(May 2013) Soon India will have a fifth of the world's working-age population. It needs to make 100m new, good jobs fast, or it risks squandering a once-in-a-generation demographic advantage.
(May 2013) Shinzo Abe's plans for structural reform are welcome. But in a region sensitive to Japanese nationalism, revitalising the country's military will demand delicacy, say The Economist's correspondents.
(May 2013) Steve Blank of the Haas School of Business at the University of California Berkeley on his return from Asia says that for the last 10 years China essentially closed its search, media and social network software market to foreign companies with the result that Google, Facebook, Twitter, YouTube, Dropbox, and 30,000 other websites are not accessible from China. This left an open playing field for Chinese software startups as they “copy to China” existing US business models. Of course “copy” is too strong a word. Adapt, adopt and extend is probably a better description. But for the last decade “innovation” in Chinese software meant something different than it did in Silicon Valley. Meanwhile, a poll of European business leaders says China will be level with or ahead of Europe in technology innovation in ten years’ time, including 55% who believe China will be ahead.
(May 2013) The second coming of Shinzo Abe, Japan's prime minister, has had a stunning impact on the economy since his long-dominant conservative Liberal Democratic Party recaptured power in the general election last December. The rise of China and the 2011 devastating earthquake and tsunami were key catalysts in ending defeatism and showing a strong determination to end almost two decades of deflation. Two HSBC economists say that opening up Japan to large FDI (foreign direct investment ) flows should come as part of Act 2. In 2008, Peter Mandelson, then EU trade commissioner, shocked a business audience in Tokyo with his directness: "In a globalised economy in which more than half of trade is in intermediate goods, trade usually follows direct investment. If markets for foreign direct investment are blocked, either directly or indirectly, then so are supply and sales chains. Without these, many of the dynamic economic gains from trade cannot occur," he warned. "If we want to deepen the global trading system, and indeed if we want to deepen our bilateral trading relationships, then the investment question cannot be ignored...For every dollar Japan invested in the UK and the Netherlands alone, European companies were able to invest a net total of only three cents in Japan. This is, frankly, hard to understand. Europe is the biggest exporter of FDI in the global economy. It has about US$3 trillion invested globally. Yet only $75bn is here in Japan - - less than 3%. Nowhere else in the developed world is EU investment so thin on the ground. In fact, Japan is the only country in the developed world with which the EU has a negative balance of investment flows.”
(May 2013) Asia’s phenomenal growth over the past few decades has been driven by the rise of Factory Asia. However, the global financial crisis and uncertain growth prospects in the United States and the Eurozone have dampened demand for Asian exports. At the same time, rising wages threaten to erode the cost advantage that the region once had, managing supply chains has become more complex, and new technologies are transforming manufacturing. During 1980–2010, developing Asia’s real gross domestic product (GDP) grew 7.1% annually on average, compared to the world average of 2.8%. The region’s real per capita GDP (in constant 2000 US dollars) climbed from about $257.26 in 1980 to $1,420.14 in 2010. That is an increase of more than five times, compared with about 1.5 times for the world’s per capita GDP during the same period. By 2010, the region accounted for 32.3% of world GDP; including Japan, the share reached 42.1%.
(April 2013) The OECD warned Japan this week that bringing its huge public debt problem under control, remains the country’s “paramount policy challenge,” at a time when Shinzo Abe, prime minister, is giving priority to ending deflation through aggressive fiscal and monetary stimulus.
(April 2013) Beginning in the 1960s, South Korea has set economic-development records with a growth formula that focused on heavy-industry and manufactured exports. GDP (gross domestic product) has tripled in just the past 20 years, and South Korea became the first nation to go from being a recipient of aid from the Organisation for Economic Cooperation and Development (OECD) to being a member of its donor committee. South Korea is the leading supplier of LCD screens, memory chips, and mobile phones and is the world’s number-five carmaker. However, despite the stunning economic success of state-guided capitalism focused on export-led manufacturing, the economic miracle is no longer working for many Koreans. While GDP has jumped, real wages have grown by less than half the rate. More than half middle-income households are paying out more than they earn. Divorce rates have jumped; fertility rates have fallen to the fourth-lowest among advanced nations and the suicide rate is the highest of all 34 mainly developed countries that are members of the OECD. The government think-tank says South Korea has plenty of room to boost welfare spending from the current level of 9.6% of GDP - - much lower than the OECD average of 22.1% - - to reduce income inequality and poverty. One in four workers in South Korea is now on a temporary contract, double the OECD average.
(April 2013) Driven by strong domestic demand, economies of developing East Asia and Pacific continue to be an engine of global growth, growing at 7.5% in 2012 -- higher than any other region in the world. As the global economy recovers, regional growth is expected to rise moderately to 7.8% in 2013 and ease to 7.6% in 2014.
(April 2013) China's authoritarian blueprint for managing the internet: China has profited from the internet while finding ways to control it, by building a large, dynamic and distinctly Chinese cage for its users.
China will be net investor in world economy by 2017; US, Singapore, Hong Kong, favourite markets for outward direct investment
(April 2013) Chinese companies have come a long way in their quest to become multinationals. In 2005 the fast-growing Asian economy accounted for 5% of global GDP but only 1.3% of global outward direct investment (ODI) flows. In 2012 China accounted for 11.6% of global output and 6.7% of ODI - - so Chinese firms invest overseas less than those from other countries. However, the gap is closing quickly. Indeed, since ODI from China took off in 2005, annual outflows have grown at an average rate of 35% per year, reaching US$115bn in 2012. That has pushed China up the global ODI rankings from 16th place in 2011 to 3rd place (excluding tax havens), after the US and Japan. China is expected to be a net investor in the world economy by 2017 and the US, Singapore and Hong Kong are favourite markets for Chinese outward direct investment.