Business in Asia: Impact of Japanese Industrial Policy, Asian Financial Crisis, International Production Networks, Exchange Rates, and Indian Economy

This article discusses the impact of Japanese Industrial Policy, Asian Financial Crisis, International Production Networks, Exchange Rates, and Indian Economy on Business in Asia. It explores the policies and methods used, their impact on business, and real-world examples. The article also provides lessons for Asian countries struggling or emerging.

qwertyuiopasdfghjklzxcvbnmqw
ertyuiopasdfghjklzxcvbnmqwert
yuiopasdfghjklzxcvbnmqwertyu
iopasdfghjklzxcvbnmqwertyuio
pasdfghjklzxcvbnmqwertyuiopa
sdfghjklzxcvbnmqwertyuiopasd
fghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklz
xcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvb
nmqwertyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnm
qwertyuiopasdfghjklzxcvbnmqw
ertyuiopasdfghjklzxcvbnmqwert
yuiopasdfghjklzxcvbnmqwertyu
iopasdfghjklzxcvbnmrtyuiopasd
fghjklzxcvbnmqwertyuiopasdfg
ECONOMICS

Business in Asia
1) A main contributor to Japan’s fast economic growth during the period 1960s-80s
was the Japanese government’s creative use of industry policy. What was the
impact for business, both abroad and domestic?
The main aim of the industrial policy was to co-operate closely mainly with the private
firms. With the aid of the resources, the business of Japan was able to shift the funds to
different industries that enabled Japan to gain a competitive advantage. The policies, as
well as methods that were different in this scenario and it, impacted the business as a
whole whereby an increment was observed in the input productivity, and a direct
influence was seen in the process of industrial investment. In short, investment guidance
was noted that led to cooperation and enabled the companies to have a strong presence in
the market. The overall benefits of the policy were pointed out in the form of trade,
labour markets, incentives of tax and competition. With the aid of systems there were
widespread benefits in the form of trade protection, subsidies, adjustments in the labour
market, etc. hence, the overall business of Japan transformed and escalated to a great
extent. In short, the policies were highly beneficial and enabled the progress. Further, the
plans led to the emergence of new technologies that uplifted the overall market and led to
a significant change. It was a significant process of industrial development that
transformed the market of Japan in the international arena.
2) What, in your view, caused the Asian Financial Crisis? What should be done
when an economy is in recession as occurred in the AFC? Discuss with the use of
examples.
The Asian Financial Crisis happened with the asset bubbles. There was strong growth in
the region export economies that led to the strong level of FDI that led to high level of
real estate value, higher spending of corporate and huge projects of public infrastructure
that were funded by huge borrowings from a bank. The investors who were ready and
use to lend came under the reduce investment quality, and the capacity in excess began
to be projected in the economies. In tune to this, the Federal Reserve began to enhance
the rate of interest to face the process of inflation that led to less attractive exports and
foreign investment on a lower level.
2

Business in Asia
Further, the Asian Financial crisis was fastened by the commercial banks of Japan who
lessened the exposure to Asia because of troubles in Thailand and South Korea.
Countries such as Indonesia, Thailand and South Korea had huge deficits of current
account meaning that the import of goods and services were more as compared to the
export. This was a projection of the economic growth of high rate and consumption. The
deficit of the current account was financed by the flow of money concerning a capital
account, and the accumulation was due to a higher percentage of interest in the East.
3) Why are International Production Networks so important within the context of
Asian economic development? Can Asian countries currently struggling or
emerging benefit from the examples of others? Discuss with the use of real world
examples.
International network is vital in the context of Asian economic development as it leads to
setting up of subsidiaries in the foreign nation. Further, it leads to setting up of
infrastructure. On the establishment of the network, it becomes easy to invest in foreign
stock and bond market, easier to withdraw money, etc. Further, the two-way trade comes
into operation, and this helps the economy in generating international trade. The global
network can result in advantages, as well as disadvantages. Diversification, as well as
independence, can be observed due to the International Production Network, however;
impacts of exchange rate influence the trade and therefore can have an advantage on the
cost advantage. Such a scenario can be defined with the help of an example:
If the Chinese organization imports more than 70% of the raw material from Japan, the
increment in cost is about 10% (that existed in RMB as depreciation happens by 10%).
Hence, the overall cost in RMB = 0.3(added value) plus 0.7 (import of raw material
divided by 0.9 (100%-10%) = 1.08. Then the overall cost will become 0.97 (1.08*0.9) in
the case of Yen hence the currency of Yen will benefit and increase.
4) “Asia’s welfare continues to depend on exports to the developed markets of
Europe
And the US, as well as to each other. When developed markets falter, Asian
markets
plummet.” (Henny Sender in Financial Times, January 23, 2012). Intra-Asian trade
3

