerate Dominance: The focus on large businesses has led to a concentration of economic power in a few conglomerates (chaebols), potentially limiting opportunities for smaller businesses and stifling innovation. This can create barriers for smaller businesses to enter the market and can limit competition, potentially hindering economic dynamism. Income Inequality: Despite social welfare programs, income inequality persists, raising concerns about social equity and economic fairness. This disparity can lead to social unrest and limit opportunities for those at the lower end of the income spectrum, potentially hindering social cohesion and long-term economic stability. Global Economic Volatility: South Korea's export-oriented economy makes it vulnerable to global economic fluctuations and crises. This dependence on external markets can make the economy susceptible to shocks, such as trade wars or global recessions. Demographic Challenges: An aging population and declining birth rate pose challenges to economic growth and social welfare in the long term. This demographic shift could lead to a shrinking workforce, increased strain on social welfare programs, and potential economic stagnation. South Korea's Economic Success Rapid Economic Growth: South Korea's economic planning has been instrumental in its rapid economic growth, transforming it from a war-torn nation to a global economic powerhouse. The country has achieved impressive rates of economic growth, fueled by a combination of government-led industrialization, export- oriented policies, and technological advancements. - Industrial Competitiveness: The government's focus on promoting specific industries has fostered global competitiveness in sectors like semiconductors, automobiles, and electronics. This strategic approach has resulted in South Korea becoming a major player in global manufacturing and technology. - Technological Advancement: South Korea has become a leader in technology, particularly in ICT, thanks to government investment and support for innovation. The country's dominance in areas like semiconductors, telecommunications, and consumer electronics is a testament to its success in fostering technological innovation. UNITED STATES OF AMERICA ECONOMIC PLANNING STRATEGY 1. Mixed Economy: The U.S. uses a mixed economic model combining free-market principles with government intervention, balancing capitalism and some elements of socialism. 2. Market-Driven Element: Most economic decisions are made by private businesses and individuals. Prices are set by supply and demand, promoting competition and innovation. 3. Government Intervention: The government regulates industries, provides public services (education, healthcare), and oversees financial stability through policies by the Federal Reserve. Social welfare programs like Social Security and Medicaid support those in need. LYNDIE GRACE INOCENCIO 4. Regulatory Controls: Licensing, restrictions, and regulations protect consumers and ensure fair competition. KEY ECONOMIC POLICIES INDUSTRIALIZATION: The U.S. is investing heavily in reshoring manufacturing and boosting sectors like clean energy and semiconductors. The Biden administration has focused on revitalizing domestic production through incentives in the CHIPS and Science Act and the Inflation Reduction Act. FISCAL POLICY: The U.S. faces a growing fiscal deficit, expected to reach $1.7 trillion in 2023. Concerns about long-term fiscal sustainability have led to discussions on managing federal debt, with calls for reforms to Medicare, Social Security, and tax policies to address rising debt levels. MONETARY POLICY: The Federal Reserve has remained committed to fighting inflation, which spiked in previous years, by maintaining higher interest rates. In 2024, the focus is on finding a balance between controlling inflation and avoiding a recession. TRADE POLICY: The United States International Trade Commission (USITC) conducted a first-of-its-kind study of the distributional effects of goods and services trade and trade policy on U.S. workers. SOCIAL WELFARE: The administration has supported expanding social welfare programs, with potential tax increases for higher-income individuals and corporations to fund initiatives like healthcare credits, child tax credits, and housing support. TECHNOLOGY: There is a strong focus on advancing technology, especially in artificial intelligence, cybersecurity, and renewable energy. Federal policies promote research and development, aiming to keep the U.S. competitive in global innovation. Recent Economic Performance 1. GDP Growth: US gross domestic product (GDP) increased 1.9% in 2022 and another 2.5% in 2023. 2. Unemployment Rate: The unemployment rate was 3.4% at the beginning of 2023 and 3.7% by the end. Labor Force Participation Rate: 62.5% in January 2024, an increase of 0.1 percentage points from January 2023. USA facts. (2023). State of the US Economy: GDP, Unemployment, Jobs & More | 2021 State of the Union Facts. USA Facts. https://usafacts.org/state-of-the-union/economy/ 3. Income Inequality: Significant disparities persist: White Families: Median wealth at $287,000. Black Families: Median wealth at $45,000. Hispanic Families: Median wealth at $61,000. Asian Families: Median wealth at $553,000. 