A Profile Of The Asian Economy
With the worlds two fastest growing economies and 60% of the worlds population
, Asia is emerging as arguably the most important market in world trade.
The Asian economy is already the largest continental economy in the world. The biggest players within Asia, according to GDP, are Japan, China, India and South Korea. China has largest economy of those and has emerged as the second largest in the world (when not including the EU) behind the US although it is anticipated that it will soon overtake and claim top spot. Japan, for a long time Asias financial superpower is now second whilst India, in terms of purchasing power, can be considered the third largest.
The might of the Asian economies may seem like a fairly modern invention but for much of European antiquity and up until the 19th century countries such as China India were the prominent economic powers in the world. Much of their success then as now depended on their plentiful natural resources, the same resources which tempted European colonisation which in turn stunted Asian economic power until the 20th century.
Asia is a very diverse and disparate continent and as a result the key economic drivers differ substantially across it, to some extent relating to the geography of each locale. The emerging superpowers of China and India are, as are much of central Asia and the subcontinent, largely reliant in the industrial and manufacturing industries fuelled by their large workforces and extensive resources. The rise of both China and India has followed an easing in the socialist governance of the two countries which has unlocked the potential in the massive labour forces and natural resources that each country has.
In Japan and South Korea on the other hand, although industry still plays major role, the economies are more developed and varied and success is also particularly reliant on the financial and service sectors. Both countries experienced post war booms - Japan after the Second World War and South Korea after the Korean War - and are now home to some of the worlds leading multinationals, particularly in the field of consumer electronics and motor vehicles. The success of each economy followed close cooperation between government, banks and business with heavy investment and enthusiastic research into high end technology.
The financial services are also integral to the economies of smaller but prosperous South East Asian states such as Hong Kong and Singapore (together with South Korea and Taiwan known as the Asian Tigers due to their rapid economic development in the second half of the 20th century). The two states are free trade ports which have grown their economies through the adoption of western capitalist principles, international trade and low taxation. They have two of the worlds most important stock exchanges with the Hong Kong stock exchange the world s six largest by market capitalisation.
The wealth of the Middle East states is mostly commodity based with oil in particular being key to their prosperity since the its discovery in Iran in 1908. The region is home to the biggest proportion of the worlds known oil reserves and as a result relatively small Gulf States such as Qatar, United Arab Emirates, Kuwait and Bahrain have been able to rival the larger economies of Turkey and Saudi Arabia and many of those economies now have the some of the highest GDPs per capita in the world (Qatars, the highest, stands at 88,232 US$).
One of the biggest challenges facing modern Asian countries is the distribution of their wealth. In middle east despite being oil rich and having some of the highest GDPs per capita in Asia, much of the wealth remains in the hands of a minority in the upper echelons of society. Whereas, in the vast countries of India and China the size of their economies is largely based upon, but very much offset against, the size of their populations sharing as they do 2.5 billion people between them (over a third of the worlds total). As a result their GDP per capita stands at only 3,417 and 7,518 respectively in comparison with the regions other large economies of Japan (32,817) and South Korea (30,200), whilst the other successful financial and trading nations in the South East are such as those of Hong Kong and Singapore.
Asia has very diverse and complex economy with varying sectors from oil to financial services to consumer electronics. In every one it is a major player and heading into the 21st century increasingly being seen as the major player so there may not be a better time to find out more about investing in Asian Investment Funds
by: Stuart Mitchell
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