Financial Liberalization : South Korea And Taiwan Essay

That this was also the decade in which globalization came into full swing is more than a minor inconvenience for its advocates” (Rodrick). If globalization is supposed to present an advantage to developing countries, why have there been so many setbacks? Indeed, both sides will have its winners and losers regardless of which side of the development coin they live on, but for the most part globalization has lifted millions out of poverty, improved the standard of living, and increased life expectancy rates all while keeping developed nations relatively competitive to their developing counterparts. Globalization’s value is that it seeks to create an economic equilibrium in the world, where parties are free from barriers and can benefit from one another through a more efficient allocation of resources. This allows all participating nations to contribute to an integrated economy and where all nations willing to embrace globalization have the potential to benefit. Regardless, the path to successful integration to the global economy has not always been easy. There is contention towards globalization as some argue that it is detrimental to developed nations, while many developing countries that were forced to hastily open up their markets and integrate failed. However, if implemented properly, globalization has proven that it can benefit all parties involved and that the potential gains outweigh the losses.

These effective strategies helped Hong Kong overcome the financial crisis. All these facts fully demonstrated that China is a responsible big country. After the Asia financial crisis, the importance of China's economy has been brought into focus; China's neighboring countries have begun to recognize the influence of the Renminbi.

While this may be detrimental to a smaller country, it is a casual sacrifice for the developed nation encouraging said liberalization. Due to their economic size and power, their cost of closure-the cost incurred on a nation by the termination of a trade partnership, measurable through direct income loss and adjustment costs of reallocating factors of production-is much smaller than that of the developing nation (Krasner, 21). Ideally, the smaller market is opened to a point of maximum advantageous trade, at whatever internal cost, and held there. The chances of the resultant instability overwhelming the capabilities of the nation are low, but if it does occur, the cost of closure for the larger nation is small. Thus, the instability is a worthwhile risk if it increases relative power. As a result, today large powers ubiquitously push economic liberalization upon smaller nations across the world in the name of the globalization

One of the primary factors that can be attributed as to have led the recent financial crisis is the financial deregulation allowing financial institutions a lot of freedom in the way they operated. The manifestation of this was seen in the form of:

Thus far, I have laid out some of the most important arguments in the extant literature on the East Asian Miracle with particular reference to South Korea. In this section, I integrate the preceding two sections on the existing literature and propose an alternative theory. In brief sum, the existing developmental state literature, including that specific to South Korea, argues that the developmental state causes economic growth through export-led industrialization. I reverse the order of two links in that theoretical chain. Specifically, I argue that the developmental state does not give rise to export-led growth. In fact, it is the inception of the export-led growth strategy that gives rise to the developmental state, which emerges as a

Japan was one of the first Asian countries to have a successful economy. Unlike other economies, Japan gew through high input and efficiency growth. It was clear back then that Japan was certain to catch up, or at least come close to the United State’s economy. Despite their past growth though, they have since slowed down and reach a plateau of growth. It was predicted that they would surpass the United States by 1998, but instead hit its limits. Japan was unique compared to its neighboring countries like its big brother

“The welfare state looked doomed, with no power to counter the economic horror of the global market.” Although the welfare state was perceived to be in decline, economic openness brought significant benefits to the both the domestic and global economies. The increase of free trade through the reduction of tariff and non-tariff barriers allowed consumers to purchase foreign goods and services at cheaper prices, and foreign investors provided considerable amount of capital to the country as well as job creation and technological innovation.

The deregulation of financial markets catalysed by Globalisation worldwide has impacted on the amount of trade within the Japanese economy beneficially allowing easier access to foreign currencies, facilitating a higher flow of goods between nation, by relaxing laws that severely prevented foreign buying of currency, and floating the yen. These drivers have helped boost Japan's trade and recovery from its recession. Technology has allowed finances to be traded and communication to be near to instantaneous. This has increased dramatically the amount of FDI into Japan largely thanks to the numerous strategies the Japanese government has taken to promote economic growth and hence development. Finance and Foreign Direct Investment (FDI) have increased as a direct result of globalisation doubling from $63 billion in 2001 to $144 billion in

South Korea was transformed into an industrial powerhouse with a highly skilled labor force. In the late 20th century, however, economic growth slowed, and in 1997 South Korea was forced to accept a $57 billion bailout from the International Monetary Fund (IMF), then the largest such rescue in IMF history. The country also wrestled with reforming the chaebol and liberalizing its economy. Nevertheless, its economy enjoyed a recovery in subsequent years, and the country entered the 21st century on a relatively firm economic footing.

In this essay we look in-depth on how government strategies and economic policy play a crucial role in the success of High Performance Asian Economies (HPAEs) during 1960 to 1990 (World Bank 1993).There are eight countries within HPAEs: South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, Indonesia and Japan. Its economic development has significantly rise that it was name ‘East Asia Miracle’ (World Bank, 1993).

The purpose of this paper is to show that the “regulatory capture” has played a role not easily measurable in causing the global financial crisis. To illustrate this, the first step will to describe the “regulatory capture” in its three possible qualifications; then, I will explain, providing some examples, how each of these categories played a possible role in posing the basis for the financial crisis. While illustrating the different forms of capture I will present some questions that leave space to different answers. Finally, I will conclude that the regulatory capture have surely played a role in generating the crisis, but it is not possible to evaluate the effective role it had in causing it.

Financial regulation is necessary and without an efficient set of regulations a country could see rises in unemployment, interest rates, and the deterioration of financial intermediaries. With the globalization of the financial industry, it becomes more and more common for businesses to seek financing outside of their county 's boarders. These innovations in the financial industry stress why it is so important for regulations to be created and changed to reduce risk and asymmetric information in financial systems.

Connor, Flavin and O’Kelly (2010), Stated that Deregulation of Financial Markets & Large Capital flow (Bonanza) were two of the four main reasons of both US & Irish Bank Crisis.(Ref 1. Connor, Flavin and O’Kelly (2010), the other two being Irrational exuberance & Moral Hazard.

The performance of East Asian nations, particularly Japan, South Korea, Taiwan and most recently, mainland China, is largely attributable to the East Asian Model, which accounts for the following notable observations: sustained economic growth at high levels for long periods, social, political and economic diversity, and economic activities that are industrialized, export-oriented and socially beneficial in nature. The East Asian Model is characterized by the following elements: investment and trade-driven growth, active governmental involvement, strong regional cooperation and economic development driven towards poverty reduction.

Asian economies that have progressed economically at such substantial rates that have come to rival the earning capacity and quality of living of those being first-world countries – Taiwan, Hong Kong, Singapore and South Korea.