East Asian Economic Miracles: Middle East Replications Research Paper

Exclusively available on IvyPanda Available only on IvyPanda

Introduction

The luster economic growth experienced in east Asian countries has continued to provide important lessons for other developing countries. Indeed, poor nations have been requested to embark on copying the route undertaken by the so called Asian Tigers. In this consideration, concurrent sections of this paper will embark on illustrating the development model that used by the Asian countries to move their populations from subsistence living to entrepreneurship that has resulted to for Middle Eastern economies to follow the Asian example. Specifically, the paper will illustrate measures that governments in the Middle East will have to provide in the process of creating conducive entrepreneurial environment.

We will write a custom essay on your topic a custom Research Paper on East Asian Economic Miracles: Middle East Replications
808 writers online

Though the Asian countries are credited with creating some of the most competitive economic environments, they are consistently criticized for employing policies that led to financial crisis in late 1990s. Middle Eastern economies will in this regard be advised to avoid some policies used by the Asian tigers. All these goals will be addressed through five concurrent sections (productivity, trade policy, intervention capital employment, and economic freedom).

Productivity

The Asian tigers embarked on a vigorous process of employing labor, their most abundant (Friedman, 2005, p. 125). This led to drastic decrease in unemployment levels as companies provided job opportunities to the masses. Other individuals who had small operations were also able to employed their colleagues. This was especially the case with family owned businesses that provided family members with the much needed employment opportunities. This resulted to the development of self dependence that formed strong foundation for productivity. The huge supply of youths in the region resulted lower hiring prices. The end result was therefore improved competitiveness compared to other countries. Companies were therefore flocking into the Asian countries to establish operations.

Other than the higher number of workforce, the countries were providing competitive labor laws that gave companies more flexibility in running their activities. This freedom was important in developing and implementing strategies that would have brought out the best in employees. For instance, companies were free to compete in the market for labor, meaning that players had to treat employees with great respect or else loose them to competitors.

On the other hand, employees understood that employers had unlimited potential employees, meaning that poor conduct or lower productivity would have resulted to getting replaced. This resulted to gradual improvement of work being done by members of respective labor force, and the provision of competitive working environment by individual employers (Hass, 2005, p. 104).

Middle Eastern economies are today faced with the challenges that Asian tigers had to overcome three decades ago. In addition, Middle Eastern countries have greater supply of youthful labor force that can be used in production processes. Indeed, the youth form a bigger percentage of the region’s labor force and population. To successfully employ youth’s labor in production processes, Middle Easter countries should start by creating an enabling environment through policy reforms.

Labor laws should be made as competitive as the ones employed by Asian tigers three decades ago. This calls for relaxing hiring and firing policies that discourage the employers against hiring the youths. Secondly, policy analysts in Middle Eastern economies should understand that just relaxing hiring and firing polices will not make the require impacts in economic growth. To create a lasting impact, the entire investment laws in the countries should be improved.

1 hour!
The minimum time our certified writers need to deliver a 100% original paper

This will allow small scale businesses to thrive. Further, the locals will embark on developing long term solutions to challenges in respective day to day living. Further, policy makers in the region should embark on gradual reduction in the social support provided to the masses. This develops from the massive oil revenues that are received in the countries. Reducing these social support programs will be the most painful step for the countries to undertake. They are, however, needed for a meaningful economic success to be achieved.

Trade Policy

Economic development in East Asian economies was developed through foreign trade with rest of the world (Baily, 2006, p. 160). Indeed, the countries are consistently mentioned as evident that no countries cannot developed by looking inwards. They show that the fastest way to developed is by producing locally and selling to other countries in the world. The greater availability of labor in these countries resulted to lower production cost.

Western companies were on the other hand experiencing higher production costs that were eroding product competitiveness at the global market. Thanks to globalization, the Asian tigers were becoming the next option. The western multinationals therefore started to produce in Asia cheaply and sell to their home countries at higher prices. This resulted to rapid increase in margins. Competitors of companies producing in Asia were therefore being edged off respective market share. As it happens in the business world, the companies had to look for ways of increasing the dwindling competitiveness. The competitors, too, embarked on establishing operations in Asia so they could sell to home countries.

The shift of production centers in Asian tigers happened at a time that the world was experiencing aggressive globalosation forces (Landes 2000, p. 96). World economies were slowly open to international competition. the companies were therefore finding more markets to sell their products. The expansion of market was good news for the Asian markets because more people were to be employed, leading to further depression of unemployment. In addition, the small scale local operations were to benefit form the expansion, because they were major inputs and service providers to the exporting countries.

Governments in respective Asian tigers had minimal taxes on export, which helped in making goods provided in the economies more competitive (Askari & Roshanak, 2006, p. 22). Employing such policies at that period could have been considered suicidal for the countries that require colossal amount of resources to end citizen suffering. While the Asian tigers were employing such policies, other developing countries were busy charging higher export taxes on goods and commodities.

The countries were undertaking the measure to ensure that exports of raw materials were minimal—they preferred to commodities to be used for local consumption. Secondly, the higher taxes on exports were directed at using the accruing revenues for socials support. But not so for Asian tigers that led local producers to increase competitive at the global level, an action whose positive benefits are still being felt to date.

Beneficial trade policy employed by respective countries is a lesson that Middle East countries, and indeed, all developing nations should take seriously. The reduction of export taxes is especially important for the countries to consider, reason being that exporters are left with more fund they could use in development processes. Leaving the companies with extra cash in their accounts means that more investments that would contribute in economic development might be on the way.

