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Economy of Asia
During 2008 unless otherwise stated
Population: 4 billion
GDP (PPP): $28.166 trillion
GDP (Currency): $18.516 trillion
GDP/capita (PPP): $7,041
GDP/capita (Currency): $4,629
Annual growth of
per capita GDP:
Income of top 10%:
Millionaires (US$):
Unemployment:
Estimated female
income:
*Most numbers are from the IMF. All GDP figures are in US$.
See also: Economy of the worldEconomy of AfricaEconomy of AsiaEconomy of EuropeEconomy of North AmericaEconomy of OceaniaEconomy of South America

The economy of Asia comprises more than 4 billion people (60% of the world population) living in 46 different states. Six further states lie partly in Asia, but are considered to belong to another region economically and politically.

As in all world regions, the wealth of Asia differs widely between, and within, states. This is due to its vast size, meaning a huge range of differing cultures, environments, historical ties and government systems. The largest economies in Asia in terms of nominal GDP are Japan, China, India, South Korea, Indonesia and Iran. Economies range from Japan, as the world's second largest economy by nominal GDP, to Cambodia as one of the poorest. In terms of GDP by purchasing power parity, China has the largest economy in Asia and the second largest economy in the world, followed by Japan and India as the world's third and fourth largest economies respectively.

Wealth (if measured by GDP per capita) is mostly concentrated in east Asian territories such as Hong Kong, Japan Taiwan and South Korea, as well in oil rich Middle Eastern countries such as Iran, Saudi Arabia, Qatar, United Arab Emirates. Asia, with the exception of Japan and South Korea, is currently undergoing rapid growth and industrialization spearheaded by China and India - the two fastest growing major economies in the world. While east Asian and southeast Asian countries generally rely on manufacturing and trade for growth, countries in the Middle East depend more on the production of commodities, principally oil, for economic growth. Over the years, with rapid economic growth and large trade surplus with the rest of the world, Asia has accumulated over US$4 trillion of foreign exchange reserves - more than half of the world's total.

Contents

Economic development

Ancient and medieval times

Asia was rich in the ancient times. China and India alternated in being the largest economies in the world from about 1 A.D to 1800 A.D. China was a major economic power and attracted many to the east,[1][2][3][4] and for many the legendary wealth and prosperity of the ancient culture of India personified Asia[5], attracting European commerce, exploration and colonialism. The accidental discovery of America by Columbus in search for India demonstrates this deep fascination. The Silk Road became the main East-West trading route in the Asian hitherland while the Straits of Malacca stood as a major sea route.

Pre-1945

Prior to World War II, most of Asia was under colonial rule. Only relatively few states managed to remain independent in the face of constant pressure exerted by European power. Such examples are Siam and Japan.

Japan in particular managed to develop its economy due to a reformation in the 19th century. The reformation was comprehensive and is today known as the Meiji Restoration. The Japanese economy continued to grow well into the 20th century and its economic growth created various shortages of resources essential to economic growth. As a result the Japanese expansion began with a great part of Korea and China annexed, thus allowing the Japanese to secure strategic resources.

At the same time, Southeast Asia was prospering due to trade and the introduction of various new technologies of that time. The volume of trade continued to increase with the opening of the Suez Canal in the 1860s. Manila had its gallion or Manila galleon wherein products from the Philippines were traded to Europe. The Philippines was the first Asian country to trade with Latin America via Acapulco. Tobacco, coconut, corn, and sugar trade was the most in demand during that time. Singapore, founded in 1819, rose to prominence as trade between the east and the west increased at an incredible rate. The British colony of Malaya, now part of Malaysia, was the world's largest producer of tin and rubber. The Dutch East Indies, now Indonesia, on the other hand, was known for its spices production. Both the British and the Dutch created their own trading companies to manage their trade flow in Asia. The British created the British East India Company while the Dutch formed Dutch East India Company. Both companies maintained trade monopolies of their respective colonies.

