The Economic Development of Asian Countries


Asia is the largest continent in the world. It is also the most populous region. According to Duara, the continent has about 4.5 billion people (961). In addition, it is regarded as the world’s fastest growing region in terms of economic development. The continent is made up of 46 independent states (Duara 961). Similar to other economic regions in the contemporary world, there are significant disparities between these states in terms of economic growth.

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China and Japan are the region’s largest economies. Other countries, such as Turkey, South Korea, India, and Indonesia, have also experienced rapid economic growth over the past few years (Hamashita and Selden 7).

The growth of these states is largely attributed to trade with the two economic giants in the region. Economic regionalism has also played a major role in the promotion of growth among the Asian economies. It is characterized by the signing of free trade agreements among the states. Another factor associated with this regionalism is economic integration.

The paper is written against this background of economic growth in Asia. In the paper, the author addresses the issue of how trade with China and Japan has contributed to the economic development of Asian economies. A number of factors related to this trade will be reviewed.

Economic Partnership between China, Japan, and other Asian Countries

Since the end of World War II, Asian states have recorded high rates of economic development. The growth is mainly attributed to intensified trade between countries in the region. The continent neighbors Europe. Before the onset of World War II, the two continents benefited a lot from trade between them (Selden 8).

However, the war divided the two traditional trade partners. There was also the formation of the European Union in 1951. The development hampered trade between Asian and European countries. As a result, the former were forced to look for new trade partners in order to sustain their growth.

Trade among the Asian countries was seen as the most viable option to deal with the emerging economic problems. The reason behind this was the fact that the countries were separated from the rest of the world by water. Economic transactions between them finally paid off in the late 1950s. Today, the countries are still benefiting from these developments. Asian countries continue to record continuous and unprecedented economic growth.

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The success of the trade was made apparent by the Japanese economic miracle. The miracle lasted for forty years, spanning from 1950 to 1990 (Duara 961). The development was closely followed by South Korea’s Miracle of the Han River. The event took place between1961 and 1996 (Hamashita and Selden 7). The Chinese boom, which occurred between 1978 and 2013, was the climax of economic success in the region (Duara 961).

The objective of increased trade between the Asian countries was realized with the help of a number of interventions from regional bodies. One of them included the signing of free trade agreements. The most successful of these treaties was the Regional Trade Agreements (RTAs). The agreement remained functional between 1980 and 2009.

Another one was the East Asian Free Trade Agreement (FTA), which was entered into in the 1990s. There was also the Association of Southeast Asian Nations (ASEAN+3) and the ASEAN–China Free Trade Area (ACFTA), which were established in 2003 (Selden 8).

The promotion of trade among the Asian countries stimulated economic development in the region. For example, China emerged as the second largest economy in the world. In addition, Japan remains one of the strongest economies in South East Asia (Ashrafur 43). Continuous trade between China, Japan, and other Asian countries has also led to the emergence of additional economic giants in the continent.

Such new entrants include South Korea, Turkey, Indonesia, and India (Ashrafur 43). Economic transactions with Japan and China have influenced this development by providing a ready market for the goods produced in most of the Asian states. The two economic power houses are especially major consumers of raw materials and agricultural products from the continent.

Countries in this region also benefit from the interaction by importing technology from the two economic giants. Japan and China are engaged in various ventures related to foreign direct investment (FDI). The investments have led to significant economic development. As a result of the free trade agreements, Asian economies enjoy cheap labor provided by the Japanese and Chinese people.

The chart below shows how trade between Japan, China, and other Asian states has led to a growth in imports. The figure depicts development that followed the introduction of the East Asian Free Trade Agreement in the 1990s. The growth recorded in the first four years of the agreement is highlighted. The treaty boosted foreign exchange rates in the region and spurred trade.

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Growth of trade in Asia.
Figure 1: Growth of trade in Asia. Source: Freeman (142)

The Effects of Trade with China and Japan on the Development of Asian Economies

China and Japan remain the biggest and most powerful economies in Asia (Selden 8). The growth of the two states has a number of effects on the larger continent. For example, the development has positive impacts on the economy of Asia as a whole.

Japan and China offer a ready market for goods produced by other economies in the region. In addition, the two are among the top ten most populous nations in the world. China is at the lead with a population of close to 1.4 billion persons (Freeman 142). Japan is at number ten with a population of about 129,000,000 (Freeman 142).

As a result of the high population density, land in the two nations is under pressure. The available resource is under commercial use. It is mainly used to set up industries and infrastructure. The high population in the two countries provides a vast market for the goods produced by other less developed economies in the region.

Goods sources from within the continent are preferred as a result of the free trade agreements between most Asian states (Freeman 142). Such agreements result in minimal trade barriers, such as tariffs and quotas. As such, Japan and China mainly relies on other Asian countries, such as India and Pakistan, for the supply of raw materials and food. The major reason is that such products can be sourced at low costs. The trade leads to the development of the Asian economies through the growth of these sectors.