Remember! This is just a sample
You can get your custom paper by one of our expert writers

Further, companies are encouraged to keep their operations in the country. This results to unending cycle of benefits throughout the economy. For instance, expansion of production at the individual level leads to suppliers and service providers, who are also local increase their revenue. Citizens are in the end left with greater amount of money that could be used in self development processes. This means that individual governments will see social services spending decreasing significantly. The funds that could be used for social distribution is are directed at other purposes, such as infrastructure improvement and investments in human capital.

Though Asian tigers made excessive use of export substitution, the Middle Eastern economies should be weary of employing such policy. The world has changes so mush such that substitution can hardly achieve the intended goal.

The Asian tigers were employing the policy because it was possible to block imports foe the sole purpose of protecting local production. It was equally possible for countries to restrict exportation of specific commodities so they could be used for local consumption. That time period also allowed governments to make decisions that are today reserved for individual companies. the global trade policy being practiced today is that of opennesses.

Countries demand that partners open their border or see their imports being blocked. Further, the continued formation of trading blocks by countries mean that members have to be extremely friendly to each other’s goods and services. The international trade policy has further become extreme reciprocity (UNDP, 2003, p. 54) meaning that blocking imports from other countries results to similar measures. This tit-for-tat policy demands that countries become friendly to goods and services coming from rest of world economies. In addition, the World Trade Organisation , WTO, has been taking serious measures against countries that seem to practice export substitution.

Government Intervention

National governments in Asian tigers were influential in the rapid development processes. This involvement had mixed blessings for the countries. Among government involvement included the provision of incentives for companies and individuals that wanted to establish operations in respective countries. As discussed earlier, governments had slashed export taxes significantly, which resulted to increased price competitiveness of commodities produced therein. Secondly governments in tiger countries embarked on an aggressive mission of investing in human capital (Stiglitz, 1996, p. 152). This began by making primary school accessible to all people in respective population.

Secondary school education was also made more accessible to the children from all economic groups. Education at tertiary level was further subsidized to make it more accessible to people that wanted to improve skills. The end result was rapid expansion of the knowledge base that investors were ready to tap. The state was also influential in setting interest rates so as to enable easier access to capital by the masses. In addition, respective governments embarked on pegging currency with the American dollar. Tight control of the two policy tools, interest rate and foreign exchange rate, were usually set outside the market (OECD, 2003, p. 14).

However, the globalization of capital market in 1990s required that both instruments be determined by respective markets. Governments in Asian tigers were not willing to let go their tight control of the two measures despite the urgings form international players. The end result was catastrophic financial crisis that rocked the countries in late 1990s. The financial crisis experienced by Asian tigers were purely caused by government’s failure to rely on the market in setting the foreign exchange and rates. Middle Eastern economies should in this regard avoid making such mistakes, and instead let the market take control.

Economic freedom

Achieving economic success seen in Asian Tigers is possible when Middle Eastern countries employ two important measures that will be discussed in this last section. They include: copying the best policies employed by Asian tigers and avoiding mistakes that were done in the process. In employing the best economic policies, the Middle Eastern governments should only perform the role of delivering environment for investors (local and foreign) to undertake their operations.

We will write
a custom essay
specifically for you
Get your first paper with
15% OFF

According to Heritage Foundation, the proper role of government is to protect life liberty and property the rest should be left to the individuals (source). Performing this major role leaves is the individuals need in to invest and improve their lives. Economic freedom calls for governments to remove all barriers to trade that could be impacting trade between countries. People are therefore able to export their wares to whichever country that illustrate demand.

Further, individuals are able to freely import goods and services that help respective production processes. Middle Eastern leaders should further understand that development in Asian economies was entirely people driven, which is also a key economic freedom demand. This calls for a major shifts from nation-state driven economic development. However, the shift from government led development to that of relying on citizens should be made gradually, drastic change could end up hurting the intended beneficiaries.

References

Askari, H. Roshanak, T. 2006. Middle East Economic Failure. Quarterly Review. 1-26.

Baily, M. 2006. Breaking Down Barriers of Growth. Finance & Development. 156-169.

Friedman, T. 2005. The World is Flat. New York: Strauss & Giroux.

Hass, R. 2005. The Opportunity. New York: Public Affairs.

Landes, D. 2000. Walth & Poverty of Nations. New York: W.W. Norton.

OECD. (2003). Sources of Economic Growth. Paris: OECD.

Stiglitz, J. 1996 Lessons from Asian Miracle. Research Observer, 11 (2): 151-177.

UNDP. (2003). Human Development Report. New York: United Nations.

Print
Need an custom research paper on East Asian Economic Miracles: Middle East Replications written from scratch by a professional specifically for you?
808 writers online
Cite This paper
Select a referencing style:

Reference

IvyPanda. (2021, October 16). East Asian Economic Miracles: Middle East Replications. https://ivypanda.com/essays/east-asian-economic-miracles-middle-east-replications/

Work Cited

"East Asian Economic Miracles: Middle East Replications." IvyPanda, 16 Oct. 2021, ivypanda.com/essays/east-asian-economic-miracles-middle-east-replications/.

References

IvyPanda. (2021) 'East Asian Economic Miracles: Middle East Replications'. 16 October.

References

IvyPanda. 2021. "East Asian Economic Miracles: Middle East Replications." October 16, 2021. https://ivypanda.com/essays/east-asian-economic-miracles-middle-east-replications/.

1. IvyPanda. "East Asian Economic Miracles: Middle East Replications." October 16, 2021. https://ivypanda.com/essays/east-asian-economic-miracles-middle-east-replications/.


Bibliography


IvyPanda. "East Asian Economic Miracles: Middle East Replications." October 16, 2021. https://ivypanda.com/essays/east-asian-economic-miracles-middle-east-replications/.

Powered by CiteTotal, easy bibliography tool
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Request the removal
More related papers
Cite
Print
1 / 1