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Asia and the World in the Asian Century

A progressive renaissance began in Asia, with the recovery of Japan after World War 2, following by the rise of the Newly Industrialized Economies of Hong Kong, Korea, Singapore and Taiwan. A “flying geese” pattern of development has continued with the success of some other ASEAN economies, and China and India. However, Asia’s share of the global economy remains still around 30%, despite the region being home to 60% of the world’s population. Asia has the potential of continuing its convergence towards the levels of development of the advanced OECD economies, and perhaps during the 21st century regaining a share of the world economy equal to that of its share of the world population. This has led many observers to argue that this century will be the "Asian Century", following on from the preceding American and British Centuries. This course will explore issues related to the promise of an Asian Century, challenges for realising an Asian Century and how Asia's renaissance is changing relationships between Asian countries, as well as the region's relationship with the rest of the world.

1. Introduction to course


Overview of course.

Course Format:

This course is structured around a blend of lectures, Youtube videos, student presentations, and class discussions.

Grading:

Two four-page (1500 words) papers -- 33% each.

-- First paper -- how much progress has Asia made in its “development”? Due Monday 31 July.

-- Second paper -- choose one Asian country and discuss the main challenges it faces to realize the benefits of an Asian Century? Due Friday 11 August.

Class presentation (6 minutes), and participation in class discussions -- 34% of grade.

Student presentations will be take place in two student seminars on:

-- Friday 29 July on the role of IT, social media and/or the sharing economy in Asia's development; and

-- Friday 4 August on the role of youth in the realisation of an Asian Century.

There will be no final exam.

Topics covered will include:

1. Introduction to course and Overview of Asian Century hypothesis.

2. Assessing Asia's developmental progress

3. Some aspects of human well-being in Asia

4. Economic catchup in Asia.

5. Asia's global value chains.

6. Student seminar on social media and development

7. Focus on Japan.

8. Socially inclusive development

9. Asia's demographic dilemmas and migration

10. Urbanisation in Asia

11. Student seminar on role of youth

12. Focus on China

13. Democracy in Asia.

14. Focus on India

15. Focus on Korea

16. Focus on Southeast Asia and ASEAN

17. Well-being and happiness in Asia

18. Future of peace in Asia


Today's class.

What do we mean by the "Asian Century hypothesis"?

Asia has always had the world's largest population, and for much of history it has also had the world's largest economy. But in the 19th century, Asia slipped back and the West became the world's economic and political leader. Then, following the end of World War 2 and the Korean War, Asia began an economic renaissance. This took the form of a "flying geese" pattern, starting with Japan, then Hong Kong, Korea, Singapore and Taiwan (the "Newly Industrialising Economies), followed by Indonesia, Malaysia and Thailand, and then China, Indonesia and India.

The 21st century could become an Asian Century if Asia continues being the fastest growing region in the world economy. The region has enormous catchup potential.

The 21st century could also belong to Asia if, in some decades time, Asia manages to have the world's biggest economy. This is very possible, if Asia continues its rapid catchup economic growth.

However, there are many challenges that Asia faces in realizing an Asian Century:

-- can the region maintain its rapid economic catch-up?

-- can Asia translate economic weight into political power?

-- can Asians cooperate together as a team? Or will they remain divided, and continue to look to the US and other Western countries for global leadership?

REFERENCES:
- Asian Development Bank, “Asia 2050”, Executive Summary
- ACI, Asian Century on Film
- Hans Rosling: Asia's rise -- how and when? TED Talks.
- ACI, How likely is an Asian Century
- ACI, Fast facts on Asia's people and economy
- The Asian Century, Episode 5: Tokyo (Hosted by Brendon Fernandez)
- Asia rising -- Part 1, Youtube
- Asia rising -- Part 3, Youtube
- Kishore Mahbubani on The Asian Century: Changing Asia
- Hugh White on Asian Century

2. Assessing Asia's developmental progress


Asia has been on top of the world for much of history, with about two-thirds of the world's population and GDP. But during the 19th and first half of the 20th centuries, the West advanced and Asia fell back.

Since the end of World War 2 (1945) and the Korean War (1953), Asia has been making a comeback, a renaissance. Domestic factors have driven Asia's renaissance, like education, export-orientation, investments in infrastructure, and strong leadership.

The US also played an important role -- postwar assistance, military alliances, open markets, a liberal international system. But will the US continue to play a supportive role during the Trump era?

The rapid renaissance of Asia has led to "Asian Century hype" among some Asian commentators, especially following the US and European financial crises. But this hype seems excessive. The renaissance, especially of China, has also given rise to pessimism in the West, as many predict a decline of the West. This also seems excessive.

Against this background, in our second class, we will begin a thorough examination of Asia's of renaissance. In particular, we will study the many economic, social and political transformations that Asia is experiencing.

Economic transformations from:

-- low-income to high-income economies;
-- small to major economies in the global economy;
-- agricultural- to manufacturing- and then service-based economies.
-- weak to highly competitive economies;
-- copycat to innovative economies.

Political transformations from:

-- authoritarian to democratic societies;
-- weak to strong rule of law;
-- corrupt to clean economies;
-- unfree to free press and Internet.

Social/human development from:

-- low to high life expectancy;
-- gender discrimination to equality;
-- rural to urban societies;
-- poverty to prosperity;

Non-income poverty?
Where is Asia's middle class?
Asia's inequality

Amartya Sen's perspective on development -- capabilities, freedom. SarahJoy's perspective.

REFERENCES:
- Asia's development renaissance. ACI
- Asian Development Bank. Key Indicators for Asia and the Pacific 2016
- Gross domestic product 2016, PPP. World Development Indicators database, World Bank, 17 April 2017.
- United Nations. World Population Prospects: The 2017 Revision.
- World Economic Forum. The Global Competitiveness Report 2016–2017.
- Democracy Index 2016. Economist Intelligence Unit.
- Freedom House. Freedom of the Press 2016.
- World Economic Forum. The Global Gender Gap Report 2016.
- World Bank. Ending Extreme Poverty and Sharing Prosperity: Progress and Policies.

3. Some aspects of human well-being in Asia


Developing countries in Asia have achieved remarkable reductions in poverty these past few decades. But daily income can be irregular, since large shares of the population work in the informal sector. This means that financial management is a challenge, as people must provide food for their family on a daily basis, cope with emergencies, and save up for major expenditures like houses or marriages.

