Asian Financial Institutions and Markets
The Asian financial markets can be compared to the economic philosophy of mercantilism, which is regulated commerce to produce a favorable balance of trade. Governments regulate production techniques to ensure the quality of exports, and in general, subsidize production in their exporting industries. Tariffs can be high on imported manufactured goods and low on imported raw materials. The state exercises much control over economic life in these environments, chiefly through corporations and trading companies. Production is carefully regulated with the object of securing goods of high quality at a low cost, thus enabling the nation to hold its place and wealth in foreign markets.
Asian countries have practiced mercantilism and protectionism under the guise of complex wholesale and retail marketing systems (Baker 13). The economic performance of the four Asian economies ? Hong Kong, Korea, Singapore, and Taiwan can be attributed to some of these practices. There is a significant degree of overlap between the government and the markets, suggesting that a broad-based approach is useful in understanding the nature of the Asian economy (Chowdhury 42). The government can control and regulate the financial system in order to finance development activities. The government acts as an internal capital market funding business sectors and industries.
From a historical perspective, Korea was one of the poorest countries in world after experiencing two wars, World War II and Korean War. Food shortages that led them to heavily rely on the foreign aid, and to a yearly per capita income below the poverty level, this country is considered a successful newly industrializing economy. Korea has been transformed ...