Politics Information |
What could Macedonia Learn from a Tiger? Asian Tigers and Uninterrupted Economic Growth
The first reaction of economies in transition is a sharp decline in their production, mainly in industrial production. In the countries which attained independence with the demise of the British Empire (where the sun never set) - industrial production fell by 20% on average. Even this was because these countries continued to maintain economic ties with the "mother" (the United Kingdom). They also continued to trade among themselves, with the rest of the British Empire, through the Commonwealth mechanism. This was not the case when the second biggest empire of modern times collapsed, the Soviet empire. When the USSR and the Eastern Bloc disintegrated - the COMECON trading bloc was dismantled, never to be replaced by another. All the constituents of the former Eastern Bloc preferred to trade with the west rather than with one another. The Empire left in its wake mountains of trade debts, total lack of liquidity and money losing barter operations carried out in unrealistic prices. Thus, industrial production plunged in the newly established countries (CIS and the countries which were part of Former Yugoslavia) as well as in other former members of the Eastern Bloc by 40-60% over a period of 5 years. A slow recovery is discernible only in the last two years and industrial production is picking up at an annual rate of 2% (Estonia) to 8% (the Czech Republic) - depending on the country. This disastrous drop in the most important parameter of economic health was largely attributable to a few, cumulative factors:
But it seems that the worst is over and that the scene is fast changing. However sloppy or criminal the process of privatization, still hundreds of thousands of new capitalists were brewed and introduced, willy nilly, to the profit motive. The spectre of capital gains, made most of them (except the most hardened) discover marketing, advertising, design, export, trade financing, public offerings, strategic partnerships, concessions and business plans. Industries are much more focussed and market oriented. The new religion of capitalism, replete with entrepreneurship, free choice, personal profit and the invisible hand of the market has been successfully phased in. Both the domestic markets and international trade are recovering nicely. Consumption is growing and with it exports. The political level is withdrawing from the scene through more or less successful privatization or transformation schemes and appropriate legislation to minimize the role of the state in the economy. Some countries have opted to "skip" some of the industrial portion of the classic, evolutionary economic cycle - and go directly to investing in information and knowledge industries. They educate their workforce and retrain it accordingly. They invite multinationals - using a cocktail of tax incentives and direct grants and subsidies - to open back office operations (accounting, administration) and telemarketing operations in their countries. This calls for lower investment than in classic (or sunset) industries and has a high value added to the economy. But the single largest driving force behind economic recovery is foreign capital. Foreign Direct Investment (FDI) is pouring in and with it: new markets, technology transfers through joint ventures, new, attractive product mixes, new management, new ideas and new ownership - clear and decisive. So, industrial production is picking up and will continue to grow briskly in all countries in transition that have the peaceful conditions necessary for long term development. If Macedonia will follow the examples of the Baltic countries, of Poland, the Czech Republic, Hungary, Slovenia, even Russia, Ireland, Egypt, Chile, Indonesia, Israel and the Philippines - it will double its industrial production within 10 years and redouble it again in 15 years. Israel, Ireland and ? France and Japan (!) are examples of poor, agricultural countries, which made the transition to thriving industrial countries successfully. But was their secret? How come Hong Kong and Singapore are richer than Britain by some measures? Together with South Korea and Taiwan they have been growing at an average rate of 7.5% annually for the last 30 years. China, Indonesia, Malaysia, Thailand, The Philippines have joined the "Asian Tigers" club. They all share some common features:
