The economies of East Asia are outpacing the world average in economic growth and are projected to continue their rise to prominence in the future. In a globalized world economy, what do business students need to know about the rise of the Asian economies? CSUF Economics Professor Robert Mead shares some insights about the economies of East Asia and what students can do to be active participants in the world economy.
East Asia, a region encompassing the economic giants Japan and China as well as the upstart economies of Southeast Asia, has a population of 2.2 billion people, over a quarter of the world’s total. It also has more than a third of the world’s total economic output.
CSUF Economics Professor Robert Mead tells students that the East Asian economies have been remarkable in their persistence toward economic vitality over the past half century. The region’s economic development started in Japan and spread to the “Asian Tiger” economies of Taiwan, South Korea, Hong Kong and Singapore in the mid-20th Century. China has made a transition from a Communist command economy to one of the world’s most dynamic economies, while Southeast Asian nations such as Malaysia, Indonesia and Thailand are rapidly becoming developed countries.
“China, India, Japan and Korea are the four major economies in Asia, though all of the Asian economies are growing faster than the rest of the world in the general,” Mead says. Particularly, China and India are notable because of their huge populations – more than one billion citizens each – which make them economic leaders by sheer size alone. Yet all of the Asian economies are notable for outpacing the world average in economic growth over the last 50 years.
Mead notes that the rise of the Asian economies has most affected the manufacturing industry. “As the Asian economies begin to grow, they have lower wages. So, manufacturing located in those countries outcompetes manufacturing in other countries,” Mead says. He notes the example of the textile industry, which relocated from Britain to the U.S. and finally to Asia over the past few centuries in response to the cost of manufacturing. “The Asian countries tend to move into technological manufacturing very quickly,” he says. For example, Apple Computers, which are designed in Cupertino, California, are manufactured in China, a common situation, which only two decades ago was manufacturing only simple products.
Will China Overtake the U.S.?
Students often hear that China’s economy will overtake the United States as the global leader in gross domestic product (GDP) over the next few years, yet older adults will remember the same predictions about Japan in the 1980s – claims that were ultimately premature.
Mead says the situation is different with China, since their population (1.3 billion) compared with Japan (120 million) permits the Chinese economy to achieve parity with the United States, even if output per person is only one-fourth of the United States figure, as the U.S. has only one-fourth of the population of China. This does not mean that China has achieved the standard of living that Americans enjoy, however.
“On a per capita basis, China is still a developing country,” Mead says, meaning that the average Chinese citizen’s wages are far behind that of the average American. China has a number of headwinds going forward, including severe pollution, a poor legal system and the potential for geopolitical conflicts with its neighbors, which will be factors in Chinese performance in the future, Mead says.
Becoming East Asia Literate
Mead believes it is important that students understand cultural norms and economic performance of Asian countries. He teaches ECON 332 – Economies of the Pacific Rim – which gives students an overview of the economies of East Asia and their recent performance. In addition to being a course for economics and international business students, this course is also a general education option.
Online periodicals, including the Asian Economic Journal and Wall Street Journal Asia, are also good sources for students interested in the Asian economies. The Pollak Library also has thousands of books, articles and audiovisual materials on Asia, both from an economic and cultural perspective. Students might also consider Mihaylo’s annual three-week study-abroad program in China, held every summer or learning one of the Asian languages. CSUF offers coursework in Japanese, Chinese, Korean and Vietnamese through the Department of Modern Languages and Literatures, which also has student language clubs.
Mead believes that Mandarin Chinese is a key language of the region due to the size of the Chinese population and economy. However, Japanese, Korean and Vietnamese are all significant Asian languages that can assist students depending on their career goals. Still, “most international merchants learn English, which puts Americans at an advantage,” Mead says. He notes that learning a foreign language to be successful in the business world may not be as difficult as students believe. “If you pick up the language needed for business, it is often a fairly simple vocabulary.”
A Passion for Economics and CSUF
Economics has been a lifelong interest for Mead, which grew out of high school and college debating. Says Mead: “No Congress has passed legislation with the intent of messing up the economy, but certain things happen despite the good intentions. My interest in economics was why do bad things occur, despite the best intentions of policymakers?” He developed a particular interest in the Asian economies when he was completing his undergraduate degree and was advised by his college roommate to visit China. “I postponed graduation for a year and went to China, which set me on a career path.”
In addition to his economic studies, Mead is an active participant in the CSUF campus community and helped design the CSUF Strategic Plan. He serves on the Academic Senate and was chair of the Planning, Resource and Budget Committee. He was honored for his service to the campus community with the Faculty Leadership in Collegial Governance Award in April 2014.
For More on Economics and International Business
Students interested in economics as a potential career may contact the Department of Economics. Those interested in international business may look into the BA degree in international business , which provide students with a practical introduction to the global economic, cultural, legal and linguistic aspects of the business world.