1. POLS 373 Foundations of Comparative Politics Lecture: Why is East Asia Rich? Part 1, Introduction Professor Timothy C. Lim California State University, Los Angeles tclim@calstatela.edu

2. 2 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

3. 3 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 GDP Growth Per Capita (% per year, 1965-1990) Sub-Saharan Africa Middle East Latin America South Asia High Income East Asia The next slide shows the same data, updated to 1996

4. 4 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

5. 5 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

6. 6 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

7. 7 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_ca pita_%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

8. 8 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) Country GDP (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

9. 9 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.

10. 10 The East Asian Miracle: Basic Data East 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

11. 11 The East Asian Miracle: Basic Data GDP 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

12. 12 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

13. 13 The East Asian Miracle: Basic Data Hyundai, 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

14. 14 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

15. 15 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

16. 16 The East Asian Miracle: Basic Data Today, Japanese companies are market leaders in 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

17. 17 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

18. 18 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