Still, these countries started from a very low income base. It is common economic knowledge that low income countries always grow fast because they can increase their productivity simply by purchasing technology and management in the rich country. Purchasing technology is always much cheaper than developing it - while maintaining roughly the same economic benefits. Thus, Hong Kong grew by 9% in the 60s. This growth coefficient was reduced to 7.5% in the 80s and to 5% in the 90s. But China, Malaysia, Thailand and Indonesia are likely to grow annually by 7-9% during the next decade. Not that these countries are exempt from problems. The process of maturation creates many of them. There is the dependence on export markets and volatile exchange rates (which determine the terms of trade). When the West reduced its consumption of microchips and the Dollar appreciated by 50% against the Japanese Yen - all the tigers suffered a decline in economic growth rates, current account deficits of 5-8% of their GDP, strikes (South Korea) and Stock Market crashes (Thailand, to name but one of many). In Singapore and in Hong Kong, the industrial production plummeted by 5% last year (1996). Years of easy money and cheap credits directed by the state at selected industries starved small businesses, created overinvestment and overcapacity in certain, state-supported, industries and destabilized the banking and the financial systems. It helped forge infrastructure bottlenecks and led to a shortage in skilled or educated manpower. In Thailand only 38% of those 14 years old attend school and in China, the situation is not much better. Finally, the financial markets proved to be too regulated, the government proved to be too bureaucratic, corruption proved to be too rampant (Indonesia, Japan, almost everybody else). There were too many old conglomerate-type mega - companies which prevented competition (e., the Chaebol in South Korea or the Zaibatsu in Japan). So, the emerging economies are looking to Hong Kong, Singapore and Taiwan to supply the ideal: truly flexible labour markets, no state involvement, lots of nimble, small businesses, deregulated markets, transigent industrial policies. These countries - and the rest of the Asian Tigers - are expected to beat the West at its own game: money. They have many more years of economic growth ahead: Each Korean worker has only 40% of the capital goods, available to his Western comrade, at his disposal. Putting more technology at his fingertips will increase his productivity. An industrial worker in the west has a minimum of 10 years of education. In Indonesia and Thailand he has 4 years and even in South Korea he has merely 9 years. On average, an industrial worker in one of the Asian Tigers countries carries 7 years of education in his satchel - hardly the stuff that generals are made of. Research demonstrated that the more educated the worker - the higher his productivity. Finally, increasing wages and looming current account deficits - will force the tigers to move to higher value added (non labour intensive) industries (the services, information and knowledge industries). Then, it will be the turn of countries like Macedonia to take their place in some labour intensive areas and to rise to tigerdom. About The Author Sam Vaknin is the author of "Malignant Self Love - Narcissism Revisited" and "After the Rain - How the West Lost the East". He is a columnist in "Central Europe Review", United Press International (UPI) and ebookweb.org and the editor of mental health and Central East Europe categories in The Open Directory, Suite101 and searcheurope.com. Until recently, he served as the Economic Advisor to the Government of Macedonia. His web site: http://samvak.tripod.com
MORE RESOURCES: Unable to open template $TEMPLATEfilename, exiting |
RELATED ARTICLES
Prison Abuses on Good Muslims Well we have certainly been reading a lot about prison abuses. Many of us in the Western World are completely outraged at the media leak of the photos at Abu-ghareeb. Stopping a Nuclear Bomb on a Hydrofoil The US Homeland Security is worried about Hydrofoil or Skimmer Craft used as fast moving bombs on water entering one of our ports or Naval shipyards. If you will remember the XXX" Movie with the Hydrofoil Craft with a Biological Weapon which would kill millions of people if it released it's gaseous cargo. Voting Pro-Environment is Good For Jobs, Health, and Security There are many issues on the minds of US voters these days, but according to national polls, the environment ranks .. The Truth About Power and Absolute Zero Societies have always had a problem of what to do with their young males with high testosterone. In many countries it is important for them to kill off many of them. TSA Missteps at Our Airports The TSA seems to have completely missed the ball at our airports. This is not to say that the Federal Government is completely and utterly incompetent, for that is a whole other debate possibly spanning a thousand agencies? It is also not an immediate call for privatization, as we have already seen the abuses in