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The World’s Three Largest Economies
Time GNI in millions of USD 200000 400000 600000 800000 1000000 1200000 Actual Size of Economy Projected Size of Economy
East Asian Giants: Changing Markets of China and Japan Kristin - - PowerPoint PPT Presentation
East Asian Giants: Changing Markets of China and Japan Kristin - - PowerPoint PPT Presentation
East Asian Giants: Changing Markets of China and Japan Kristin Vekasi University of Maine kristin.vekasi@maine.edu The Worlds Three Largest Economies 1200000 1000000 Actual Size of Economy Projected Size of Economy 800000 GNI in
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Prediction about the World’s Three Largest Economies (circa 1988)
GNI in millions of USD 1960 1970 1980 1990 2000 2010 200000 400000 600000 800000 1000000 1200000 United States Japan Germany
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The World’s Four Largest Economies
GNI in millions of USD 1960 1970 1980 1990 2000 2010 500000 1000000 1500000 United States Japan Germany China
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China’s economy strong, US modest Strong growth in both economies Most-strong growth in both economies Modest-low growth in both economies
Source: The Economist Dec. 27, 2011, “The Dating Game”
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Japan
◮ High-income, consolidated
democracy
◮ Stagnant decades, but
recent signs of growth
◮ Competitive, but robust and
stable consumer market
◮ New market possibilities
with TPP China
◮ 35 years of economic
reforms and growth, though not for all Chinese
◮ Multiple regional economies
with different market potential
◮ Corrupt and capricious, but
likely stable one-party authoritarian regime
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“The Japan that Can Say NO” (1989)
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Japanese Stock Market Annual Values, 1981-2015
Nikkei 300 Index 1980 1985 1990 1995 2000 2005 2010 2015 10000 20000 30000 40000
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Koizumi Junichiro Prime Minister 2001-2006
◮ “No economic recovery
without structural reform”
◮ Privatization and
administrative reform
◮ Bold domestic leadership
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◮ Koizumi’s prot´
eg´ e
◮ Abenomics and the ‘Three
Arrows’
- 1. aggressive monetary
policy: end deflation
- 2. expansionary fiscal policy:
short-term economic boost
- 3. broad growth strategy
Abe Shinzo Prime Minister 2007-2007; 2012-
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US and Japan Per Capita Income, 1960-2013
Per Capita Income, 2005 USD 1960 1970 1980 1990 2000 2010 10000 20000 30000 40000 United States Japan
Source: World Bank Development Indicators ◮ Reasons for
- ptimism about
recovery, Abenomics
◮ Japan is a
stable, democratic, high-income country
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Points to watch: liberalization of agriculture, finance
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US, Japan, and China Per Capita Income, 1960-2013
Per Capita Income, 2005 USD 1960 1970 1980 1990 2000 2010 10000 20000 30000 40000 United States Japan China
Source: World Bank Development Indicators
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Reform and Opening
◮ Late 1970s: special economic zones (SEZs) in Guangdong,
Fujian
◮ 1980s: liberalization of exports ◮ Post-1986: coastal development strategy
◮ Rapid growth of export promotion trade ◮ Slow growth of ordinary trade
◮ Uneven regional composition of trade ◮ WTO membership in 2001: trade and inward FDI rocket
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Special economic zones (SEZs) from 1980-2006: southern, coastal economic strategy
Source: Wang, Jin, The economic impact of Special Economic Zones: Evidence from Chinese Municipalities, Journal of Development Economics, vol. 101 (2013):133-147.
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Chinese Inward FDI, 1982-2013 China’s Balance of Payments, 1980-2013
Balance of Payments, millions of USD 1980 1985 1990 1995 2000 2005 2010 0e+00 1e+05 2e+05 3e+05
Chinese Exports by Region
Source: World Bank Development Indicators
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The China that Can Say ‘No’ (1996) and Unhappy China (2008)
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Beijing’s Economic Model
◮ Export-led growth, employing vast, cheap labor force
producing labor-intensive products
◮ High domestic savings rate ◮ Large state-owned enterprises account for 1 3 of total economic
- utput, and maintain control of strategic sectors
◮ New shift:
◮ Domestic consumption ◮ Reform banking and state-owned enterprises
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Trade as % of GDP in China, 1982-2013
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M Schiavenza, “Mapping China’s Income Inequality” The Atlantic 9/13/13
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M Schiavenza, “Mapping China’s Income Inequality” The Atlantic 9/13/13
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M Schiavenza, “Mapping China’s Income Inequality” The Atlantic 9/13/13
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Source: The Economist
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More Developed China(s)
◮ Demand for quality, foreign
goods
◮ Increasing consumption,
middle class
◮ New rich ◮ Financial liberalization
Less Developed China(s)
◮ Manufacturing possibilities ◮ “Go West” campaign:
Xi’an, Chengdu, Chongqing
◮ Immense possibilities for
expansion
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East Asian Giants: Changing Markets of Japan and China
Japan
◮ High-income, consolidated
democracy
◮ Competitive, but robust and
stable consumer market
◮ New market possibilities
with TPP China
◮ Multiple regional economies
with different market potential
◮ Relatively corrupt and
capricious, but likely stable
- ne-party authoritarian
regime
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