Asian economies should rely less on exports so countries can prosper
Powerful Asiatic countries such as China and Japan have improved their economy over the years through manufacturing and exportation of goods.
Most clothing, iPhones and other knick-knacks can often find a tag attached to the product that reads: MADE IN CHINA or MADE IN JAPAN.
This mass production of goods distributed to other countries like the United States has allowed Asian economies to succeed.
However, in recent years, exports from Asia have been slowing down, and growing at a lesser rate due to the financial crisis.
This may seem like a detrimental problem for Asian economies; however, this could prove to be beneficial.
Prior to the financial crisis, China, Japan, Vietnam and many other Asian economies heavily relied on exports and not enough on domestic demand.
Most of the Asian countries’ income was predominantly through exports. This helped generate large amounts of current account surpluses.
On the other hand, this also meant they were susceptible to an economic slowdown once Western countries began to cut back the amount of imports they would take in, limiting production and exports in Asian countries.
Most cases would prove that a financial crisis would hurt a country’s economy. Take the U.S. as an example. High consumer spending and incredibly high levels of debt left the states with big current account deficits and layoffs.
But that has not been the case recently.
According to a survey conducted by the International Monetary Fund, Asian and U.S. economies are half as big as they were in 2006. Going back to 2011 to 2013, exports from Asian countries grew to about 10 percent a year in dollar value. They were also up 2.9 percent for over the first half of 2014.
While exports may be slowing down in Asia, the International Monetary Fund proved that in no way is there a decrease or harmful correlation to the number of exports shipped from Asia and its economy.
But, with the financial crisis affecting the economy and slowing down exports, this allows Asian governments to stimulate domestic demand. In countries like China, Malaysia and Vietnam, the government should allocate their money in education, public services and health care to strengthen their own economy and not rely as heavily on exports.
By shifting Asian economies to focus inside its own country rather than outside to manufacture and produce for other Western nations, the people, economy and government will benefit for itself.
For example, providing better education to countries like Thailand, Malaysia and Indonesia, people are able to obtain higher-paying and higher-level jobs to support their families and pursue higher-level education. Furthermore, this will allow better jobs to be created within the country so most civilians do not rely solely on manufacturing as a career.
I believe with time and a more narrow focus on Asian economies within the country rather than exports, Asian economies are able to grow without needing to excessively produce and ship goods to Western nations.