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The East Asian model, pioneered by Japan, is a plan for economic growth whereby the government invests in certain sectors of the economy in order to stimulate the growth of specific industries in the private sector. It generally refers to the model of development pursued in East Asian economies such as Japan, South Korea, Hong Kong and Taiwan. It has also been used by some to describe the contemporary economic system in Mainland China after Deng Xiaoping's economic reforms during the late 1970s and the current economic system of Vietnam after its Đổi Mới policy was implemented in 1986. Generally, as a country becomes more developed, the most common employment industry transitions from agriculture to manufacturing, and then to services. The main shared approach of East Asian economies is the role of the government. For East Asian governments have recognized the limitations of markets in allocation of scarce resources in the economy, thus the governments have used interventions to promote economic development. They include state control of finance, direct support for state-owned enterprises in strategic sectors of the economy or the creation of privately owned national champions, high dependence on the export market for growth and a high rate of savings. It is similar to dirigisme, neomercantilism, & Hamiltonian economics. Although there is a common theme, there is not one single approach to the economies of Asian countries, and it widely varies in economic structure as well as development experiences among the East Asian economies, especially between Northeast and Southeast Asian countries (e.g. Malaysia, Indonesia and Thailand relied much more on FDI (Foreign Direct Investment) than Taiwan or Singapore). Success of the model East Asian countries saw rapid economic growth from the end of the Second World War to the East Asian financial crisis in 1997. For instance, the percentage of annual average growth between 1970-96 was 3-5% in China, Hong Kong, Taiwan, South Korea and Singapore. Within this period, developing East Asian countries were growing at three times the rate of growth of the world economy. Hence these countries attracted a significant amount of foreign and private capital inflows. During this period, East Asian countries also achieved dramatic reductions in poverty; the greatest example is Indonesia, where the percentage of people living below the official poverty line fell from 60% to 12% between 1970 and 1996. Furthermore, Indonesia's population increased from 117 to 200 million. Equally impressive is the growth of real wages between 1980 and 1992, with average wages in newly industrialized Asian countries increasing at a rate of 5 percent a year, whereas at the same time employment in manufacturing increased by 6 percent a year. The growth period in East Asian countries saw a large improvement in overall standards of living. Causes of GDP growth Behind this success is export-oriented economies which brought high foreign direct investment and greater technological developments which caused significant growth of GDP. Big companies like LG, Hyundai, Samsung etc. were successful due to huge government support and its intervention into the banking sector in order to direct banks to give credit to big companies. The governments in those countries were crucial in controlling trade unions, provisions, justice and also in providing necessary public infrastructure (roads, electricity, good education etc.). All this just made these countries more attractive for foreign investors. Along investors, Asian countries got foreign aid from the West (especially from the United States in order to discourage communism as a Cold War Containment policy) and get better access to the Western markets. Examples "Eight countries in East Asia–Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, and Indonesia–have become known as the East Asian miracle." Beside successes of the East Asian economy mentioned above in the success of the model, there are two other examples why they are called 'Asian miracles'. Japan: The East Asian model of capitalism was first used in Japan after The Second World War in 1950. After war and American occupation, recovered Japan was considered a developing country (e.g. In 1952 Japan had lower total export value than India). The main development was between 1950 and 1980. It took Japan about 25 years, a non-competitive country (in steel production), to overcome Germany in producing cars (Germany was at that time the largest exporter of automobiles in the world). 5 years later, Japan produced more automobiles than the US. In a post-war period, the Korean War (1950-1953) can be seen as a turning point for the Japanese economy, as the country moved from depression to economic recovery. Japan, being occupied by the US military, was a staging place for the US-led United Nations forces deployed in the Korean peninsula. The country found itself in a good position to make a profit as Japanese goods and services were procured by the UN troops. This, along with economic reform, gave an initial boost for the economy that would experience rapid growth for the next half-century. In the 1950s and early 1960s average annual growth rates were around 10% and later will even climb to 13%. In the early post-war years Japan initiated economic reform, Zaibatsu corporations were dismantled, empowering small agricultural producers to earn profit as opposed to the pre-war years where big land lords were owners of agricultural land. In 1960s Japan developed a consumer-oriented economy, with industry orienting towards production of high-quality technological products aimed for export, as well as the domestic market. Japanese exports rose rapidly and in subsequent years it became a world leader in car manufacturing, shipbuilding, precision optical devices, and high technology. Beginning in 1965 Japan started having a trade surplus and the next decade saw Japan having the third-largest gross national product in the world. In the 1970s the growth will significantly slow down partly due to the oil crisis, as the country was heavily dependent on oil and food imports. In the 1980s Japan diversified its raw material sources, due to economic misfortunes of the previous decade, and shifted its production’s emphasis towards telecommunication and computer technologies. Even though Japanese economic expansion ended in the early 1990s, today Japan is the leader in highly sophisticated technology along with its traditional heavy industry products. Tokyo is one of the world's most important financial centres, home to the Japan Stock Exchange Group's Tokyo Stock Exchange and Tokyo Commodity Exchange, among others. Korea: Korea followed Japan and despite its lower industrial development, was in nearly 40 years able to compete in chip manufacturing, surpassing the United States. In the 1950s South Korea was one of the poorest countries in the world, heavily dependent o.... Discover the Keijiro Otsuka popular books. Find the top 100 most popular Keijiro Otsuka books.