Shifting Global Economy to Asia and its significance | Daily News

Shifting Global Economy to Asia and its significance

Part 1

The Global Economy Shift (GES) is an identifiable geographical shifting of world trade and industry to Asia Pacific region, creating a trendy change for a New Centre of Gravity in Asia, with respect to the volume and value of global industry and trade.

This has been in the making since 1950s after the end of war and conflicts in that part of East Asia. This is a continuing process, probably unstoppable, in the economic affairs of the world. This is related in fundamental sense, to a number of factors, the large populations living in this part of the world, their aspiration and past glories of their history persisting, despite the wars and revolutions, that occurred. Further the enabling political environment gained after ending of colonial domination in Asia and the countries acquiring organizing and management skills in state craft and finally the urge to improve living standard for the masses with the spread of communication and information.

This essay is to focus on the significance of this shift (GES), its trends and the factors and forces involved, and the possible lessons to learn, hopefully for the serious readers, policy makers and the business community in Sri Lanka. However being limited by the printing space available, it is possible to only to dwell on the main forces behind this Global Economic Shift, though the full picture is certainly most interesting and appealing to a serious reader.

A Glimpse Economic History

The world economic history records how the Western Europe, initially England and later others, including North America, became developed industrial economies following the industrial revolution (and its technological developments, creating and acquiring thereby, the state of being the Centre of Gravity, in the global economic affairs. The IR first in England and elsewhere, in Europe, saw the emerging of factory based, manufacturing system using machines, and replacing cottage industries that had prevailed earlier for a long time.

The new system of production using machines and large labour force led to mass production of manufactured goods and trading among nations first among the colonised Asian countries and later to other countries in Africa. These countries become the Periphery for the European Core area. The pattern of trade and industry that developed in the western countries in the 19th and early 20th century, created what is often referred to as the Core of the global economy where countries of Asia and Africa becoming the periphery to feed the core, with raw material and labour, (initially slaves) and later as captive markets for their manufactured good and commerce, on their terms, of course. In the system of exchanging that followed, the most striking feature is that a group of Western States, led by England first and later USA joining, coming to wield power and influence over most of other states in world affairs.

This power is largely because of wealth and money accumulated over 100 to 150 years, exploiting other countries through the colonial system and trading that was created by the West. With the onset of GES, this structure in world affairs is expected to fundamentally change to a system, more open and competitive pattern of industry and trade, within the global economy.

The Shift- GES

By 1950, five years after World War II, that killed many millions and destroying economies, began new trends in development first in Japan, a defeated country, followed by few others in East Asia, in the nearby region, ironically having gone through similar, though somewhat less harsh wars and revolutions , many countries in East Asia –Pacific basin, began to transform their economies to much improved industrial and trading activities rapidly, earning the popular title, the Miracle Economies.

The fact that it happened in a far corner of Asia, far away from the Western Europe and North America, the countries which had dominated and influenced the world affairs for nearly 200 years or more, is indeed unique in world history. The trend of change, bringing about this shift of the GES, began gradually but steadily over last few decades, encountering at times temporary crises and disruptions, most of which have been managed by their governments led by strong and determined political leaders of respective countries and the equally determined business leaders and the citizenry. This is true of most countries of E. Asia. The profile of this rapid change from the stand point of contemporary economic history is indeed enticing.

The industry based economic developments that followed in most of these countries, started with textiles and garments for exports and gradually changing to make simple tools and machines and later slowly gaining knowledge and graduating their skills and acquiring relevant technology and competency to make automobiles, first may be motor bikes and later cars and lorries, and also venturing into heavy industry of ship building and air craft parts manufacture. Today they have entered to produce a whole range of electronic goods, for households and industry, using highly advanced technology and skills, they have graduated into the production of robotics for wide applications. In this respect the development strategies and practices adopted by South Korea and now China are most noteworthy.

South Korea was a traditional agraian country, previously becaming a colony of Japan and later subject to a political division and gaining peace after a civil war and then becoming a republic with an elected president and parliament to manage affairs as an independent nation. S. Korea rapidly became a miracle economy of East Asia, having Japan as located few hundred miles in the immediate south, as then most recently advanced industrial economy in Asia and of course, the upcoming giant economy of China in the west and close by, no doubt striving to be the lead economy of Asia and of the world. China then, was growing steadily at around eight to ten percent GDP growth rate and now having plans and strategies to extend its ancient silk route to link a large part of the globe through both land and seas in Asia.

This fundamental transformation coming into being and when become fully developed, in the next few decades, is bound to be significant globally over its affairs and in particular to the countries and economies of Asia where large populations live and work and who are also aspiring for better tomorrow. The discussion that follows, of this expected massive change in the global economy, would focus on the key forces and specific factors causing it.

The writer hopes that it would, indeed be relevant and useful to business community, students of world affairs and the readers in general. The plan is to present the discussion in 3-4 articles as a series focusing on the key forces and factors involved in this shift of the global economy.

This being first of the series will focus initially on the profile of the shift, tracing the main contours relating to the shift.


 

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