Professional Documents
Culture Documents
From recent economic history the following are the growth miracles:
By comparing the performance of China and India with Germany, Japan & Korea it is evident that the economic
performance on this grand scale reconfigures industrial geography even as it transforms the pattern of trade.
Until the eve of the first oil crisis in 1973, Germany’s per capita growth rate was robust, averaging 3.7% from 1960-
73.
Exports is the main reason that Germany regained it’s industrial vigor and the GDP rose to 25% by 1975.
Given the scale of destruction during the world war it is a miracle as to how Germany
had re-joined the ranks of the advanced industrial nations by effectively leveraging and
augmenting it’s stock of human capital and technological capabilities.
Whereas, Japan’s revival was assisted by the demand for resource-based industrial
products such as petro chemicals, steels and ferrous metals.
The average GDP in the late 1940s was negligible but it has increased to an average of
36% between 1960 & 73.
This was well above the rate achieved by Germany and is reflected in Japan’s growth in
per capita GDP which averaged around 8.7% which is 5% more than Germany.
While Germany’s interest towards exports, the main interest for Japan is on par with
investments.
Enter Korea
• Korea was not endowed with human capital, technology and business
infrastructure.
• Nucleus of business organizations survived under the Japanese.
• Koreans were quick to learn and the government showed
commitment towards industrialization.
• Domestic savings rose in Korea during 1976 to 1985 and Koreans
relied heavily on Foreign Assistance like Japan and Germany for
overseas borrowing.
• President Park Chung – Hee actively supervised the enforcement of
the exports targets through regular meetings with industrialists.
• Growth was heavily led by the manufacturing sector.
• Large firms were the driving forces and key to creation and brand
image of export success.
• Small and medium – sized firms had a lower industrial profile in Korea
despite government efforts to encourage the entry of firms into the
SME sector.
Exports of Goods and Services -
China sets a new benchmark
• Between 1985 and 2006, China’s GDP rose at an average rate of 7% a
year.
• By 2008, it had rose to 8%, surpassing Japan.
• China had a larger share of GDP in 1985 – 7% gradually increasing to
17% by the year 2006.
• China started out in the early 1980’s as an exporter of raw materials,
foodstuffs, etc., over 93% of the exporters have now become the
manufacturers.
• China has been heavily relied on manufacturing for their economic
growth.
India in the
Global Scales
• Compared to China and the
three other countries, India is
still in a catch-up phase. Its
share of global GDP at
nominal exchange rates was
1.85 percent in 1985 and 2.16
percent in 2007
Savings,
Investment,
Technology,
and Growth:
A Comparison
Global Share of GDP
• As a share of GDP, FDI in China
was 0.54 percent in 1985 and
oscillated between 3 percent and
over 4 percent between 2000 and
2007 which is far more then most
of the countries.
• India’s long-run trend rate of per
capita income growth is 2.6
percent. Per capita income
growth edged above the trend
line in the late 1990s and has
remained above it ever since.
Per Capita GDP Growth
• It is notable that over a long period of time—
extending from 1860 to the present—leading
economies such as the United States and the
United Kingdom have deviated relatively little
from their trend growth rates of per capita
GDP, averaging 1.9 percent annually for the
United States and 1.4 percent for the United
Kingdom.
• Germany, Japan, and Korea stand out because
their growth rose above long-term trends for
significant stretches of time, beginning in the
1960s.
Labor Force with
Tertiary Education
• The long-run growth rates for
Germany, Japan, and Korea are 1.8
percent, 3.4 percent, and 6.3 percent,
respectively. In Korea, growth dipped
below the trend rate during an
economically and politically stressful
period starting in 1979 and extending
into the early 1980s, after which the
economy quickly regained its stride.
• As can be seen from the figures, the
spread of tertiary education appears
to be unrelated to the acceleration of
growth in Germany, Japan, and Korea
In a class of its own
• Germany and japan were major trading nations in mid 1970s.
• The suggestions of other high achieving economies says that India has
to double its share of GDP to be sustained.