As a result of trade with China and Japan, Asian countries benefit from advanced technology (Ashrafur 43). For example, Japan is one of the leading countries in the world in terms of innovation. The nation is associated with the production of advanced technological products, such as locomotives and machinery. For instance, Toyota, the leading car manufacturer in the world, is based in Japan. Reduced trade barriers with this economy enable other Asian countries to acquire such goods at lower costs.

China is also associated with a large number of innovations. Today, the country is mainly focusing on the manufacture of industrial goods, such as machinery. Most of these products are exported to other Asian economies. The use of these technologies increases productivity in these countries. In addition, they enhance the efficiency of the target economies. For instance, Pakistan and India import farm machinery from China and Japan.

The trade in these goods has led to increased agricultural production. As a result, the two countries have become some of the world’s greatest food producers (Selden 8). Exportation of agricultural products earns them foreign exchange. Over the years, the two nations have recorded improved economic growth.

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Trade with China and Japan takes many forms. With the signing of the free trade agreements, many of the companies operating in the two countries have opted to invest in other Asian economies to cut on the cost of exporting products. The practice is often referred to as Foreign Direct Investment [FDI] (Shambaugh 73). The decision by the companies is seen as a move to enhance their proximity to the sources of raw materials.

It is a fact that the move leads to increased competition for the local producers. However, it also speeds up the rate of industrialization in the host Asian countries. In addition, the practice leads to infrastructural development in the region. The reason behind this is that these companies tend to build roads and rail systems to connect them to the sources of raw materials and to the market for their finished goods. In turn, the infrastructural development attracts other investors into the country.

The population of the Asian States is expected to continue growing at a high rate (Duara 961). As a result, such problems as high levels of unemployment are likely to be experienced. With the help of FDI from companies based in Japan and China, the problem is likely to be alleviated. The countries will also enjoy increased employment opportunities for their citizens. As a result, poverty will be eradicated in these states, leading to further economic development.

Trade with China and Japan allows for free movement of human resource. The two countries provide low cost labor compared to other Asian states. Studies reveal that the Chinese population provides cheap labor (Shambaugh 73). The community is also associated with high levels of expertise gained by working in their home country.

The main reason for this is that the country has a large population. The local economy is unable to absorb the increasing labor force. As such, many Chinese nationals move to other Asian countries in search of employment. Some of them are absorbed by home based companies that practice FDI (Freeman 142). The remaining individuals seek employment in foreign firms. Their ability to provide cheap labor makes them attractive to companies operating in many developing countries.

With a cheap source of labor, companies in the Asian economies are able to cut on their cost of production. As such, they enjoy high levels of profits. Japan, on its part, is renowned for its advanced technology. Adoption of these innovations in other Asian economies helps in cutting down on labor requirements through mechanization. Consequently, higher returns are achieved. In addition, the governments of these states benefit from the trade arrangements through taxation.

Increased income by the companies translates to high taxes. The income of the foreign workers is also taxed, generating more money for these economies. As such, they are able to finance development projects that lead to the economic prosperity of the region (Selden 8). As a result, the disparities that previously existed in terms of economic development among Asian countries are slowly reducing. The free trade agreements with China and Japan are some of the major reasons for this apparent reduction (Selden 8).


Following the Second World War, the ties between Asia and the west were severed. The development led to a drastic drop in trade volumes between the two regions. Countries in the region embarked on a mission to sustain their growth by enhancing trade with their peers. By late 1950s, the move finally paid off. It led to the emergence of Japan as one of the strongest and fastest growing economies in the world.

Starting from the 1960s, South Korea recorded rapid economic growth as a result of this form of trade. By late 1970s, China started experiencing an unprecedented economic boom. Today, China and Japan are the region’s largest economies. The two continue to impact positively on the growth of other Asian states through trading activities. The economic engagements are characterized by such arrangements as FDI, transfer of technology, provision of cheap labor, and availability of a ready market for goods

Works Cited

Ashrafur, Rahman. “Japan’s Political and Economic Goals in Bangladesh.” Asian Affairs 27.4 (2005): 41-50. Print.

Duara, Prasenjit. “Asia Redux: Conceptualizing a Region for Our Times.” Journal of Asian Studies 69.4 (2010): 959-1029. Print.

Freeman, Carla. “Neighborly Relations: The Tumen Development Project and China’s Security Strategy.” Journal of Contemporary China 19.63 (2010): 137-157. Print.

Hamashita, Takeshi, and Mark Selden. The Resurgence of East Asia: 500, 150, and 50 Year Perspectives, London, United Kingdom: Routledge, 2003. Print.

Selden, Mark. “Economic Nationalism and Regionalism in Contemporary East Asia.” The Asia-Pacific Journal 10.43 (2012): 1-17. Print.

Shambaugh, David. “China Engages Asia: Reshaping the Regional Order.” International Security 29.3 (2004): 64-99. Print.

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