Asian Century Essay.
Instructions: Scholars and businesses are talking about the next 100 years being the Asian Century or more precisely the Chinese Century or the ChinIndia century. Do you think that China and other parts of Asia will be the leaders of the business world by the end of this century? Discuss and you can either agree or disagree with the above statement but you must justify your answer.
Solution.
Asian Century
Introduction
Napoleon once remarked on China and India “China is a sleeping giant, let her sleep when she awakens she will wake the world.” (Johnson, 2007, p. 11) Currently, China and India are one of the countries in the world improving economically. Arguments from the conventional wisdom have it that the twenty-first century will be subjugated by Asia regarding economic and political aspects. Therefore, Asian Century will entail a dramatic global shift to superiority over America. Strategists in the economic and business world field have arguments over the success of the Asian century (Kohli, et al., 2011). Some are in support of the notion that the Asian century is indeed flickering its rays of success. This paper will discuss the possible causes and indications to achieve the Asian Century. Some of the reasons for Asian Century achievement include the demographic statistics in the region, financial transformation in business sectors, improved entrepreneurship, innovation and technological development, the changing forms of governance, available resources present and the emergence of China and India as business giants.
Body
The Asian century scenario fundamentally encompasses the past success into the future, putting a cusp of a truly momentous change in the world of business and economics. The scenario provides that Asia’s Gross Domestic Product(GDP) would increase from 6 trillion dollars in 2010 to 148 trillion dollars in 2050 or rather half of the world’s GDP similar to its portion of the global population. The metric implies that there will be no underdeveloped countries in Asia as compared to the seven today. The scenario explains that the average per capita GDP of $38,600 per person. The fundamental dynamics of Asian growth depend majorly on the three classic drivers of economic growth namely, technical progress regarding total productivity growth, demographics and labor force and the accumulation of capital (Kohli, et al., 2011). A portion of these drivers are being achieved and forecast studies show that they are achieved
According to Jacques De Larosierre, advisor to the chairperson of BNP Paribas and a former governor of the Bank of France, suggests that demography is a major factor behind the economic power transference for Asia over the coming years (Brzezinski, 2013). Average increase in the number of the working populace in countries such as China, Malaysia, India, and Pakistan will be in the order of 40%-50%. This trend together with improved education systems is bound to impact primarily on the GDP development. The fact that China will be ebbing demographically will not prevent it from overtaking the economic superiority of U.S in the next twenty-five years to come. Alternatively, with demographic increases, the labor force is key to economic development. Asian Development Bank,2011 suggests that the world has profited from a demographic dividend majorly from the Asian countries. Asia as a continent reflects trends in the labor force. Admittedly, Asia’s labor force has been growing at a 2.0 percent per year over the last two decades. It is calculated, in the next biennium, it will be halved to 0.9 percent a year between 2031-2050. Such trends are key to solving unemployment problems and poverty issues in the country.
Also, technological advancement being part of characteristics of a well-developed economy, Asian countries, in reality, have upgraded their product lines in most of their present form of technologies and make known to new brand new technology (Lewis, 2013). Most Asian research conducted in the business sector reveals that a higher proportion of GDP is spent on research other than any other country elsewhere. Technology in Asia is close to a cutting edge globally in areas of electronics, information technology services, computers, biotechnology and communications. Knowledge spillovers are geographically concentrated, the closer the source of innovation the faster the adaptations to the new technology. China has a vast idea regarding technological superiority in the world. The above argument shows that when these ideas are spread among the countries in Asia, it will result in robust growth in technology leading to a fully up-to-date technology in other Asian countries hence an indicator of Asian dominance in the technological world.
