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Economic Globalization and Continuities and Discontinuities in East Asian Countries

By Evans Jan 22 2021

Section A: Economic Globalization

With the advancement of technology having a breakthrough in technological inventions, especially in provision of internet services, information technology and the use of television to disseminate information globalization have become a reality (Islam et al., 2012; Ezcurra et al., 2013). Free flow of information, capital, and innovation across the border is fast. The notion is supported by advancement in technology and consumer desire to obtain quality product at a cheap price (Marshal et al., 2013). Economic globalization can be termed as growing interdependence of local, regional and national economies through economic integrations across the world (Soc, 2000). Economic globalization is often associated with extension of market forces, integration of money market, easy access to capital flows, technology, skilled labor and migration of people across the border. However, this paper discusses the debates around the existence of economic globalization drawing conclusions and policy implication arising from the debates

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Ideally, economists have varied opinions about the existence of economic globalization. Economists such as Blair (2001) and Dicken (2005) who were of hyper globalist view believed that globalization is real. And that the existence of the internet, the advancement of information technology, and use of television purports for globalization. The contemporary economy has evolved into a “small market place” where information, capital and innovation are shared easily and faster across the globe (Barnett et al., 2013; Rodrick, 2011). Consumers are often rational and will want to maximize their utility by accessing good quality products at a fair price. On the other hand, producers seek to maximize profit (Ezcurra et al., 2013). This ideology strongly supports the existence of multinationals. Whereby, large corporations seek markets beyond the borders of their home country hence the existence of a global market.

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Sceptic view versus pragmatic view; the economists with sceptic view argued that the economy is not fully globalized (Marshal et al., 2013; Torp, 2014). They believe that what exists is an international economy which permits exchanges to occur between countries. On the other hand, an economist with pragmatic view sees the global economy as the linking of organization or production networks with the geographic or localized clusters of economic activities (Ezcura et al., 2013; Dreher et al., 2012; Kalemli-Ozcan et al., 2013). According to Carin et al. (2010) globalization supersedes neoliberalism and westernization. He argues that globalization is not about “free flows” but rather a “regulated flows” in the existence of a global governance system and not an ad-hoc agreement.

Internationalized versus the globalized economy; both models are used to explain the trends in the global economy. The internationalized economy is often characterized by shallow assimilation into world market (Derudder, 2012). Trade is often restricted by National Governance and International Agreements. The globalized economy is where markets and production of goods and services is worldwide and supported by functional integration.

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From the different views discussed above, the economist tries to develop policies to help in economic growth and poverty reduction. Economists believe that globalization accelerates economic growth and hence reduce poverty. According to IMF, benefits gained as a result of globalization are shared widely between countries. Even though countries with high globalization index have witnessed an increase in inequality, for instance in China, this trend results from domestic liberalization, agricultural policies and restriction on migration. But this increase in inequality is not as a result of globalization. Poverty reduction is evident in poor countries such as Malaysia with high population yet there is an annual growth in income by 5.4%.

Policy makers develop policies to combat capital flight. Capital flight is a situation where money or assets rapidly flow out of the country as a result of financial constraints such as tariffs, labor costs, capital controls and taxes. This trend results in a drop in exchange rate which might lead to devaluation. Policy makers also have to consider economic inequality, effects of multinational corporations, tax haven, cultural effects amongst other economic issues resulting from economic globalization, before developing policies that either encourage or discourage economic integration.

Section B: Continuities and Discontinuities in East Asian Economies

Transformation in an economy is a continuous process and the structural changes occur over time. Economic growth and development is a gradual process and is often indicated by increase in a country’s National Income as well as improvement in Quality of life. This section of the paper discusses the continuities and discontinuities in the process of transformation of East Asian economies in late twentieth century.

The Asian miracles are characterized as a spectacular growth of the Asian economy in the Eastern part of the so called East Asia. Which is thought to have taken or begin from early 1960s (Nelson, 1999).During this period the cities like Taiwan, Korea, and Hong Kong were so successful in terms of the economic growth rate. But the Japanese were ahead of them since its growth took over a long time ahead. An economic growth is measured in terms of the difference between its export and import. Thus if the Physical or manpower exports to surpass the imports then the country’s economy is said to be undergoing development (Lim, 2014).

The continuity of this Asian Miracles has been seen in the economies of the counties of the Far East like China and Thailand where they have experiencing the highest growth rate in the whole continent. Their growth rate reached at a point of up to 3-5% per annum. Carolan, et al (2013), states that these countries were experiencing a super economic growth rate, which was an abnormal move. On the other hand, Philippines during that same period was having the worst economic times. This is because its growth rate was about 2% per annum. Thus the four countries, i.e. Taiwan, Hong Kong, Singapore, and Korea were termed as the ‘Four Tigers’ (Ohno, 2013).

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In the recent years the changes in both political and economic development in countries like Taiwan and South Korea have been so dramatic. From the political perspective, both countries emerged from the colonial rule with a lot of success. Despite that the war had suppressed them and the effects of postwar which had lasted for decades (Lim, 2014). This war was from the so called former Soviet Union and that of the United States. This war had a devastating effect since a staunch hostility between the South Korea and North Korea come up and made the two countries to be great enemies (Blair, 2012). The continuity of the Asian Miracles has been seen in many aspects of life. Not to mention the ability of a country or a firm to take advantage of the previous paradigm and successfully transform into the next paradigm. For example, the transfer or the movement from the electro-mechanical could indeed improve or in other way improve its long life. In addition, there is the aspect of the innovative structure which, according to Hanna, et al (1996) it has a great impact on the organization past experience/ practices. 

Given this continuity of dependency on the IT, the organization may in great measure, improve the electromechanical, microelectronics among other social economic things. Conversely, all this transition greatly depends on the firm’s ability to cumulatively learn the transform and if it is unable to do so, then it is left behind lagging with little or no IT progress. Hence, for any country or organization to transform it must possess a great and inertia of the transmission (Carolan, et al., 2013).

On the other hand the so named Tiger countries in the most recent years they have been experiencing a state called the period of diminishing returns of the capital accumulation. Thus, ithas been noted that since the East Asian is no exemption it will be faced by law of diminishing returns and sooner or later it will reach a point of grinding down. (Hanna, et al., 1996) states that because in the recent the East Asia has technical change there will come a time when the total factor productivity will be reduced, and most probably there will be no more economical or any IT development (Shapiro, 2014). Hence at this period the Asian Miracle will be no more, thus in other words, it will come to an end or diminish.

In conclusion, this economic period was therefore a time where the Asian countries experienced both economic and social positive transformations (Carolan, 2013). In conclusion, this was the greatest time period in which the East Asian countries become economically stable and achieved the highest industry development.

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