People living just above the poverty line are also highly vulnerable to various shocks such as economic downturns, food price hikes, war/conflict and natural disasters. Asia is in fact the continent the most afflicted by natural disasters, which are likely to increase in frequency, as the effects of global warming take the toll.

REFERENCES:
- ACI. Amartya Sen on development on Youtube
- Living on $2 a day
- India - No toilet, no bride
- Inside Story - Asia and the economics of natural disasters

4. Economic catchup in Asia


Asia's economic development is driven by a process of economic convergence or catchup to world leaders.

In the early stages of development, economies can make great progress by absorbing knowledge and technology from the rest of the world. As economies converge toward world leaders, it is necessary to become an "innovation nation".

In concrete terms, economic development has been driven by several factors:

(i) countries like Japan, Hong Kong, Korea, Singapore and Taiwan benefited large youthful workforces ("demographic dividend") -- now they are suffering from aging populations.

(ii) these countries also have excellent achievements in education (reference: OECD PISA study). There is a debate about role of rote learning and debate in Asian education, and insufficient emphasis on critical thinking and creativity.

(iii) public investment in infrastructure (reference: World Economic Forum data on infrastructure). Issue of wasteful infrastructure spending in Japan and China.

(iv) ease of doing business (reference: World Bank report). Singapore and Hong Kong lead the way.

Most countries in Southeast and South Asia, which have been much less successful, are much weaker when it comes to education, infrastructure and ease of doing business. And many of these same countries now have large, youthful workforces who are not well education, and who have trouble finding jobs.

When it comes to innovation, most Asian economies have proved more adept at "incremental innovation", rather than "disruptive Innovation". For example, while China assembles smart phones and iPads, these were invented America's Apple.

Japan, Hong Kong, Korea, Singapore and Taiwan have managed to graduate to high-income status. But countries like Malaysia and Thailand seem to have fallen into a "middle income trap", while there is a serious risk that China will do the same. One factor hindering China's progress might be the Communist Party's repression of highly creative people like Ai Weiwei who challenge aspects of the Party's rule.

REFERENCES:
- ASIA'S ECONOMY -- NO MIRACLE!
- ECONOMIC GROWTH PROSPECTS IN ASIA
- Avoiding the middle-income trap - Biz Wire - November 13 - BONTV
- AI WEIWEI: NEVER SORRY (US trailer)
- MSNBC - How Shanghai (China) Schools Outperform The Entire World On Tests
- CNN: Are asian students smarter?
- Chinese maths teachers come to British classrooms
- Designed in China: Can China innovate?
- China's challenge: Moving from copier to innovator
- Alibaba Counters the Myth That China Can’t Innovate

5. Asia’s global value chains


Today, virtually all manufactured goods are produced through "global value chains" (GVCs). They are no longer produced in one country.

The production of Apple's iPhone is perhaps the classic example. The iPhone is designed in California, its high-tech components come from Japan, Korea, Taiwan, Germany and elsewhere, it is assembled in China by a Taiwanese company (Foxconn), and its branding and marketing is directed from California.

A similar GVC story can be told for clothing, much of which today is manufactured in China, Bangladesh, Vietnam, and Cambodia. For example, a jacket which is designed and sold in the US for $425, but manufactured in China, might have manufacturing costs representing only 9% of the total sales value. US companies would account for much of the other 91%, through their intellectual property, services like retail, logistics, and banking, and profits.

In other words, products like jackets, which seem to be manufactured goods, are substantially packages of intangible, knowledge-based services. In fact, all manufactured goods embody large shares of services.

There are many other surprising examples of GVCs, some of which highlight the role of Japan in the engine room of today’s GVCs. Japanese high-tech parts and components account for some 35% of the value of Boeing’s 787 Dreamliner, and 21% of the 777 widebody jets. And as China is now celebrating the production of its first big passenger plane, the C919, which is in the testing stage, the reality is that many technologies, systems and parts are supplied by foreign companies, like the engines which come from a joint venture between America’s General Electric and France’s Safran.

GVCs were born in the 1980s. Before that, when Japan and Korea were developing, most manufacturing took place within one country and often under one factory roof. Asia's GVCs offer a fast track for development. You only need to be able to do one element of the GVC to benefit from GVCs.

For example, the Chinese town of Qiaotou, once a mere farming village, has made its mark on Asia’s GVCs by becoming the "button capital of the world". According to one estimate, Qiaotou’s 700 family-run factories would produce over 60% of the world's clothing buttons, and 80% of the world's zippers, as it manufactures 15 billion buttons and 200 million meters of zippers a year.

How did GVCs develop?

Role of Japan. Deng's visit to Japan. Japan's outsourcing to neighbouring Asian countries following 1985 yen hike. Other countries followed suit as their wages/costs rose.

Proximity of countries of different levels of development.

Role of information technology in coordination.

Declining transport costs.

Trade liberalisation.

More recently, GVCs have developed in the service sector. Companies in high-cost countries are now outsourcing call centres, accounting, legal, software development and animation to countries like India and the Philippines.

REFERENCES:
- Asia's global value chains -- Part 1
- Asia's global value chains -- Part 2
- Asia's global value chains -- Part 3.
- Deng Xiaoping visits Japan Shinkansen
- Deng Xiaoping visits Panasonic in Osaka

6. Challenges of Asia's global value chains


Asia's global value chains offer new opportunities for fast track development. But GVC-based development also presents many challenges and risks. A major factor is that GVCs result in a distinction between "headquarter economies" and "factory economies", where the headquarters gain the most value from their intellectual property, while the factories only earn a small share of the value. In the case of the iPhone, the US is the headquarter and China the factory economy.

Countries like Cambodia and Bangladesh have enjoyed very rapid development through participating in GVCs for clothing and footwear, thanks to their very low wages/costs. But they run the risk of being stuck doing low value-added work forever. They run the risk of being caught in a "low-skill, low-wage trap", a version of the middle-income trap. More advanced economies like Malaysia and Thailand have also remained factory economies, and have never managed the transition to becoming head-quarter economies. For its part, China is very actively trying to transform itself into a headquarter economy.