Additionally, capital deepening is another sign of an advanced economy (Kohli, et al., 2011). Capital deepening also referred to as an increase in capital intensity relates to a situation where there is an increase in the capital stock per worker in the economy. As the world enters in investment boom, Asian countries especially People’s Republic of China(PRC) and India in recent years have huge investment rates. Many countries from Europe and US are investing in Asian countries. Most of the world’s capital Stock is found in advanced economies, around 70%. Japan has a high capital stock per laborer, which is above average for a developed country like Switzerland, Denmark, and Norway. Recent research shows that PRC has the highest growth rate regarding capital stock per worker at 8.6 percent, followed by India with 8.3. As the economies get more productive and drastic capital deepening scenarios, it is hard to accumulate capital. In order to maintain net capital levels, it requires an accumulating proportion of investment to be used to replace obsolete capital in the economy (Arner, et al., 2014). For advanced growing economies, the rate of obsolescence is high. This scenario can be seen in PRC and India. As a good indicator of becoming economic giants, Asia century is indeed a reality.
Apart from the above mentioned three classical drivers of a healthy economic growth, there are also other indicators in Asia that show a possibility of advanced economies that can lead to gaining dominance in business in the world. Dynamically, Asian countries are incorporating among themselves at an alarming rate for two reasons (Ananchotikul, et al., 2015). First, the fastest emergent economies in the Asian countries boost intra-Asia trade and Intra- Asia investment automatically even if when one holds trade barricades constant. Intra-Asia trade has a higher growth rate compared to the world trade as a whole over the last thirty years.
Secondly, many of the Asian states dismantle both tariffs and non-trade barriers at a faster rate than other countries. Recent regional productions chain, especially in electronics and other sectors, come together economically. For example, PRC’s exports of iPhones and iPads to the U.S and Europe contain lots of value added from Japan, Taiwan, and Korea. Unlike the free trade agreements in North America and Europe which imposes discriminatory rules against countries from the outside by instituting different trading rules and tariffs of members and non-member states. In Asia, such laws are inapplicable hence necessary for trade and investment integration. Such a scenario is known as “open regionalism,’ increasing market and business integration without imposing a discriminatory rule on member countries and or other regional countries (Beeson, 2014). Also, evidence has shown that the leaders and elders in Asia have the sufficient wisdom required not to let border disputes jeopardize the trade and growth. With the hopes that regional trade talks will not alter open regionalism, Asia integration will benefit the rest of the world hence achievement of Asian Century expectations (Ananchotikul, et al., 2015).
More so, the emerging Asian middle classes will become a key factor in implementing project “Asian Century”. As general economic theory states, a higher number of the middle class being a source of more savings and drive for entrepreneurial culture will lead to greater demands for goods and services (Mohan, 2006, p. 10). Advanced economies are sparked by the introduction of new products in the market and when they are adopted by the middle class. This aspect of the need for new products and high demands for middle-class consumers is necessary for boosting the economic growth in regions such as Indonesia, India, and China. China has acknowledged the need to grow its domestic demand, though not yet achieved.
Another indicator to achieving Asian century is how communication has revolutionized. Recent events that took place in Tunisia and Egypt have outlined vividly the power of the ongoing revolutions in communications and even in more traditional societies and politics. Communication in Asia has improved drastically. Ten years ago, 2-3 person in 1000 Indians had access to television. By the end of 2010, India had two-third of India’s population mobile phone connections. Communication revolutions have a significant impact on the reducing the cost of information sharing and processing in both public and private sectors. With such revolution coupled with the affluent citizenry, middle-class values, and proper educational advancement, most of the Asian countries will improve economically and businesswise. Additionally, financial transformations in Asia are notable. IN 2009, Asia accounted for 27% of global GDP in global financial assets (Ananchotikul, et al., 2015). With the rising power economically, and showing highest levels of savings. Asia can build an entirely different economic model by learning from the past financial crisis (Great Depression)
Conclusion
Opinions and predictions have been put forth on
whether Asian Century is just hype or
reality. Indicators of economic growth are currently suggesting otherwise.
Indeed, some of the requirements in the Asian Century are achievable. With the
growing GDP, improved communications systems, capital deepening, fewer trade restrictions and demographic
statistics of the available labor force,
most countries in Asia, especially China
and India will soon become economic giants. With all these indicators monitored
and strategized well, there is hope for the wake of a sleeping giant.
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