POLS 373 Foundations of Comparative Politics Lecture: Why is East Asia Rich? Part 1, Brief Introduction

2 Why is East Asia Rich? Map of East Asia With Japan, South Korea and Taiwan. China and North Korea are also considered part of East Asia, but for the purposes of this lecture, will not be included in our discussion.

3 Why is East Asia Rich? Before we address the “why” question, we should begin with an even more basic task, which is simply to determine if, in fact, East Asia is rich.

4 Why is East Asia Rich? South Korea and Taiwan have achieved astonishingly high rates of economic growth between 1960 and In Taiwan, per capita income increased from $50 in 1970 to $2,500 in In Korea, the figures were $87 in 1962 and $1,709 in 1983 (note: the starting figure is actually overstated, since a good proportion of per capita income was actually foreign aid)

5 Why is East Asia Rich? By 2004, per capita income (in PPP$) increased to $25,300 in Taiwan and $19,200 in Korea, making both countries very well off in relative terms. By contrast, consider these figures for less prosperous countries: Russia: $9,800, Mexico: $9,600; Peru, $5,600; Philippines: $5,000; India, $3,100; Haiti: $1,500; Ethiopia: $800.

6 Why is East Asia Rich? The graph below 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.

7 Why is East Asia Rich? But the wealth of Taiwan and Korea is not just based on per capita income. Both countries have achieved remarkable success in “catching up” with more developed countries with regard to technology and industrial capacity. Many Korean and Taiwanese firms, for example, are among the leaders in the computer sector, cell phones, flat panel displays, semiconductor manufacturing, and so on.

8 Why is East Asia Rich? South Korea, in fact, is the only developing country to ever successfully break into the major Western automobile markets. And it is one of the few formerly “Third world” countries to compete head-to-head against the leading industrial powers in steel, shipbuilding, semiconductors, and the most advanced consumer electronics products. Taiwan is also competitive in many of these same fields, but not as a “branded” product.

9 Why is East Asia Rich? Hyundai, along with Kia (of which it owns 47%), is the world’s seventh largest automotive company, but it has been growing fast and has ambitious plans for the future. In fiscal 2004 (year-end December 31st) worldwide sales were up 16.2% and topped 2 million vehicles for the first time. Growth has been driven by the breakneck expansion in foreign markets. Overseas sales, consisting of exports and, increasingly, output from foreign plants, jumped some 30% in At over 1.7m, foreign sales now approach 75% of the company’s total sales. Production at overseas plants rocketed 85% last year, to some 450,000 units. Picture: Hyundai Motor Manufacturing Alabama, LLC (HMMA), Hyundai's first assembly and manufacturing plant in the United States. The new generation of Sonata's are being built in Montgomery, Alabama in this $1.1 billion automotive plant, one of the most advanced assembly plants in North America

10 Why is East Asia Rich? Korean companies are globally competitive in many cutting-edge, high-tech fields such as plasma HDTVs (LG and Samsung), semi- conductors (Samsung), cell phones (Samsung and LG), MP3 players, and automobiles (Hyundai and Kia).

11 Why is East Asia Rich? Comparatively speaking, Japan is much further ahead. In Japan, per capita income increased from only $200 in the early 1950s to almost $2,000 by 1971, which made Japan the fifth richest country in the world at the time. By1998, Japan's per capita income had increased to $42,081 (non-PPP), placing it well in front of all G-8 economies. In PPP terms, it has a per capita GDP of $28,620 compared to $29,010 in the United States (its HDI rank is fourth behind Canada, Norway and the United States).

12 Why is East Asia Rich? Japan has the world’s second largest economy, and, as everyone knows, is the technological leader in many vitally important industrial fields, including automobile manufacturing. It’s true that Japan has been suffering from a long-term economic malaise, but it remains by any account, one of the richest countries in the world today.

13 Why is East Asia Rich?

14 Why is East Asia Rich? All these facts and figures raise important questions: How did Japan, South Korea and Taiwan achieve their amazing development? What is their secret to success? Why have they been able to do what so many other countries have been unable to do?