Another risk of GVC-driven development became evident following the 2008/2010 US and European financial crises. The demand for Asia's GVC exports dropped sharply, with China being hit hard. The Chinese government now realises that it had become too dependent on GVCs. So it is trying to "rebalance" development towards domestic demand and services.

The "Fourth Industrial Revolution" (Industry 4.0), with the digitalisation of manufacturing also means that Asia's low-wage cost advantage is becoming less relevant.

Reshoring in America and Donald Trump

Labour-rights and human-rights abuses of poor GVC workers is yet another risk of GVC-based development. There are horror stories in many countries, notably the collapse of the Rana Plaza factory building in Bangladesh. But even relatively advanced countries like Malaysia have horror stories of human-trafficking and forced labour.

Asia faces great challenges to take full advantage of GVCs -- from upgrading technological and innovative capacities to improving working conditions and rights.

Asia also needs to open markets for trade and investment, and to improve intellectual property protection. The Trans Pacific Partnership is an impressive initiative, but Donald Trump withdrew the US and the remaining eleven countries are struggling to salvage it.

China's 'One-Belt, One-Road' is another initiative which promises to boost trade and investment, by improving infrastructure connectivity between Asian countries, and also with Europe.

REFERENCES:
- Trump's win pushed this manufacturer to escalate return to the U.S.
- Rana Plaza Collapse Documentary: The Deadly Cost of Fashion | Op-Docs | The New York Times -- Youtube
- Philip Jennings. Rana Plaza -- 12 months on. Youtube.
- What is TPP? Why is Donald Trump pulling out of the Trans-Pacific Partnership?
- Foxconn: An Exclusive Inside Look. Youtube.
- What is China's One Belt, One Road?
- Fourth industrial revolution: The rise of machines
- 'One Belt,One Road' China's plan to reposition global economy CHINA 'One Belt,One Road' China's plan to reposition global economy
- Unskilled and unable: Why Donald Trump's great jobs promise is a lie
- Re-Shoring and Revitalizing American Jobs

7. Student seminar on social media and development



8. Focus on Japan


Until now, a thematic approach. Today, first of country focuses with Japan. Good topic for second paper. For example, comparison with Germany, China or the Philippines.

Japan, so far. Asia’s first developer. Great progress. But still behind US and Germany in GDP per capita. Backward re gender. Bureaucracy -- ease of doing business.

Factors shaping Japan. Geographic isolation -- UK? Resisted Western imperialism by closing up from 1639 to 1853. Good? Commodore Perry, 1852/54. Start of relationship with US.

Domestic political changes, Meiji Restoration, 1868. Rapid development. Copied many things from the West, like German legal system. Became a colonial power -- C, K, T. World War 2. After War, remade by US as a democracy, with pacifist constitution.

Borrowing culture, especially from China. Buddhism. Confucianism. Art. Music. Hierarchical society. Innovation? Resource poor -- must export to import.

Post War an economic roller coaster. 1950-73. GDP growth, 8.1%, like China. 1973-90. Slowdown, 3.0%, like China. 1990s. Financial crisis. ??like China??

Japan’s GDP per capita 81% of US in 1990. Transformed from low to high-tech economy, from agricultural to manufacturing and services, from rural to urban society.

Education. Demographic dividend -- show chart. Infrastructure. Nation rebuilding after war -- like China.

Role of "iron triangle" of business, bureaucrats and politicians in promoting exports. Protecting economy against imports, foreign investment, providing assistance. Breathing space for upgrading. Very effective.

Bubble economy in late 1980s. Yen. Hubris. Bubble burst in early 1990s -- show chart.Government slow to react. Stages of grief -- denial, anger, bargaining, depression and acceptance.Corporate zombies. Public debt starts increasing.

When Japan hit by financial crisis, tectonic plates under Japan shifting. Iron triangle model left unbalanced economy. Work force begins decline due to aging -- potential growth now low. Outsourcing to Asia, GVCs. Also competition from Asia.

Since 1990s, Japan on a low-growth path due to population aging, exploding public debt, deflation, inequality and irregular work, lingering zombie companies (iron triangle resists change). Weak entrepreneurship. Discrimination against women.

Liberal Democratic Party wins elections in December 2012, with Shinzo Abe (show photo). “Abenomics”. Three arrows. Monetary expansion to solve deflation. Fiscal stimulus to stimulate economy (and debt!). Structural reform to boost productivity.

Some progress on deflation. But government goal of 2% inflation not achieved, and postponed again. No serious plan to tackle public debt. Little progress on “womenomics” and structural reform generally. TPP on life support without US. But free trade agreement with Europe.

Tokyo Olympics in 1964 announced the return of Japan. But can Japan afford 2020 Olympics? Olympic Games curse. Also spectre of natural disasters

REFERENCES:
- In search of Japan's roots
- Commodore Perry and the Black Ships
- Japan almost made it
- Xi, Abe and Winnie the Pooh.
- Economist pours cold water on Tokyo hopes for Olympic success in 2020. Japan Times, July 29, 2017.
- OECD Economic Survey of Japan 2017.

9. Socially inclusive development -- Part 1


Many social groups suffer from discrimination, prejudice and persecution.

Japanese women long suffered from discrimination in business, government and politics. In recent times, some exceptions like Madame Yuriko Koike, first woman elected governor of Tokyo in July 2016. Former Defence Minister Tomomi Inada. Renho, former leader of opposition party, Democratic Party of Japan.

But Japanese women strong role in household finances.

Japan's "M-curve". Many factors conspire against Japanese women participating in business, government and politics. Lack of child care facilities. Tight immigration policies affects care workers. Japanese work culture (long hours, drinking with boss, forced rotation away from tokyo, male-dominated environment), social attitudes (Japanese men). “Seqa-hara”. Japanese men an attitude problem, but young men are changing. Japan does not facilitates combining work and family life. "Mata-hara".

Abe’s womenomics ambitious, but not working.

The plight of South Asia’s women much worse. Now like Sub-Saharan Africa for nutrition, health, education, and economic and political participation for gender equality. Half of South Asian women cannot read. In South Asia women much more vulnerable to poverty, sexual and other violence, and HIV/AIDS. The problem is conservative traditional values in male-dominated societies.

Asia's missing girls, due to three factors -- preference for boys, technology (ultra sound), and decline in birth rates. Sex ratios at birth 118 boys for every hundred girls in China, and 111 in each of India and Vietnam (standard biological level of around 105 male births for every 100 female births). Result 117 million missing women, with 57% in China and 30% in India.