private police forces and prisons. US Government Sore Losers in Not So Neighborly Dispute I'm getting a little tired of being lectured by that "pin-headed, pencil-necked" whiner David Wilkins, about what Canada should do and not do with respect to the failed softwood lumber talks.Wilkins, the US Ambassador to Canada, said today that Canadian politicians should stop their ''emotional tirades'' and order the country's trade representatives back to the bargaining table to reach a final settlement. The Contemporary Global Marketplace - IT, Software, and Services "Had there not been outsourcing and utilization of cheaper resources offshore, average computer users would not have been able to afford the hardware and software that are available to them today." In this manner, author Robin Sood brushes aside superficial criticism of outsourcing and brings home to the reader of IT, Software and Services: Outsourcing and Offshoring two key points: outsourcing is already widely used and its positive effects go well beyond increased company profits. We Are Turning a Corner in Foreign Relations, Thanks GW Bush! Kudos goes out to the George Walker Bush's Administration and long-term strategy in the world to take the high road in our foreign relations policy. Today we see relief donations coming in from around the world, why? Well because despite what you read in the newspapers about our Middle East efforts, it shows that we, America, is seen as a country with the right attitude and vision. Globalization Often we see protests at the sites of global leader gatherings. Some complain Globalization is bad, that a one world currency is evil and that there is a huge conspiracy a foot to control all of mankind. Harmonic Beams to Pre-Detonate Shoulder Launched Surface to Air Missiles Using Harmonic Beams to Pre-Detonate Shoulder Launched Surface to Air Missiles near airport departure and arrival flight paths. We could use a Harmonic Beam pulse on a close system harmonic beam to pre-detonate explosives that International Terrorists may want to use on such as Hand Held SAMs. Unemployment Iraqi Style Let's put it all into perspective: the U.S. Netanyahu: Too Late For A Fight-back? The resignation from cabinet yesterday, Sunday, by the Israeli minister of Finance is a good signal by the extreme right-wing, within the ruling Likud Party to the world that a group exists that would not go to sleep, much less on the same bed with terrorism.I am of the contrary view that if we have to sleep on the same bed, and not necesarilly with the witch called terrorism in order to morally strangulate it, we must get done with the ugly task quick. Environmentalists Often Complain About GM Crops Maybe some of the people complaining ought to go to Africa and tell people to stop breeding like rats? Think of all the GM Crops can do for plastics, synthetic material and even for NASA since they are working with these R and D facilities to make organic materials with GM crops. All this special R and D is paid for by these companies due to the future promise of potential profits, but it is not without risk. Constitutional Amendment Needed on Sodomy Laws Many very nice and loving homosexual male couples want to get married. Sure they can have various personal vows and contractual relationships, share monies; even call themselves married; domestic partners or sole mates. Patriots and Parrots: Imprisoning Tongues in America It can be dangerous to engage in free speech. This year alone, 242 journalists, in countries such as Egypt, Morocco, Jordan, and Saudi Arabia, have been tossed into jail for their words, and one has been killed. Wartime Prisoners and the Will to Fight; War is Hell, Let's Win Alright? We learned some lessons in these last few wars. For instance: some of Saddam's Iraqi army personal may have given up or volunteered to give up to slow us down. Fight Terror, With Education A War on Terrorism? Conventional war being brought on an unconventional enemy is ineffective out of date. Building these countries up to a certain level of stability, and allowing them to take over and govern themselves is part of the Presidents plan. Bosnia - An Economy in Search of a State Bosnia-Herzegovina (heretofore "Bosnia") is an artificial polity with four, tangentially interacting, economies. Serbs, Croats and their nominal allies, the Bosniaks each maintain their own economy. 6 Steps to Destroy the American Infidels The United States has enemies, which call the country the land of infidels. They have been plotting ways to attack. MUD MUD - Much Unnecessary DisclosureThe Federal Trade Commission recently asserted in a report that the Franchising Industry needs more disclosure. Yet we are in time of heightened Homeland Security. |
home | site map | contact us |