East Asian Business- Lecture 1
Explaining Asia's double digit growth- Is there and “Asian model” which has helped countries such as the four tigers (South Korea, Taiwan, Singapore and Hong Kong” as well as NIC's (Malaysia, Indonesia and Thailand + PRC double digit growth from 1978.
Cultural explanations; legacy of Confucianism: Confucianism, the teachings of Confucius during 500 BC, has played an important role in forming Chinese character, behavior and way of living. (Eliot 2001; Guo 1995) Its primary purpose is to achieve harmony, the most important social value. Confucianism strongly emphsizes:
Fulfillment of Responsibilities
This is achieved by everyone having well defined roles and acting towards others in a proper way.
respect for age, hierarchy, moral over legal controls
However, does Asia really have a “common culture” or is the culture just variations of Webber's “Protestant work ethic” often credited in countries such as Northern Europe.
Neo-clasical explanations- optimum allocation of resources through unrestricted market operation. -Export orientated growth, using there comparative advantage in labour intensive industries
The developmental state- Explanations of successful late industrialisation in terms of “the developmental state” which is a term used to describe East Asia's state led macroeconomic planning at the end of the twentieth century (including strong government intervention, regulation and planning, where by the GVT and political power have a strong say in where the allocation of resources go. Often described as “picking winners”
Socialist developmental states- private entrepreneurship replaced with administrative commands Command Economy. Capitalist developmental state- strong state in alliance with private sector; using influence, not demands
Maritime trade and empire in East and South-east Asia
Europeans came to Asia to trade, the first phase of expansion was in the 15th century “Age of Discovery”; the first phase was led by Portugal and Spain.
However by the 17th century the British and Dutch dominated. Spain and Portugal failed to form companies (due to the culture of having kings and queens who have the view of monopolising everything. The British and Dutch saw their “mistake” and allowed companies to be formed, allowing financial incentives to British entrepreneur’s.- The British and Dutch took a more “Liberal approach”
Restricted European pressure until 19th century, No European Settlement in China/Japan until 1840s-50s
THE BRITISH AND DUTCH COMPANIES;
British East India Co. (EIC) founded 1600
Dutch East Indies Company (VOC) 1602
Join stock companies- greater capital reserves than individual trades (These companies had a robust organisational structure, with the ability to expand rapidly) Military power enabled companies to break the Portuguese control of maritime trade
Advantages of EIC (British East India) and VOC (Dutch East Indies Company)
uncertainty of the maritime trade; due to the nature of unpredictable harvests, uncertain winds, and strong competition. Also, larger size and more resources of companies allowed them to ride out fluctuations Used near monopoly rights, shutting out European and Asian competitors
THE FREE TRADE ERA
Britain leading imperial power by 18th century. After the industrial revolution occurred, mass produced goods meant lower prices and were cheap enough for Asian markets. Britain and US now strongly favoured free trade, and didn’t long tolerate Asian countries remaining closed. Forced opening of China in 1842, start of treaty port system in Asian (Treaty of Nanjing)
The incentives (economic and others) for imperialist expansion in East and south east Asia
surplus of capital in Europe meant money was spare for investment military status
could deal with “trouble” beyond border (Frontier imperialism)...
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