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POLS 373 Foundations of
Comparative Politics
Lecture: Why is East Asia Rich?Part 1, Introduction
Professor Timothy C. Lim
California State University, Los Angeles
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Why Is East Asia Rich?Introduction
East Asia is an ambiguous terms, but it typically includes Japan, China, North and South Korea, and Taiwan • The focus of our attention are the three economies and societies of Japan, South Korea and Taiwan
Geographic Bearings
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Why Is East Asia Rich?Introduction
Compared to other regions, the High Performing East Asian economies (HPAEs) have grown at a remarkable pace, especially between 1965 and 1990
The East Asian Miracle: Basic Data
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Sub-SaharanAfrica
Middle EastLatin America
South Asia
High Income
East Asia
The next slide shows the same data, updated to 1996
The next slide shows the same data, updated to 1996
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The East Asian Miracle: Basic Data
“On Top of the World”The growth of East Asia is all the more impressive,
when the first half of the 1990s is
taken into account
NOTE: This graph (and the preceding one) includes
other East Asian countries, but gives a good general indication
of how fast East Asia has grown compared to the
rest of the world
Why Is East Asia Rich?Introduction
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The East Asian Miracle: Basic Data
By 1970, Taiwan and South Korea had increased their per capita GDP more than 300% and had become richer than most other “developing countries”
By 1970, Japan had grown into one of the largest economies in the world, with a per capita income about 70% of America’s
Why Is East Asia Rich?Introduction
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The East Asian Miracle: Basic Data
In 1992, per capita GDP in Taiwan broke the $10,000 mark for the first time, while South Korea achieved the same feat three years later in 1995
By 2005, per capita GDP in Taiwan had grown to almost $28,000 and in South Korea to more than $20,000
Why Is East Asia Rich?Introduction
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GDP Per Capita: International Ranking (Selected Countries), 2005
On a per capita basis, Japan is the 18th wealthiest country in the world,* while Taiwan and South Korea are in the top 20% of wealthiest countries in the world
____________________* Most countries richer than Japan have much smaller populations--e.g., Luxembourg, Ireland, Norway, Iceland, Denmark, etc. NOTE: GDP dollar estimates are derived from PPP calculations. Figures come from the IMF, World Bank and the University of Pennsylvania. Complete listing of countries is available at: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_per_capita_%28PPP%29
Country GDP per capita
3. United States $41,999
18. Japan $32,674
24. Taiwan $27,721
27. New Zealand $24,797
34. South Korea $20,590
46. Saudi Arabia $15,229
55. South Africa $12,161
65. Mexico $10,186
75. Turkey $7,950
98. Peru $5,983
104. Philippines $4,923
158. Kenya $1,445
Why Is East Asia Rich?Introduction
The East Asian Miracle: Basic Data
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GDP: Int’l Comparison, Selected Countries, 2006
On an absolute basis, South Korea was the 13th richest country in the world in 2006 with a GDP of $1.1 trillion, while Taiwan was 18th with a GDP of $668 billion
Japan had the 3rd largest economy in the world with a GDP of $4.2 trillion (China was second at $10 trillion)
Source: CIA World Factbook--Rank Order -GDP (PPP)
CountryGDP (PPP), in
million $
1. United States $12,980,000
3. Japan $4,220,00
8. United Kingdom $1,930,000
13. South Korea $1,180,000
14. Canada $1,165,000
18. Taiwan $668,000
29. Saudi Arabia $374,000
50. Peru $181,800
77. Ghana $59,150
93. Kenya $44,770
105. Bolivia $27,210
Why Is East Asia Rich?Introduction
The East Asian Miracle: Basic Data
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Why Is East Asia Rich?Introduction
Even more surprising, this rapid growth has been achieved with relative equity (that is, equitable distribution of income)
The East Asian Miracle: Basic Data
The Gini coefficient measures the inequality of income distribution within a country. It varies from zero, which indicates perfect equality, with every household earning exactly the same, to one, which implies absolute inequality, with a single household earning a country's entire income. Latin America is the world's most unequal region, with a Gini coefficient of around 0.5; in rich countries the figure is closer to 0.3.