In 1908, crude oil was first discovered in Persia, modern day Iran. Afterwards, many oil fields were discovered and it was learnt later that the Mideast possesses the world's largest oil stocks. This made the rulers of the Arab nations very rich though the socioeconomic development in that region lagged behind.

In the early 1930s, the world underwent a global economic depression, today known as the Great Depression. Asia was not spared, and suffered the same pain as Europe and the United States. The volume of trade decreased dramatically all around Asia and indeed the world. With falling demand, prices of various goods starting to fall and further impoverished locals and foreigners alike. In 1941, Japan invaded Malaya and thus began World War II in Asia.

1945-1990

Following World War II, the People's Republic of China and India, which account for half of the population of Asia, adopted industrial policies to promote their domestic economy. These policies limited the economic growth of the region. In contrast, the economies of superiors Japan, South Korea and the other tigers Taiwan, Singapore, and Hong Kong--were economic successes, and the only successful economies outside of North America, Western Europe and Australia. The Philippines from the post-World War II until the late 1960s had the second largest economy in Asia. The Philippine economy during the 1980s was marked by stagnant growth as a result of dictatorship and martial law.

One of the most pronounced Asian economic phenomenons during this time - the Japanese post-war economic miracle greatly impacted the rest of the world. After World War II, under central guidance from the Japanese government, the entire economy was undergoing a remarkable restructuring. Close cooperation between the government, corporations and banks facilitated easy access to much-needed capital, and large conglomerates known as keiretsu spurred horizontal and vertical integration across all industries, keeping out foreign competition. These policies, in addition to an abandonment of military spending, worked phenomenally well. Japanese corporations as a result exported and still export massive amounts of high quality products from The Land of The Rising Sun.

Another amazing economic success story is that of South Korea's, also referred to as the Miracle on the Han River. The country was left impoverished after the Korean War, yet was able to recover at double digit percentiles. Many conglomerates, also known as Chaebols, such as Samsung, LG, Hyundai, Kia, SK, and more grew tremendously during this period. South Korea has now become the world's most wired country in the world.

Taiwan and Hong Kong experienced rapid growth up till the 1990s. Taiwan became, and still remains one of the main centers of consumer electronics R&D as well as manufacturing. However, unlike in Japan and South Korea, the bulk of Taiwan's economy is dependent on small to medium sized businesses. Hong Kong, on the other hand, experienced rapid growth in the financial sector due to liberal market policies, with many financial institutions setting up their Asian headquarters in Hong Kong. Till today, Hong Kong has been ranked as the world's freest economy for many years running, and it remains among one of the world's top 5 leading financial centers.

This period was also marked by military conflict. Wars driven by the Cold War, notably in Vietnam and Afghanistan, wrecked the economies of these respective nations. When the Soviet Union collapsed in 1990-91, many Central Asian states were cut free and were forced to adapt to pressure for democratic and economic change. Also, several of the USSR's allies lost valuable aid and funding.

1991-2007

After the liberalization of the economy of India, undertaken by then finance minister and current Prime Minister of India, Dr. Manmohan Singh, the Indian economy coupled with the Chinese economy to power Asia into being one of the hotspots for world trade. The Chinese economy was already booming under the economic measures undertaken by Deng Xiaoping, in the 1980s, and continuing under Jiang Zemin in the 1990s. In 2007, China's economic growth rate exceeded 11% while India's growth rate increased to around 9%. One of the factors was the sheer size of the population in this region.[citation needed]

Meanwhile, Thailand, Malaysia and Indonesia emerged as the new Asian tigers with their GDPs growing well above 7% per year in the 1980s and the 90s. Their economies were mainly driven by growing exports. The Philippines only began to open up its stagnated economy in the early 1990s. Vietnam's economy began to grow in 1995, shortly after the United States and Vietnam restored economic and political ties.

Throughout the 1990s, the manufacturing ability and cheap labor markets in Asian developing nations allowed companies to establish themselves in many of the industries previously dominated by companies from developed nations. Asia became one of the largest sources of automobiles, machinery, audio equipment and other electronics.

