Money made in the East from the West is often reinvested in the West ( esp by Japan to fund the surplus) Like Stalins 1950s , the asian tigers have grown more through increasing number of inputs than in efficiency gains which up till now have been negligable. Eg. Singapore employed share of population 27 to 51% 1966 most workers not education at all , now 2/3rds complete secondary education Between 1966 and 1990 grew 8.5% per annum( 3 x US) and per capital income at 6.6% per annum. Investment as a share of output grew from 11 to 40%. That doesn't mean that growth will now slow because unlike Stalin's Russia , Singapore might well start to increase efficiency being far freer than Russia the fundamentals are there for it to do so. Japan did grow through increases in efficiency Foreign Affairs Nov/Dec 94
Its not confucianism that is the cause of success because China is and Malaysia , Brazil and Chile aren't. Destruction of confucian order helped as it distained labour and merchants FLD. All Dragons had very tight control over crime. Price of Land and stocks has sky rocketed everywhere apart from Sing (apparently) Asia from 1970-90 the number of poor people dropped from 400m to 180m despite 2/3rds growth in population Economist Oct 30/93 In 1960 Japan had a GDP/person of $380 , 1/8th that of the US, S Korea in 1962 was $110 same as Sudans , Taiwan =Zaire =$160 China's great leap forward caused 30-50 million people to starve to death , 50m died in WW2 The also rans spent education moneys on Universities (10% in S Korea, 43% in Venezuela) the successes on primary and secondary education Total factor productivity explains 1/3rd of Asia's growth (56% Hong Kong and 10% of Malaysias) and 50% in the West (most poor countries its only 10%ish) Only 10 years ago Taiwan and Korea were under fairly harsh martial law. Brunei: no income tax, but 60% of workforce work for government
Germany well respected here. No income tax, some taxes on food ( to restrict imports) Average age of unskilled about B$5.00 per hour (£2.20) Cars seem about the same price . Houses about the same to rent though you may get more £1000 per month to rent Civil engineering firms will charge 2.5% ( 7% if they manage them) on contracts of about B$2 million to B$10 million . A contract will take about on month per million for a team of 3 ( using CAD) ( obviously quite substantial profits there). In Brunai unlike the Philapines there can be substantial waits between contracts and the government can take 3 to 12 months to pay. Malaysians enjoy special privelidges and each company must have a quota of Malasians in the higher ranks. Philipines mostly Catholic, but perhaps 10% Christian China : 9% growth, real incomes doubled in the 90s , population densities 3 times the world average , 80% of population agricultural . Income tax rates are only 15% which is part of the reason why rates are growth is so strong (US 20% , Japan 18% , EU 25% )
Its 15 yr long 10% a year is partly growth in goods that no one wants to buy Unique lack of infrastructure. Hasn't even started the closures E Eur have gone through China though poor has a very high savings ratio- foreign investment not so crucial, capital flight not such a risk,China better educated than most, China had only 18% in state cos whereas in Russia 77% of all the products made in One factory ! India now self sufficient in food. The British ran India for 200 years with 1000 civil servants, today India has 22 million of them
INDONESIA: Economist July26th 1997: Creeping re-regulation. Some monopolies on import and distribution of some agricultural products. Bribes and charges to the bureaucracy about 10-15% of any new project.Foreign investment has climbed from £1.9 billion, to £6.2 billion. Minimum wage has tripled in last 3 years causing loss of 2-3% total employment (World bank ). Although it manages the exchange rate it has let it slide 3-4% a year with inflation and allows it to trade within a wide bank 8-12%.. Has 240 banks (some tiny and 50% of lending is for property) -due to be merged and privatised.. It feels inequality is rising and the education system is behind others.But World Bank studies show that economic growth is creating more equality. Enrolment in schools is near universal.although standards are low.Government controls curriculum. 52 state unis and 1284 private. JAPAN Japan has labour shortages hence the viability of robots PFT Ch5
FANUC is the important factory - tourist attraction
Japans GDP was 1/3rd of UK now 3x , was 1/20th of US , now 2/3rds (since 1950)
Spends less than 1% of GDP on defence. Success due to low taxation not exports policy
Because Japan has protected its non exporting industries they are hugely expensive and inefficient, full of special interests esp. Distribution and agriculture . Overall productivity is much less than in the US and prices much higher. The protectionist policy is a drain on Japan's success not its cause. (TNR) (PRT) MITI ( the government industial policy people) have at best not helped, competition between exporters has been more of a factor. The Japanese unfailingly planned for the wrong targets -opposed electronics, cars and photography. Instead it pushed steel -Japan has 3 times the sustainable capacity for steel and no iron ore ,coal, gas or limestone ( tax payer pays). They pushed for larger and larger computers and the market went to PCs . Failure of this policy that helped the exporting 12.5% at the expense of the domestic 87.5% is why Japan can't open up.