Forced child marriage in Asia

Many Asian girls forced into marriage while still a child. Child marriage, under age of 18, is endemic in South Asia. Despite laws, 66 per cent of girls from Bangladesh married before age of 18, 47 per cent of Indian and 41 per cent of Nepalese girls do so. 29 per cent of Bangladeshi girls get married before age of 15.

Effects of child marriage catastrophic. Many abandon school and become pregnant. More likely to die during pregnancy and childbirth. Children are more likely to be stillborn or die during their first month of life. Child brides more vulnerable to domestic violence and HIV/AIDS.

South Asian governments making commitments to tackle forced child marriage. But progress slow. Push back from conservative forces in these male-dominated societies.

Pakistan's dishonourable honour-killing epidemic

Forced child marriages a tragedy. But girls who stand up for themselves and refuse such marriages, or allegedly bring dishonour on their families in other ways, expose themselves to risk of murder in “honour-killings”. In 2000, UN estimated 5000 honor killings in world annually, with 1000 in each of Pakistan and India. Real figure may be closer to 20,000.

REFERENCES:
- Pakistani model Qandeel Baloch killed by brother after friends' taunts – mother
- Trading Success Stories- Japan's Forex Trader housewives Mrs Watanabe
- Why male Japanese wage-earners have only 'pocket money'
- Japan: Who is new Tokyo Governor Yuriko Koike?
- WOMENOMICS 4.0: TIME TO WALK THE TALK
- Japan needs more women at work
- Malnutrition and Gender Equality in India | UNICEF
- FRONTLINE/World | India: The Missing Girls | PBS
- China's one-child policy creates massive gender imbalance
- Girl under 15 married every seven seconds, says Save the Children

10. Socially inclusive development -- Part 2


LGBT rights in Asia.

Revolution in LGBT rights in the West. But overall, Asia is still backward.

Tim Cook, CEO of Apple, in an essay published by Bloomberg Businessweek, "I’m proud to be gay, and I consider being gay among the greatest gifts God has given me”, said Tim Cook, CEO of Apple, in an essay published by Bloomberg Businessweek. “Part of social progress is understanding that a person is not defined only by one's sexuality, race, or gender …The company that I am so fortunate to lead has long advocated for human rights and equality for all”.

Ironical that on same day Cook’s essay was published, Singapore's Court of Appeal upheld the country's ban on gay sex. LGBT communities may suffer from some of the most egregious discrimination in Asia. According to 2014 Gallup poll, most Asian countries are not LGBT-friendly, and things may have since gotten worse. The best performing Asian countries are Philippines and Taiwan, where 58% and 39% of respondents respectively consider their home city or area to be LGBT-friendly (indeed, in May 2017, Taiwan’s top court ruled that gay couples will be allowed to marry).

Scores were less than 30% for Japan, India, Myanmar, Thailand and Vietnam, below 20% for Bangladesh, Korea and China, and 10% or below for Malaysia, Mongolia, Sri Lanka, Indonesia and Pakistan. Indonesia is an interesting case. A 2013 report by the Pew Research Center showed that over 93% of Indonesians believe that homosexuality should not be accepted (other Asian countries with high non-acceptance rates were Pakistan, Malaysia, China and South Korea).

A wave of homophobia has been sweeping through Indonesia, and threatens to undermine its economic and social progress. "Beginning in January 2016, however, a series of anti-LGBT public comments by government officials grew into a cascade of threats and vitriol against LGBT Indonesians by state commissions, militant Islamists, and mainstream religious organizations", reports Human Rights Watch.

In addition to being fundamental human rights, LGBT rights also make good economic sense. As Cook said, Apple is a "company that loves creativity and innovation and knows it can only flourish when you embrace people's differences.” It is not surprising that Apple should be ranked the most innovative company.

Indonesia, Singapore, China, and other Asian countries dream of having homegrown companies like Apple. But until they embrace diversity, and fight against discrimination, prejudice,and persecution of LGBT and other social groups, the dream of building successful innovative companies will remain a pious hope.

REFERENCES:
- Apple CEO Tim Cook: I'm Proud to Be Gay
- Taiwan is paving the way to equal LGBT rights in Asia

11. Socially inclusive development -- Part 3


Asia’s indigenous peoples. 260 million indigenous peoples in Asia, three-quarters of the world's total. This makes Asia the most culturally diverse region in the world. Indigenous peoples have a historical continuity with pre-invasion and pre-colonial societies, and consider themselves distinct from other sectors of the societies now prevailing.

Asia’s indigenous peoples deprived of opportunity of contributing fully to the economy and society. Poverty rate of Asia's indigenous peoples is three times higher than the Asian average. And education, health and other social conditions are also much worse. Most indigenous peoples have benefited little from this economic growth. Also face problems of self-determination, loss of control over land and natural resources, discrimination and marginalization, heavy assimilation pressure and violent repression by state security forces. Experiences of the US, Canada, Australia and New Zealand highlight how very difficult it can be to address challenges of indigenous peoples.

Who are Asia's indigenous peoples? Where do they live?

-- Myanmar has over 100 different ethnic groups, with Burmans making up an estimated 68 percent of the country’s 53 million people.

-- Besides Han majority, Chinese government recognises 55 ethnic minority peoples, who number 114 million persons, or 8.5 % of total population. Great efforts to improve education and health. But Tibetans and Uighurs still suffer terrible human rights.

-- In India, 461 ethnic groups, estimated population of 84.3 million, 8.2% of total population.

-- Indonesia's population of 250 million includes some 50-70 million indigenous peoples.

-- Japan has two main indigenous peoples, the Ainu and the Okinawans.

-- Philippine national population of over 100 million includes an indigenous population of between 10% and 20%.

-- Vietnam's 53 recognized ethnic groups, beyond the Kinh majority, account for around 14% of the country’s total population of 90 million. While Vietnam has achieved a spectacular decline in its poverty, among its ethnic minorities poverty remains very high.

As the experience of US, Canada, Australia and New Zealand shows, addressing the concerns of indigenous populations is a great challenge.