4. Inflation: Year-over-year inflation was 3.1% in January 2023, down from a peak of 9.1% in June 2022. 5. Trade Deficit Fell by 22%, from $990.3 billion in 2022 to $773.4 billion in 2023. CHALLENGES AND SUCCESSES LYNDIE GRACE INOCENCIO  Despite economic gains, income inequality remains a significant issue. Wage growth has not consistently kept pace with rising living costs, leading to challenges in household financial stability. Persistent geopolitical conflicts and high interest rates pose risks to economic stability. While technological advancements are boosting productivity, they are also reshaping the labor market, sometimes displacing jobs and creating new forms of employment. The U.S. managed to reduce inflation from 6.5% in 2022 to 3.4% by the end of 2023. The U.S. maintained a low unemployment rate of 3.7% by the end of 2023. The U.S. economy stayed strong in 2023, avoiding a recession. Government spending and a solid job market helped stabilize things, allowing the U.S. to grow faster than other G7 countries. CHINA China's Economic Planning Approach Historical Context: ￭ Began with centrally planned economy post-1949. ￭ Shift towards market reforms starting in the late 1970s under Deng Xiaoping. Modern Approach: ￭ A hybrid system combining state control with market-driven elements. ￭ Focus on long-term development goals set bthe government, such as the Five- Year Plans (Wu, 2020). Centralized Model: Government controls major sectors. Five-Year Plans guide development (Wu, 2020). Market-Driven Model: Gradual integration of market forces. Economic reforms starting in 1978 (Deng Xiaoping era). Mixed Model: Combination of state control with market mechanisms. State-Owned Enterprises (SOEs) alongside private businesses. CHINA’s ECONOMIC POLICIES 1. INDUSTRIALIZATION China's rapid industrialization began in the late 20th century, primarily driven by the "Reform and Opening Up" policy initiated in 1978. The government prioritized heavy industries, such as steel and machinery, while also supporting light industries to boost exports. Special Economic Zones (SEZs)- Established to attract foreign investment and facilitate technology transfer. Cities like Shenzhen became manufacturing hubs, significantly contributing to GDP growth (Zhang, 2018). State-Owned Enterprises (SOEs)- While SOEs dominate sectors like energy and telecommunications, reforms have been introduced to increase efficiency and competitiveness. LYNDIE GRACE INOCENCIO 2. FISCAL POLICY China's fiscal policy has evolved to support economic stability and growth, particularly through government spending and tax reforms. Infrastructure Investment- Significant public spending on infrastructure, such as roads, railways, and urban development, has been a cornerstone of fiscal policy, especially in response to economic downturns (Chen & Jin, 2019). Tax Reforms- The introduction of value-added tax (VAT) and corporate tax reforms has aimed to enhance revenue while promoting business growth. 3. MONETARY POLICY Interest Rate Adjustments- The PBOC uses interest rates to influence economic activity, adjusting them in response to inflation and growth rates. Reserve Requirements- Changing the reserve ratio for banks helps control money supply and credit growth, essential for managing inflation (Li, 2020). 4. TRADE China's trade policy has been integral to its economic expansion, positioning it as the world's largest exporter. WTO Membership- Joining the World Trade Organization (WTO) in 2001 allowed China to integrate into the global economy, significantly boosting exports and attracting foreign direct investment (FDI) (Wang, 2021). Belt and Road Initiative (BRI)- Aimed at enhancing trade routes and economic cooperation with over 140 countries, this initiative seeks to expand China's influence globally. 5. SOCIAL WELFARE The Chinese government has increasingly focused on social welfare to ensure equitable growth. Healthcare Reforms- Initiatives like the New Rural Cooperative Medical Scheme have expanded healthcare access, improving overall public health (Yang, 2022). Poverty Alleviation- The government has set ambitious targets to eliminate poverty, with significant investments in rural development and social programs. 6. TECHNOLOGY Technological advancement is central to China's economic strategy, with the government actively promoting innovation and high-tech industry development. Made in China 2025- This initiative aims to upgrade China's manufacturing sector by focusing on high-tech industries such as robotics, aerospace, and renewable energy. The goal is to make China a global leader in these fields, reducing dependency on foreign technology (Zhao, 2023). Investment in R&D- The Chinese government invests heavily in research and development, fostering collaboration between universities and industries. Recent Economic Performance of China 1. GDP Growth China's GDP growth moderated to approximately 5.2% in 2023. This figure reflects a slowdown compared to previous years, influenced by factors such as weak domestic demand and ongoing challenges in the property market. 