Asian Economies: Powerhouses and potentials

Asian Economies: Powerhouses and potentials

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We discussed in the Why do an internship in Asia article the potential that Asian markets have over the next few decades. Asian economies are burgeoning as a result of innovation and modernization in a variety of different sectors. These include service, industry, and manufacturing. In this article, we will do a breakdown of the major Asian economies, as well as discuss their expected growth over the next several years.

 

China

As of 2017, China boasts the world’s second largest economy by nominal GDP at a staggering $11.8 trillion. It has the largest manufacturing economy in the world, and is the largest exporter of goods. China is also the world’s largest producer and consumer of agricultural products. Unsurprisingly, China produces the most rice in the world, and is a key producer of wheat, corn, tobacco, soybeans, and potatoes, among others. The real estate industry in China has been a controversial subject, but, since 2010, China has had the largest real estate market in the world. Despite China’s focus on manufacturing, in the last two decades China’s service sector has doubled in size, accounting for 46% of China’s total GDP. In 2011, the Chinese government instituted a five-year plan to prioritize the development of the service economy. The telecommunications sub-sector in China is the largest in the world, with over a billion mobile customers. Tencent, the developer of WeChat, is dominating Chinese mobile culture like nothing before it.

In 2015, China contributed a third of global GDP growth. China’s influence in the global economy is a force to be reckoned with, and, as more and more Chinese citizens are becoming bigger consumers, it would be no surprise if this continues for the foreseeable future.

 

India

By 2050, India’s economy is expected to overtake that of the US, putting it right behind China in the world’s largest economies. Like China, agriculture makes up a large part of the Indian economy. As the Indian economy has grown, agriculture’s contribution to GDP has steadily declined, but it still makes up a large portion of the workforce and socio-economic development. India’s industrial manufacturing GDP output was the 6th largest in the world in 2015, largely due to petroleum products and chemicals. India’s pharmaceutical industry has also grown at a compound annual growth rate of 17.5% over the last 11 years, and is one of India’s fastest-growing sub-sectors today. However, the engineering industry in India is still the largest sub-sector by GDP.

Perhaps the most exciting development in India is its incredibly fast-growing information technology and business process outsourcing sub-sector. Cities like Bangalore rival the United States’s Silicon Valley in innovation and technological advancement as more and more skilled, tech-savvy students and young professionals are entering the entrepreneurial world.

 

Indonesia

Since the Asian financial crisis in the late 1990s, Indonesia has charted impressive economic growth. Indonesia is the world’s fourth most populous nation (behind China, India, and the US), and has the 10th largest economy, although this is expected to jump up to fourth by 2050.

Like South Korea, Indonesia’s agricultural sector has historically contributed a majority of the GDP, but this has shrunk to about 14%. Indonesia’s industrial sector is what has been propelling its growth over the last few decades, with its share tripling in less than 20 years between 1965 and 1980. Manufacturing and mining are driving this growth, and are the recipients of the most foreign direct investment into the country. Indonesia is one of the world’s largest producers and exporters of coal, and is among the top ten gold producers.

 

Japan

Unlike China and India, Japan’s agricultural sector accounts for a very small portion of its economy - only 1.4%. Almost three-quarters of Japan’s total economic output is from its services sector. Banking, insurance, real estate, transportation, and telecommunications are all major industries in Japan, which boasts some of the largest companies in the world in each industry. These include Mizuho, NTT, TEPCO, ÆON, SoftBank, JR East, Japan Airlines, Sumitomo, and some of the world’s biggest car companies like Mitsubishi, Honda, Toyota, Nissan, Lexus, and Mazda. Additionally, four of the five most circulated newspapers in the world are Japanese newspapers.

Japan is also making strides in manufacturing and industry, particularly in the fields of consumer electronics, automobile manufacturing, optical fibers, and robotics.

 

Malaysia

Malaysia was among 13 countries that recorded an average growth of >7% a year for 25 years or more. It has nearly eradicated poverty and has reduced income inequality substantially over the last few decades.  As recently as the 1970s, Malaysia’s economy was dominated by the production of raw natural resources like tin and rubber. Since then, Malaysia has been making strides industrially. Its electrical and electronics sub-sector contributes to 33% of the country’s exports and 27% of the country’s employment. As demand for mobile devices, storage devices, optoelectronics, and embedded technology increases, Malaysia’s production of smartphones, tablets, cloud computing devices, fibre optics, integrated circuits, and LEDs, among others, are proving to be very important to its economy. Malaysia is also a major hub for electrical component manufacturing, with companies like Intel, STMicroelectronics, Infineon, and Texas Instruments investing in factories there. Additionally, Malaysia is one of the world’s leading manufacturers of photovoltaics and solar equipment.

 

Philippines

As a newly industrialized country, the Philippines still has a large agricultural sector. As of 2014, agriculture employed 30% of the Filipino workforce, although it only accounts for 11% of the GDP. It’s the world’s largest producer of coconuts and pineapples, producing several million tons of each annually. Industrially, the Philippines is a major player in the shipbuilding industry -- it became the world’s 4th largest shipbuilding nation in 2010. Manufacturing is a large part of the Philippines’ economy, especially in the automotive and aerospace industries.

Economic growth is expected to be rapid and consistent in the next decade, with growth projected at 6.9% in 2017 and 2018. In 2016, the Philippines was the strongest performer in terms of economic growth in East Asia, outperforming China, Indonesia, Thailand, Malaysia, and Vietnam.

 

South Korea

South Korea’s spectacular economic growth has been popularly dubbed the “Miracle on the Han River.” South Korea is categorized as a “high-income OECD” nation per the World Bank.

Directly after the Korean war, South Korea’s agricultural sector contributed nearly 50% of the nation’s GDP, but as the country has progressed, much of this has shifted to the industrial sector. Now, agriculture employs only 6% of the population and contributes 2.3% to the GDP. Industry, however, has absorbed approximately one-fourth of South Korea’s labor force, primarily in manufacturing. South Korea is one of the world’s largest manufacturers of electronic goods as well as semiconductors (Samsung), and is very strong in its automobile and shipbuilding industries as well (Hyundai, Renault, Kia). South Korea’s services sector employs 70% of its workforce, and recent investment increases in medical care, tourism, and education are expected to be powerful employment generators for the nation’s youth.

 

Thailand

In 2011, Thailand became an upper-middle income economy. Its economy was growing at an annual average rate of 7.5% before the Asian crisis, and although it has since slowed a bit, economic growth is still consistent.

Like Malaysia, Thailand’s electrical and electronics sector is its largest export sector. Behind China, Thailand is the world’s biggest maker of hard disk drives, with notable names like Western Digital and Seagate Technology among the biggest producers. Car production in Thailand has been increasing steadily, and, according to ASEAN, Thailand is the leader in automotive production and sales. However, as automation becomes more and more prevalent, automotive workers may find themselves being replaced by machines.

 

Vietnam

Vietnam is considered to have one of the most dynamic emerging economies in Asia. In the span of 30 years, Vietnam has seen incredible economic growth and development, transforming itself from one of the world’s poorest nations to a lower middle-income country. Its GDP per capita growth has been among the fastest in the world, and is expected to continue to grow consistently despite global economic uncertainty.

Vietnam’s newly developed software industry has bolstered its rapidly growing technology market, and progression in engineering, business, education, and agriculture offer many new opportunities for large-scale impact.

 
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