India's caste system

REFERENCES:
- Advancing the rights of indigenous peoples
- Indigenous peoples in Asia. International Work Group for Indigenous Affairs.
- Is India's Caste System Still Alive?
- Discrimination prevents Muslims in India from seeking higher education

12. Asia's demographic dilemmas


World population, long term trends -- relatively flat for most of human history -- then a dramatic increase in recent centuries due to demographic transitions.

In history, high birth and mortality rates, little change in population.

First demographic transition -- decline in mortality rates thanks to nutrition and hygiene -- results in increase in youth population. As youthful population advance to working age creates potential for a demographic dividend, if they are educated and jobs are available.

Second demographic transition occurs when women's fertility rates decline in tandem with urbanization, better education, improvement in women's rights and prosperity. This enhances demographic dividend by reducing the burden of children.

Third transition occurs when demographic bulge advances into retirement age. This reduces share of the working age population, and represents a "demographic tax". Share of retired population is increased by higher life expectancy, thanks to improved health care and healthy lifestyles.

Asia's advanced economies like Japan, Korea, China, Hong Kong, Taiwan and Singapore have benefited from a demographic dividend. Now experiencing "demographic taxes", especially since life expectancies are now high. Much more can be done to alleviate effects of aging populations -- such as by more opportunity to women and youth, raising retirement age and cutting back on retirement benefits, implementing open immigration policies, and improving productivity.

Countries like India, Indonesia and the Philippines now have youth bulges entering labour market. But are less successful in educating their youth and providing jobs for them. Risks of social explosion.

To surprise of many, most Asian countries are now experiencing a fourth demographic transition as fertility rates have fallen below the "replacement rate" of 2.1 children per woman. This is accelerating population aging, and resulting in declining populations (Japan already). Much can be done to address factors discouraging childbirth, and implement more family-friendly policies in workplace.

Connecting Asia's "old" and "young" countries is potential for mutually beneficial migration. Hong Kong and Singapore have accepted large numbers of immigrants. But while skilled workers can become citizens, lower skilled workers usually treated as guest workers.

Japan is experiencing labour shortages, and needs immigrants. But it has very restrictive policies towards immigration for cultural reasons. It does however have an "internship" programme, which is de facto a guest worker programme, by which foreigners can live and work in Japan. It is becoming easier for skilled workers to migrate to Japan and to gain permanent residence. Japan also accepts "marriage migrants".

Korea in a similar situation to Japan, but is becoming more open to migration, especially for Chinese citizens of Korean ethic origin.

Human trafficking is widespread in Asia, including in Japan.

REFERENCES:
- First World Problems: South Korea's shadow workers
- ASIA'S LOOMING DEMOGRAPHIC DILEMMAS
- ASIA'S WASTED MIGRATION OPPORTUNITIES
- JAPAN'S EXPERIMENT IN ETHNIC IMMIGRATION
- TOWARDS A MULTICULTURAL KOREA?
- JAPAN'S IMMIGRATION PHOBIA
- ASIA'S LONG SUFFERING MIGRANTS
- CHINA'S TWO-CHILD POLICY
- EAST ASIA'S FADING FERTILITY
- China’s leftover women

13. Urbanisation in Asia


GVCs and urbanization closely linked. People moving from country to city to work in GVC factories, as well urban services sector. In fact, Asia is in the midst of the biggest wave of urbanization in history. Show data.

Why do people migrate from the country to the city? Job opportunities, availability of services, bright lights and excitement, or an escape from constraining social and cultural traditions in rural villages. Some people are also pushed into urbanisation as they flee hunger and poverty, conflicts, natural disasters and environmental crises like desertification. There is however one common denominator -- all these people are seeking a better life, and usually urbanisation can satisfy that wish.

The movement of people from rural to urban areas can provide a big boost to development, especially since people usually also move from low value added agricultural work to higher value added manufacturing and services work.

Lewis model, and surplus labor. China has reached the "Lewis turning point", where surplus rural labor is exhausted and wages increase substantially. Time to shift from cheap labour to smart labour development. Youtube. Labour unrest. Youtube.

Household registration system -- "hukou" -- prevents rural migrants benefiting from social services in big cities like Shanghai. Youtube

Urban poverty and slums. One-third of Asia's urban population lives in slums with poor infrastructure and high poverty. Show data. Slums often exposed to natural disasters, because badly planned. Can be site of civil unrest, and a driver of democratization.

Asia’s urban environmental crisis, air and water pollution. India worse than China. Hong Kong's pollution problem hits health and businesses -- http://www.bbc.com/news/av/business-21038308/hong-kong-s-pollution-problem-hits-health-and-businesses

One consequence of Asia's rapid urbanization and demographic decline is the growing number of "ghost towns", occupied by dwindling numbers of senior citizens. Ghost town JAPAN https://www.youtube.com/watch?v=45CsXOd7LU8

Quest for innovative cities for innovative-driven development. Need an "ecosystem" that fosters innovation.
Cities need to be a melting pot of artists, academics and investors, men and women, young and old, and of different ethnic and cultural backgrounds, provides a potent force for generating and realizing new ideas. It also helps if there is an environment which tolerates or even encourages differences, rather than conformity, promotes risk taking, and does not instantly punish making mistakes.

World's most innovative cities. London, New York, Tokyo, San Francisco, Boston, Los Angeles, Singapore, Toronto, Paris, Vienna, Seoul, Amsterdam, Barcelona, Sydney, Munich, Dallas, Berlin, Atlanta, Montreal, Chicago. Other Asian cities further down the list.

Asia’s best city Singapore versus HK.

REFERENCES:
- URBANIZATION AND SLUMS IN ASIA
- Videographic. The largest migration in history
- China at the Lewis Turning Point | FT World
- Chinese labour relations: Worker militancy spreads
- On China: Hukou system
- Kevin McCloud: Slumming It (2010) - Ep1 -- 6 minutes.
- Would you pay for a tour of Jakarta's slums?
- Delhi Ranked World's Most Air-Polluted City
- Innovation Cities™ Index 2016-2017: Top 100 Cities
- Singapore Budget 2016: Jurong Innovation District

14. Focus on China -- Part 1


Key words: global value chains, inclusive development, demographic transitions, urbanisation, innovation, middle income trap, education, infrastructure, poverty.

China achieved three decades of stunning development, and poverty reduction. GDP per capita increased tenfold from $1500 to $15,000 from 1990 to 2016. Dramatic poverty reduction from 67% in 1990 to 2% in 2013, based on poverty line of $1.90 (based on poverty line of $3.10 decline was from 89% to 11%).

