Economics Essay

Economics

Approach to Economic Growth of East Asia and Latin America

In a fast changing world market, it can be hard to keep up with competitive individual economies, and the world economy is fast becoming a cut-throat battlefield of desperate nations, industries, and markets, all vying for power over one another. Therefore, to properly understand the world economy as a whole, it is important to understand how individual economies are growing and changing over time. Gross domestic product (GDP) is the combined market value of any and all goods and services produced in a particular country within a period of time, and the change in this figure (per capita) is known as the annual rate of change of GDP, and is basically how economic growth is determined. Major economic growth is usually achieved as part of a long run cycle, and is generally the result of improvements in productivity, allowing higher outputs to be achieved, using the same (or less) inputs. Two of the major competing economies on the global scale are East Asia and Latin America; two economies which are very comparable with each other. Between the 1950's and the 1970's, the Latin American economy appeared to be booming, while the East Asian economy was struggling, with Jim Rohwer (1995) claiming that the average Japanese citizen was then earning one-eighth of the dollar income of their American counterparts (as cited in Shixue, N.D). Since the 1970's however, it appears the tables have turned, as East Asia now surges into a new age of development and economic growth, with a second generation of rapid industrialisation, allowing for per capita incomes to be nearly quadrupled over the past 3 decades (Leipziger & Thomas, 1993). In understanding the different levels economic growth between these two competing economies, we need to...