2. Employment Rate LYNDIE GRACE INOCENCIO  The unemployment rate in urban areas was reported at around 5.3% in early 2023. However, youth unemployment (ages 16-24) has been significantly higher, reaching approximately 20% in 2023, indicating challenges in job creation for younger generations. 3. Income Inequality Income inequality in China, measured by the Gini coefficient, remains a concern. The Gini coefficient was estimated to be around 0.47 in 2023, indicating a high level of income inequality (a Gini coefficient of 0 represents perfect equality, while 1 represents perfect inequality). SUCCESSESS Economic Growth - Since the late 1970s, China has transformed from a largely agrarian society into the world's second-largest economy, achieving average annual GDP growth rates exceeding 9%. This growth has lifted approximately 800 million people out of poverty. Infrastructure Development - China has invested heavily in infrastructure, including transportation networks, energy production, and urban development. This has facilitated economic activity and improved connectivity across the country. Manufacturing Powerhouse - China has become a global leader in manufacturing, serving as the "world's factory." This has enabled it to dominate various supply chains and export markets. Technological Advancement - Significant investments in research and development have led to advancements in technology and innovation, positioning China as a key player in sectors such as telecommunications, e- commerce, and renewable energy. Poverty Eradication - In 2020, China announced the eradication of extreme poverty, a milestone recognized globally as a remarkable achievement in social development. CHALLENGES Income Inequality - Despite significant progress, income inequality remains a pressing issue. The Gini coefficient is around 0.47, indicating a substantial disparity between urban and rural areas, as well as among different regions. Aging Population - China faces demographic challenges, including a rapidly aging population and declining birth rates. This shift threatens future labor force growth and places increased pressure on social services and healthcare. Environmental Degradation: Rapid industrialization has led to severe environmental issues, including air and water pollution, soil degradation, and resource depletion. Addressing these challenges requires a transition to sustainable practices. Economic Rebalancing - As the economy matures, China is attempting to shift from an investment and export-driven model to one that emphasizes domestic consumption and high-value services. This transition poses risks and uncertainties. Geopolitical Tensions - Rising tensions with other countries, particularly the United States, over trade, technology, and geopolitical influence can impact China’s economic stability and growth prospects. LYNDIE GRACE INOCENCIO Economic Systems Def. The method used by a society to produce and distribute goods and services. Or, How the government tells us what we can get and how to get it! Types of Economic Systems There are 3 basic types of economic systems. 1. Traditional Economy  Economic questions are answered by habits and customs (the way it has always been done)  Children work the same jobs parents worked, often farming or hunter/gatherer  Fear Change!  Ex. Eskimos, the Amish,  Pigmies, Bush People 2. Command Economy  The government answers the basic economic questions  Advantages: able to act quickly in emergencies, provide for all people equally  Disadvantages: Inefficient, no incentive to work hard or be creative  Ex. Communist Countries (China, Vietnam, North Korea, former Soviet Union, Cuba) 3. Free Market Economy  Economic questions are answered by individual buyers and sellers.  Supply and demand influence economy  People act out of self interest; motive for profit (money) drives the economy  Also known as FREE ENTERPRISE or CAPITALISM  Ex. The United States, Western Europe, Japan 4. Mixed Economy  While the United States is mostly a free market economy, it does have elements of a command economy. Features of Free Market Economy 1. Economic Freedom: individuals have the right to choose 2. Competition: more than one producer of good/services insures choice 3. Private Property: individuals have the right to own their own property, including business 4. Self-Interest: individuals make decisions based on what is best for them 5. Voluntary Exchange: individuals may freely buy and sell goods LYNDIE GRACE INOCENCIO  6. Profit Motive: individuals are driven by a desire to profit (make money) Features of Command Economy 1. Government regulation of some business practices Ex. Wages, labor hours, safety practice. 2. Government limits certain choices Ex. Cannot buy or produce certain goods/services 3. Government provides aid to the needy Ex. Medicare, Medicaid, welfare LYNDIE GRACE INOCENCIO