China's economy now at turning point.

What happened, how?

To understand China, must go back over 200 years. In 1793, George Macartney led first British diplomatic mission to China to open China to trade. Qianlong Emperor rejected British requests.

"Our Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There is therefore no need to import the manufactures of outside barbarians in exchange for our own produce."

Beginning of "century of humiliation". Opium wars. Pressure from foreign powers. Invasion by Japan. World War 2. Stability of sorts returned to China when Mao's Communist Party won Chinese Civil War in 1950. Mao period many ups and downs.

Modern China began to emerge in 1978, under leadership of Deng Xiaoping with Reform & Opening up. Communist China was allowed to become more capitalist. Deng was inspired by Japan, Korea, Taiwan success stories.

Deng's philosophy -- cross river by feeling stones -- as China moves forward in new directions, it needed to feel its way forward even amidst uncertainty.

What did Deng do?

Gradual opening up to trade and investment through special economic zones, beginning with Shenzhen, Zhuhai, Shantou, Xiamen, and Hainan. Laid foundations for participation in GVCs. Exports and foreign investment played a major role in China's development.

Allowed internal migration from countryside to cities and towns, while retaining hukou system. Migrants worked in GVC factories, construction and urban services sector.

One-child policy, now aging population. China becoming old before rich.

Investment in infrastructure and education. Allowed Chinese youth to study overseas.

Private enterprise permitted. Today, China has many successful private enterprises, like Alibaba. But China retains many restrictions on international trade and investment. Exchange rate manipulation.

Many state-owned enterprises (SOEs) were privatised. But government also retained many SOEs, in strategic sectors like banking, telecommunications, energy ("state capitalism").

Tiananmen Square incident in 1989 saw slowdown in China's development. Deng relaunched reform in 1992 with his "Southern Tour".

Membership of WTO in 2001 saw new wave of foreign investment and trade.

In 2007, Premier Wen Jiabao warned Chinese economy was “unbalanced, unstable, uncoordinated, and unsustainable”. Inequality, coast v. interior, pro-exports, environment.

REFERENCES:
- China’s conundrums
- Macartney mission
- Deng Xiaoping
- Beijing airport
- A record number of Chinese students abroad in 2015 but growth is slowing
- China’s special economic zones
- Ian Brenner on state capitalism
- Mar 24 10 Hearing on China's Exchange Rate Policy, C. Fred Bergsten Opening Statement
- Chinese Entrepreneurs Turn Inefficiency into Opportunity
- Chinese shop for business assets in Germany

15. Focus on China -- Part 2


In 2008/09, China’s exports hit by global financial crisis (also Lewis turning point). Government launched mega stimulus, spending on housing and infrastructure. Boosted economy, but resulted in massive debt -- from 150% of GDP in 2008 to over 250% in 2016. Risk of financial crisis. Over capacity.

China’s economy has slowed down. Productivity slowed down. China needs to open economy to market forces, rebalance. Risk of middle income trap. Government fears downturn. Now protecting economy and still boosting economy. But entrepreneurship dynamic, esp. In tech space.

Will China become a democracy? Would democracy help China's economic development (innovation?)? After all, the world's richest countries tend to be democracies, while the world's poorest countries tend to have authoritarian regimes.

Political scientists argue that economic development, rising middle classes, education and urbanisation foster democratisation. Korea and Taiwan successfully transition from authoritarian regimes into democracies.

Many analysts also thought Internet could fuel democratisation. Internet and social media provide citizens in non-democratic countries with access to information, and tools for social mobilisation.

Asia’s youth elite can now see democracy in action through Internet, overseas education and tourism.

But democracy struggling to develop in Asia’s non-democratic countries.

Many in Asia’s middle and upper classes not great supporters of democracy. Substantial beneficiaries of Asia’s development, and rising inequality. Those who want freedom and democracy, are migrating to US, Canada, Australia and New Zealand.

Internet and social media two-edged swords. Governments imposing censorship controls, disseminating propaganda, and using Internet for surveillance.

Ruling elites have been ramping up repression by arresting opposition voices.

Western democracy is painted in a bad light in many authoritarian countries, especially in light of Brexit, Donald Trump and the perceived crisis in Western democracy.

Most Western governments and business now widely accept and tolerate China’s one-party rule and human rights abuses, in light of China's market and financial power, and need to enlist China's help on issues like North Korea and climate change.

More specifically on China. Since 1989 Tiananmen Square student protests, Chinese Communist Party (CCP) governing on basis of a social contract. Chinese citizens accept the CCP's monopoly on power, in return for the CCP's good management of the economy. But CCP has also employed nationalistic, patriotic education.

CCP's social contract is now fraying in light of inequality, corruption and bad pollution.

President Xi Jinping is deeply worried about the future of the CCP. So he has been fighting corruption, inequality and pollution. But he has also been increasing repression, and adopting a aggressive policy towards the US and China's neighbours.

REFERENCES:
- China’s political predicament
- Economist Intelligence Unit. Democracy Index 2016.
- ASIA'S DEARTH OF DEMOCRACIES
- Youtube. Factors Contributing to CCP's Inevitable Downfall.
- Youtube. China's anti-corruption campaign. Kevin Rudd
- David Shambaugh on Chinese politics.
- Bill Clinton wants normal trade with China
- Youtube. Kishore Mahbubani: Human Rights in Asia.
- The Economist, Special Report: China and the Internet
- The US and China: a Fragile and Dangerous Codependency Relationship - Professor Richard D Wolff

16. Focus on India


India and China are two giants of Asia.

India's GDP per capital 3 1/2 times higher than in 1990. Very good progress, but less than China's growth. At $6500, India's GDP per capita is only 42% that of China. Back in 1990, India's GDP per capita was 20% higher than China's.

Big reduction in poverty, but much less than China. From 1993 to 2011, poverty fell from 46% to 21%, based on $1.90 poverty line, and from 80% to 58% based on $3.10 poverty line. 97% live on less than $10 a day. Jean Drèze and Amartya Sen said India looks "more and more like islands of California in a sea of sub-Saharan Africa”.

But India is big. World's 3rd biggest economy, thanks to enormous population of 1.3 billion. By 2022, India will over take China to have world's biggest population. By year 2100, India's population could at 1.5 billion be 50% bigger than China's.