Business in Asia
has grown very substantially in recent years and most of Asia’s trade is intra-Asian
trade. If this is the case, do you agree with the statement that ‘Asia’s welfare
continues to depend on exports to the develop countries of Europe and the US’? Use
examples to support your answer
Asia welfare rests upon the export of the developed markets of Europe and the US.
Commodities can be defined as critical as it leads to more earning. When it comes to
exports of Japan and Asia, China has 13% exports trade majorly after the GFC. Exports
are critical due to the small geographical area as the market isn’t big enough to undertake
production. The outward FDI of Japan to Asia enhanced and can be apt from the
example that Honda produces cars in Thailand. Since 1991, there is an enhanced level of
export concerning intermediate goods to China, and this can be termed as the integrated
phase of the growth. When it comes to the corporate sector, it contains high cash reserve
and falling return on assets. Hence, it can be seen that the trade between the two nations
is vital for the functioning of the economy. Japan contains low national debt while there
are many FDI in Asia; on the contrary, high public debt leads to enhanced corporate
savings to balance the national income. Hence, from the overall discussion, it can be
commented that Intra-Asian trade has increased due to the strong relationship between
the two nations and therefore, the intra-Asian theme is one of the primary reason for the
progress.
5) Why has Japan been unable to escape the middle income trap? Are there lessons
from the Japanese examples that other Asian countries could use to ensure that
they can escape the Middle income trap?
Volatility in the market of international Trade and investment is a vast idea that is
necessary for growth in developing countries. At the same time, it is doubtful for the
countries which have a high income.
With the industries approaching that the global technology Frontier the organizations are
trying to boost the growth by removing the economic hindrances. This may also cause
the government to intervene by the inclusion of cheap credit and government ownership
programs in favour of specific industries or organizations. By following a particular part
of economic growth, the countries will be able to escape the middle-income trap by
4

Business in Asia
fostering the entry and exit of competitive domestic products and factor markets as well
as the well developed financial markets that can allocate capital efficiently and quickly.
The middle-income countries are also determined according to their distance from the
global technology Frontier, their ability to upgrade ketchup and innovate as fast as
possible because it is critical for them to remove the meter. To reach to the top, Japan
needs to have open ideas and have institutions that can allow it to work with complex
interactions across the world economy. This will also require good governance strategies
by decentralising the economic decision making tasks. The organisations can also learn
to access different knowledge with the help of R&D centres.
6) What is the relationship between exchange rates and international business?
How can Asian economies use exchange rates to benefit economic development?
Discuss with the use of real life examples.
There exists an essential relationship between the imports and exports of a nation and the
exchange rate of the currencies. A large effect is noticed on the trade deficit which
further affects the exchange rate and so on. The exchange rates can influence the trade in
many ways according to the principles. The actual exchange rates which are relative to
the prices of tradable and non-taxable goods create a much significant impact on the
incentives to allocate the resources like capital and labour between the sectors that are
producing marketable and non-taxable products. The exchange rates can also be used to
determine the competitiveness present in the costs, prices, and productivity of different
countries following the rest of the world. The different levels of existing values will not
only affect the demand but will also affect the output in reaction to the favourable and
unfavourable changes of profitability from the exports that are being derived from the
exchange rate shifts. The variable future exchange rates also lead to an uncertainty of
future receipts in the quiet country. Define individual considered that the organization is
maximizing its profit and is also prone to risk, and the organisation should try and
produce in accordance to the marginal revenue exceeding the minimal cost so that it can
compensate and there any risk present because of the exchange rates.
5

Business in Asia
7) Does the Indian economy have a future or is its economy too stagnated and slow
to change? Do any Asian countries provide a blueprint that India could follow?
The economic journey of India has improved itself and is an inspiring story for every
developing nation. For understanding the economic status of the country, it is essential to
assess the economic and political history. India was under control of British rule for
about 200 years and was declared an independent nation in 1947. Several obstacles were
not allowing the country to increase the investment and revive itself. However, the state
manages to capitalise itself with the help of private sectors and increase the gross
domestic product by the year 2011 to 2012.however, downward Trend was noticed by
the year 2014 to 2015. This decline has resulted in the weakness of the country leading
to depreciation of projects in Maharashtra with 15% and reductions in the scheme of
Gujarat and Tamil Nadu to be 20%.
The “Make in India” project has also suffered an upgrade decline of 35% from its peak
in the year 2011. The constant deterioration of the services industry also looks the
moderate. The primary factor holding back the investment was the reforms in the land
acquisition that have not happened. This further led the central government to delegate
some of the tasks to state governments. Yes, Japan can provide a blueprint that India can
follow as Japan rose like a phoenix from the ashes of the world war. This reflects that
Japan has paced with the new developments and ensured stability from the ruins. India in
a similar manner can follow the footsteps of Japan and ensure progress in the long run.
8) The Asian Financial crisis allowed Asia to avoid the severe repercussions of the
Global financial crisis. Do you agree with this statement? Discuss using real world
examples.
No, it was observed that the Asian financial crisis was subdued because of its policies.
The East Asian economies try to make active efforts for building itself with large
accumulated amounts of international reserves. However, like most of the emerging
economy is East Asia reserves are not coming from capital inflows. The major part of the
capital was generated by using current account surplus is which can be the earned
reserves rather than the borrowed reserves. Several countries suffered economically
because of the 1997 crisis and had made significant progress in the management of their
6

Business in Asia
current accounts in the current Era by maintaining the surpluses and moderate deficits.
The organizations also are trying to strengthen the regional corporation present in the
financing contingency of extending and materializing the Chiang Mai initiative.
For reducing the vulnerability present in the external debt crisis on the East Asian
countries are trying to move its depth finance to equity finance from the equity liabilities
that are much less risky and more stable. Also, liberalisation is observed in the foreign
direct investments because of the direct and portfolio equity inflows that have been
relaxed or removed. This has also resulted in an absolute increase in market
capitalisation rates in the US. The growth has also been noticed in Malaysia, Indonesia,
Thailand, and Korea.
7