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Economy

planned economy, International Monetary Fund, large loans, NIEs, foreign debt

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Much of Asia is economically underdeveloped. Even though the majority of the continent’s population is employed in agriculture, most agriculture is characterized by low yields and poor labor productivity. Relatively few people are employed in manufacturing. The services sector is dominated by low-income positions, such as street vendors or pedicab operators. Urban centers and their industries are often poorly integrated into the rural economy. Transportation systems, both within countries and between them, are often underdeveloped.

Russia and most states of Central Asia have struggled economically since the early 1990s when the USSR and its centrally planned economy dissolved. In contrast, the economies of China and Vietnam have grown since the late 1980s when their governments began making a transformation from a centrally planned to a mixed-market system. Afghanistan, Bangladesh, and the smaller states of South Asia, as well as Laos and Cambodia in Southeast Asia, have achieved only modest economic gains. Their economies face a variety of hurdles, including a poor resource base, widespread poverty, and, often, inadequate government planning.

The value of some East and Southeast Asian currencies fell dramatically in the late 1990s, impeding the ability of certain governments, banks, and businesses to repay their foreign debt. Some countries, notably Indonesia, Thailand, and South Korea, obtained large loans from the International Monetary Fund (IMF) to meet their debt obligations. Nevertheless, the economic crisis has not reversed the years of growth; Asia’s overall economic performance has been very good since the 1980s, and most analysts expect continued long-term growth. Japan is a global economic superpower with one of the world’s highest average incomes per person. Economists often refer to Hong Kong, Singapore, South Korea, and Taiwan as Asia’s “Four Tigers,” because they rapidly achieved high economic growth and a standard of living among the highest in the world. Thailand and Malaysia were close behind. Because of their impressive annual growth rates during the early and mid-1990s, ranging from 5 to 10 percent, these countries are sometimes collectively referred to as the “newly industrialized economies” (NIEs). This term is applied loosely, however, and sometimes includes Indonesia, China, and Vietnam, which also achieved rapid growth in early and mid-1990s. Government policies that emphasize foreign investment and production of labor-intensive manufactured goods for export are central to Asia’s economic success. In the early 1990s the Philippines and India introduced economic reforms modeled on those of their successful Asian neighbors. The Southwest Asian states with large petroleum resources have also done well, although the wealth generated is often concentrated in very few hands.



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