India is very important. Indians very talented. Indians who migrated to US earn on average $88,000 a year, compared with $66,000 for all Asian Americans, and $50,000 for Americans overall. Indian companies like Infosys, Mahindra, Mittal, Reliance, and Tata succeed on world markets. Indian movie industry produces more films than any other country. Indian Premier League is world's most popular cricket tournament.

India was chronic underperformer. During first four decades of independence, 1950s-1980s, growth of only 3.5% (or 1.3% in per capita terms). Despite vibrant democracy, India's economic policies based on socialism of USSR.

Financial crisis in early 1990s triggered economic liberalization and reform. Past 25 years, Indian economy averaged 6 ½ % annual growth. Today, India is world’s fastest growing large economy with growth of around 7 ½ %.

In 2014, Bharatiya Janata Party won election, under leadership of Narendra Modi. Beat corrupt Congress Party in world’s biggest democratic election. Modi was Chief Minister of Gujarat state, and very successful. Big hopes that Modi will revitalise Indian economy. Slow progress. Close relations with US, Japan.

Challenge of India's demographic dividend.

Weak participation in manufacturing GVCs -- poor infrastructure and education, and restrictions on foreign investment. But changing. India has market power, more open to foreign investment, and China's rising costs (Lewis turning point).

Very successful in BPO GVCs -- India benefits from English language, IT skills (often trained in US).

Frugal innovation (simple and plain and costing little).

Failed urbanisation -- slums, poor environment.

Inclusive development -- caste, muslims, violence against women.

Some analysts argue that China's authoritarianism is more efficient than India's democracy. But both countries have very different political histories, and characters.

Francis Fukuyama: India vs. China
https://www.youtube.com/watch?v=3zicqzkwMxk

How will Lee Kuan Yew govern India?
https://www.youtube.com/watch?v=5vELNwtQO1E

REFERENCES:
- In Business - India's Demographic: Dividend or Disaster?
- Xiaomi's new manufacturing plant opened in India
- Apple looks to manufacture in India
- Business Process Outsourcing (BPO) at its best (up to 4.00 minutes)
- Call centres in Delhi (Australian BPO's) -- 3 minutes.
- India : Universe of frugal innovation (up to 6.00 minutes)
- Kevin McCloud: Slumming It (2010) - Ep1 -- 6 minutes
- What Are The World’s Most Polluted Cities?
- Is India's Caste System Still Alive?
- Standing up to violence against women in India

18. Focus on Korea, Asia's greatest miracle economy


Korea Japanese colony 1910-45. Before a poor, backward country.

In 1950, Korea's GDP per capita $770, cf Philippines at $1070 and Japan at $1926. By 1998, leapt to $12152, overtaking Philippines at $2268 and following Japan ($20410).

By 2016, Korea's GDP per capita $35751. Nevertheless, Korea behind Japan ($41470), Germany ($48730) and US ($57467).

How did Korea do it?

When three-year Korean War ended in 1953, 2 1/2 million killed of combined population of North and South Korea of 30 million. Infrastructure almost completely destroyed. One-third of population homeless. End of 1950s, Korea's situation still bleak.

Then, during two decades, 1960s and 70s, President Park Chung-hee transformed Korean economy, society and politics. Park came power in 1961 following a military coup. He corralled nation's leading businessmen, leaders of the "chaebol", into his economic project. Protection and favours. But must develop and export. Corruption was widespread, but things got done.

Park assassinated in 1979. But Korea on irreversible path to development.

Korea's political space always contested, especially by Kim Young-sam, and Kim Dae-jung, who later became president. Protests by students frequent.

In 1987, student and trade union protests. Designated presidential successor Roh Tae-woo called elections, which he won. In 1992 President Kim Young-sam won election. Korea now a mature democracy.

In 1997, Korea struck down by Asian financial crisis. Chaebol went on international borrowing spree. International lenders lost confidence, withdrew capital, Korea left in financial crisis.

Korea recovered quickly from crisis thanks to reforms imposed by IMF. Since 2008 global financial crisis, growth slowed down.

Urbanisation from 20% in 1950 to over 80% today. Seoul hub of innovation. Seoul 11th most innovative city in world.

Samsung Asia's most innovative company, 11th in world, just ahead of 8th placed Toyota. Samsung world's 10th most valuable brand, Hyundai 68th. Korea 11th Global Innovation Index. Singapore is 7th placed, while Japan is 14th.

Since late 1990s, Korean pop culture very popular in Asia.

GVCs -- Korean companies very active in outsourcing production to Asia's GVCs.

Corruption endemic. All Korea’s democratically elected presidents or families in corruption scandals. Previous president (Park Geun-hye) impeached because of corruption. Leaders of most large chaebol convicted of corruption. Present head of Samsung, Lee Jae-yong, now being prosecuted.

Chaebol major role in Korea’s development. Dominate economy to detriment of foreign and SMEs.

Demographics. Korea's fertility rate fell from 6 children per woman in 1960 to 1.24 in 2015, lower than Japan. Rapidly aging population. Working age population now declining. Korea now accepting migrants (1.9 million or 3.8% of the population). Racism, xenophobia and discrimination a problem.

Inclusive development. Women and migrants.

Problem of North.

REFERENCES:
- KOREA'S CHAEBOL PREDICAMENT
- KOREA’S CORRUPT DEMOCRACY
- How Samsung dominates South Korea's economy
- Innovation South Korea
- LPGA money winners
- PSY - GANGNAM STYLE(강남스타일) M/V
- NORTH KOREAN IMBROGLIO

19. Southeast Asia and ASEAN


Southeast Asia very important. Population 622 million. World’s seventh biggest economy. Annual average growth rate of 5.1% from 2000-2013.

Very diverse. From rich Singapore to middle-income Malaysia and Thailand, to very poor Cambodia and Myanmar. From Buddhist Thailand and Myanmar, to Muslim Indonesia and Malaysia, to Catholic Philippines. From large economy of Indonesia (40% of region's GDP) to tiny Cambodia and Laos.

In 1967, governments of Indonesia, Malaysia, the Philippines, Singapore and Thailand were sufficiently worried about security threats from communism so they created ASEAN, which expanded as follows: Brunei (1984), Vietnam (1995), Laos and Myanmar (1997), and Cambodia (1999).