Cheap imports would mean people would have more money to spend on domestic goods as well
And in dashing for market share Japanese firms lost a fortune-$4 billion by one estimate-a blow only partly balanced by subsequent profits. "ECONOMIST JANUARY 1994 Most of the ASEAN states and China pay for their defecits with Japan with surpluses with US Money is borrowed to finance the trade defecit Japan lends the funds by buying US bonds ( for which they have to sell Yen and buy dollars) and buying assets in the US. The Japanese save much more than the US and so can lend more profitably there. Private sector debt is twice as high in Japan as US as % of GDP. Exporting more is a drop in the ocean now the economy is so large. 150 of the world top 500 cos are Japanese, same num US. US ones earned 7 times as much relative to sales and 12 times as much relative to assets Japan gets 2/3rds of its revenue from direct taxes as opposed to less than half from ,say, Germany.. Interest rates on bonds are under 2% - a loose monetary policy by any standard. Japan is now deregulating with its usually short term negative effects on confidence Economist 23/9/97 After doubling its sales tax , GDP fell dramatically The effective corporation tax in 1997 is 50% including local and national -higher than ASEANand the West. Only Germany is higher.(US 40 , France 35, China32,UK 32, Thal 30, Sing 27,Hong Kong 12) Most other rich countries slashed taxes in 1980s to boost competitiveness Japan waited to 1990 and then reduced them by only 2.5% Loss makers are treated more generously in Japan than elsewhere, so 2/3rds of companies declared losses in 1996 despite GDP growth of 2.4% Cashflow is 2/3rds depreciation in Japan (allowed under accounting rules and good for tax ) and only 1/3rd profit )( opposite in America ) (this must be why some think price/ cashflow ratios are better in Japan than price/earnings) - or simply half price earnings ratios. Small firms have much lower tax rates and better rules- big firms transfer all their profits there. Corporation taxes are 27% of all government receipts Korea : Half of GDP is sales of the chaebol: Daewoo, Lucky-Goldstar, Samsung, Hyundai PFT. See Japan for disasters in store for this policy. South Korean income didn't reach $100 per person until 1963. During rapid growth average working week was 60 hours (10 hours more than the next hardest working nation) In the late 80s it is now 55 hours. It didn't tolerate dissidents or unions. It had a small group of technocrats.
Malaysia 31% of Malaysia is Chinese people , 58% Malays 77% of Singapore is Chinese people, 14% Malays Malaysis GDP $4000, Singapore >$24,000 New Zealand
Top rate of income tax now 33% ( no deductions except bus expenses)
Central bank governors contract is 0-2% inflation or contract not renewed
Mongolia Abolished all taxes on tariffs and trade ( now only country in the world that has done so) Myanmar GDP per person is still below its 1980 level Ec26Jul97, in 1987 the government abolished a high denomination banknote overnight destroying the savings of many. Still spends more than 50% of government spending on the military. Singapore Got Multinationals more because of stable government and trained workers than tax incentives. 80% of housing public built. Government expenditure 21% of GDP in 1994 ($24.8 billion ) ($8.1 bil income and corporation tax, GST 1.6 billion, excise £8.6 billion, cars 1.8 billion, stamp duty £1.8 billion, fees and charges $3.6 billion) Spends 14% of income , saves 7% of GDP Education $3.3 billion, 15% of income , 20% of expend Health $0.9 billion Security $4.8 billion Housing $1.0 bill (its £80,000 to buy a car in Singapore- £20,000 car license) Taiwan: mostly small companies. In 1949 income per head was £100 per annum,same as Indias, (in 1987 it is $7500) it had virtually no industrial base, private sector was only 28% of output (now 84% (in1985))
Thailand Inability of Thailands state hospitals to meet demand led to the rapid growth of private hospital care) state spending on health (6.8%) , soc sec and welfare 3.6%, educ 20%. In 1995 , period of compulsory education expanded, 97% of children go to primary, 33% Secondary,( 2/3rds of taxation indirect, and the other third is 2/3rd s not personal income taxes( which are only 10% of GDP)), defense is about 12% of spending, transport about 10%, housing about 5%, 10% for agriculture Vietanam : nothing really private , state share in the economy up from 33% in 1990 to 40% in 1997- most "private " is joint ventures with the state EC May 17th 97