The Gini coefficient measures the inequality of income distribution within a country. It varies from zero, which indicates perfect equality, with every household earning exactly the same, to one, which implies absolute inequality, with a single household earning a country's entire income. Latin America is the world's most unequal region, with a Gini coefficient of around 0.5; in rich countries the figure is closer to 0.3.
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The East Asian Miracle: Basic DataEast Asian economic performance is all the more “amazing” when you consider the relative starting points of the three countries in the early postwar period …
In 1950, South Korea and Taiwan were poorer than Kenya, Romania, Ghana, Turkey, Morocco, and the Philippines (among others)
In 1950, Japan was poorer than Greece, Mexico, Columbia, Peru, Poland, Hungary, and South Africa (among others)
South Korea in 1950: Typical living conditions
Why Is East Asia Rich?Introduction
South Korea in 2000: Rush Hour
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The East Asian Miracle: Basic DataGDP growth tells only part of the story: Taiwan and South Korea have also achieved remarkable success in “catching up” with (and even surpassing, in some cases) more developed countries with regard to industrial, technological, managerial and marketing capacity and innovation
Example: South Korea plans to spend $25 billion on New Songdo, the world's largest "ubiquitous city," with computers linking home life and life on its streets. Construction, 40 miles from Seoul, is to be done in 2014.
Why Is East Asia Rich?Introduction
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The East Asian Miracle: Basic Data
South Korea is the only developing country to ever successfully break into the major western automobile markets
In 2004, Hyundai automobiles rose to #2 (tied with Honda) on JD Power’s annual “Reliability Survey,” well ahead of BMW and General Motors (more on following slide)
Taiwan is also competitive in many of leading-edge fields, but not as a “branded” product
Taiwan Semiconductor Manufacturing Co. (TSMC), for example, is the world's largest contract chipmaker, and has a market share of above 50 percent of the global chip-foundry sector
Why Is East Asia Rich?Introduction
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The East Asian Miracle: Basic DataHyundai, along with Kia (of which it owns 47%), is the world’s seventh largest automotive company • In 2004 worldwide sales topped 2 million vehicles for the first time
In a reversal of the typical relationship between developing and rich countries, Hyundai Motor Co. is now a major investor in the United States, with a $1.1 billion manufacturing factory in Alabama, an Engineering & Technology center in Michigan, a Design & Research center in California, and distributions centers/ports in Ontario, CA, New Jersey, and Portland, OR; Hyundai Motor America’s corporate headquarters are in Fountain Valley, CA
Why Is East Asia Rich?Introduction
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Korean companies are globally competitive in many important fields, including …
HDTVs (LG and Samsung)
Semi-conductors (Samsung)
Cell phones (Samsung and LG)
HD DVD (Samsung and LG)
Bioengineering (Sewon Cellontech)
Shipbuilding (Hyundai)
Steel Production (POSCO)
The East Asian Miracle: Basic Data
Why Is East Asia Rich?Introduction
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The East Asian Miracle: Basic Data Japan’s economic preeminence is largely taken for granted today, but remember …
In the 1950s, Japan was a poor country in both relative and absolute terms
“Made in Japan” once meant cheap, shoddy, and low-tech
Japan was/is “overpopulated” (it has one of the highest population densities in the world) and lacked/lacks valuable natural resources (Japan is almost entirely dependent on imported oil)
Why Is East Asia Rich?Introduction
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The East Asian Miracle: Basic DataToday, Japanese companies are market leadersin a range of industrial and high technology sectors • Japan’s economy, while not the economic “monster” it was once considered, remains the home of many of the world’s strongest, most innovative and dynamic companies
Why Is East Asia Rich?Introduction
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East Asian Development: Key Questions
How did Japan, South Korea and Taiwan achieve their remarkable economic development?
Is there “secret” to their success?
Why have the East Asian countries been able to do what so many other countries have been unable to do?
Why Is East Asia Rich?Introduction
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Background Video: Asia Rising, Japan and Korea Rebuild
As you watch, consider the following questions:
Can you identify an implicit argument(s) about the reasons for East Asia’ economic success?
Or can you identify the specific (explanatory) factors that the filmmaker focuses on?
How might you classify the implied argument from a theoretical perspective (i.e., cultural, rational choice, or structural)?
Also, as you watch, jot down what you consider to be particularly interesting or important points; think about any questions you may have