With end of Cold War and globalization, ASEAN transformed into important organization for economic cooperation. ASEAN Free Trade Area signed in 1992. In 2015 ASEAN Community came into force with economic, political-security and socio-cultural pillars. Despite these impressive achievements, ASEAN cooperation remains shallow.

As countries in Northeast and South Asia have bad relations, ASEAN become meeting ground for Asian cooperation. China, Japan, Korea, Australia, New Zealand, and India -- have free trade agreements with ASEAN. Regional Comprehensive Economic Partnership under discussion. ASEAN Regional Forum includes North Korea, recent meeting. East Asia Summit.

China’s growing influence over ASEAN through trade, tourism, investment and aid. In 2010, China’s then foreign minister Yang Jiechi famously said “China is a big country and you are small countries and that is a fact”. China now bullying ASEAN over South China Sea.

Philippines, enormous potential. Talented people. Chronic poor performer. GDP per capita only $7800, cf Vietnam $6400, well behind Thailand $16900, Malaysia ($27700) and Indonesia ($11600). Ruled by corrupt dictator Marcos from 1965-86. Economy doing well for a decade, but poverty and unemployment still high.

Weak participation in GVCs for manufacturing, but active in BPO. Poor infrastructure, especially Manila. Weak education. Problems of stability, terrorism and corruption. Large youthful population. But large numbers emigrate. Women active in economic and political life. Indigenous peoples 10-20% of population. Chronic poverty and dissatisfaction with elites fosters populism -- populist presidents Estrada and Duterte.

Vietnam strong performer. Started opening economy in mid-1980s. Strong economic growth, poverty reduction. Attracted lots of FDI. Participates in GVCs for garments, shoes, electronics. Benefiting from China's rising wages. Better infrastructure than Philippines. Excellent in OECD PISA study for education, 8th leading country, ahead of US and Germany. Fertility fallen from 6 in 1960 to 2 today. Challenges -- improving value added in GVCs, poverty concentrated among indigenous people, dominant role of communist state, corruption. Vietnam caught in US/China rivalry.

REFERENCES:
- 7 Things you need to know about ASEAN
- What Is ASEAN And Why Is It Important For Southeast Asia?
- Two sides to the Philippine economy
- How the economy affects Philippine women
- How Philippine economy can catch up with Thailand (up to 5 minutes)
- The 5 Engines That Guarantee Vietnam More Fast Economic Growth This Year
- Vietnam: the most dynamic in Asean. Lee Kuan Yu (start at 3.30)
- Vietnam Sees Strong Economic Growth Despite Incomplete Reforms
- Why Singapore became an economic success
- On democracy & human rights in SE Asia: PM Lee

20. Well-being and happiness in Asia


There is more to life than the cold numbers of GDP and economic statistics. Economists and policy-makers are now increasingly focusing on measures of well-being and happiness.

An early inspiration for this was the King of Bhutan, Jigme Singye Wangchuck who said "We do not believe in Gross National Product. Gross National Happiness is more important." Bhutan now measures the country's GNH. Critics say that the concept is propaganda by the Bhutanese government to distract from human rights abuses in the country.

The OECD's Better Life Index allows us to compare well-being across countries, based on 11 topics, namely, Housing, Income, Jobs, Community, Education, Environment, Civic Engagement, Health, Life Satisfaction, Safety and Work-Life Balance.

Japan and Korea, like all countries, perform well in some measures of well-being in the Better Life Index.

Japan ranks at the top in personal security. It ranks above the OECD average in income and wealth, education and skills, jobs and earnings, personal security, and social connections. It is below the average in terms of housing, civic engagement, subjective well-being, work-life balance and health status.

Korea ranks above the average in civic engagement, education and skills, personal security, jobs and earnings, but below average in income and wealth, subjective well-being, environmental quality, health status, social connections, and work-life balance.

The UN now publishes the "World Happiness Report". Rankings include: 9. Australia; 14. United States; 16. Germany; 26. Singapore; 31. France; 32. Thailand; 33. Taiwan; 42. Malaysia; 51. Japan; 55. South Korea; 71. Hong Kong; 72. Philippines; 79. China; 81. Indonesia; 94. Vietnam; 97. Bhutan; 99. Nepal; 100. Mongolia; 110. Bangladesh; 114. Myanmar; 120. Sri Lanka; 122. India; 129. Cambodia.

The USA is a story of reduced happiness. In 2007 the USA ranked 3rd among the OECD countries; in 2016 it came 19th. The reasons are declining social support and increased corruption and it is these same factors that explain why the Nordic countries do so much better.

People in China are no happier than 25 years ago. China has had sharply growing per capita income over the past 25 years with life evaluations that fell steadily from 1990 till about 2005, recovering since then to about the 1990 levels. Dropping happiness in the first part of the period was due to rising unemployment and fraying social safety nets, with recoveries since in both.

REFERENCES:
- OECD Better Life Index
- World Happiness Report
- Bhutan’s Gross National Happiness Index
- Centre for Bhutan Studies and Gross National Happiness

21. Future of peace in Asia


US and China are in a power struggle for leadership of Asia.

Since World War 2, US played leading role in Asia.

Rise of China challenging US leadership.

Singapore’s Lee Kuan Yew -- “the size of China’s displacement of the world balance is such that the world must find a new balance. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.”

First three decades of its renaissance, China followed Deng Xiaoping's cautious “hide and bide” strategy.

Under Xi Jinping, China is more assertive, trying to push US out of East Asia and position China as region’s paramount power -- "it is for the people of Asia to run the affairs of Asia".

Great power struggle. Risk of war between US and China, "Thucydides trap". More than 2,400 years ago, Athenian historian Thucydides said “It was the rise of Athens, and the fear that this inspired in Sparta, that made war inevitable.”

Can China and US escape Thucydides’s Trap? Historically most contests ended badly.

Some argue dense trade, investment, finance and people-to-people relations mean war too costly for both sides.

Xi Jinping has argued “There is no such thing as the so-called Thucydides Trap in the world. But should major countries time and again make the mistakes of strategic miscalculation, they might create such traps for themselves.”

A new deal for China and the US?

REFERENCES:
- AMERICA AND CHINA -- WAR OR PEACE?
- Graham Allison: Unpacking Thucydides's Trap