At the end of 1997, Thailand was hit by currency speculators, and the value of the Baht along with its annual growth rate fell dramatically. Soon after, the crisis spread to Indonesia, Malaysia, South Korea, Hong Kong, Singapore and many other Asian economies, resulting in great economic damage on the affected countries (Japan largely escaped the crisis). In fact, some of the economies, most notably those of Thailand, Indonesia, and South Korea actually contracted. This later would be known as the Asian financial crisis. By 1999, most countries had already recovered from the crisis.

In 2004, parts of Sumatra and South Asia were severely damaged by an earthquake and the subsequent tsunami. The natural disaster wiped out huge amounts of infrastructure throughout the affected area and displaced millions.

Future

Asia's large economic disparities are a source of major continuing tension in the region.[citation needed] While global economic powers Japan, China, India, and South Korea continue powering through, and Indonesia, The Philippines, Malaysia, Thailand, and Vietnam have entered the path to long-term growth, regions right next to these countries are in need of severe assistance.

Given the large number cheap and amply available labor in the region, particularly in China and India, where large workforces provide an economical advantage over other countries, the rising standard of living will eventually lead to a slow-down. Asia is also riddled with political problems that threaten not just the economies, but the general stability of the region and world. The nuclear neighbors—Pakistan and India—constantly pose a threat to each other, causing their governments to heavily invest in military spending.

Military intervention by the United States in Iraq and Afghanistan has also inflamed extremism and resulted in several terrorist attacks in a number of Asian countries. Another impending crisis is the depletion of oil reserves in the Middle East. Most of these economies have traditionally been over-dependent on oil and have had difficulty establishing another pillar in their economies.

Yet another potential global danger posed by the economy of Asia is the growing accumulation of foreign exchange reserves. The countries/regions with the largest foreign reserves are mostly in Asia - China (Mainland - $988 billion & Hong Kong - $130 billion, September 2006), Japan ($881 billion, September 2006), Russia ($412 billion, June 2009), Taiwan ($261 billion, September 2006), the Republic of Korea ($228 billion, September 2006), Singapore ($129 billion, June 2005), India ($252 billion, April 2009). This increasingly means that the interchangeability of the Euro, USD, and GBP are heavily influenced by Asian central banks. Some economists in the western countries see this as a bad thing, prompting their respective governments to take action.

The economies of Asia are expected to be unequally divided for a long period of time. East Asian nations such as economic leaders Japan, China and South Korea will continue to flourish. Japanese products such as Sony and Hitachi are commanding premium prices in the western world. South Korean conglomerates Samsung and LG are respectively the second and fifth largest in Asia in terms of annual revenues. These two rivaling countries are expected to be joined by new economic competitors such as China and India. On the other hand, the Middle East and a few parts of South East Asia are will be in a state of trouble.

Asian countries by GDP

To sort this table, click on the Sort none.gif icon next to the column title.

Country or
territory
GDP nominal
millions of USD
GDP PPP
millions of USD
GDP PPP per capita
USD
Location
 Afghanistan 11,709 21,388 760 South Asia
 Armenia 8,683 16,057 4,916 West Asia
 Azerbaijan 46,378 74,856 8,634 West Asia
 Bahrain 21,236 27,014 34,662 West Asia
 Bangladesh 84,196 226,205 1,398 South Asia
 Bhutan 1,389 3,490 5,312 South Asia
 Brunei 14,553 19,716 50,198 Southeast Asia
 Burma 26,205 67,963 1,156 Southeast Asia
 Cambodia 11,250 28,461 2,082 Southeast Asia
 China (PRC) 4,911,000 8,767,000 6,546 East Asia
 Cyprus 24,922 22,721 29,853 West Asia
 East Timor 499 2,522 2,368 Southeast Asia
 Georgia 12,864 21,424 4,869 West Asia
 Hong Kong 210,730 301,300 42,574 East Asia
 India 1,243,000 3,298,000 2,930 South Asia
 Indonesia 511,765 909,729 3,980 Southeast Asia
 Iran 331,757 830,058 11,202 West Asia
 Iraq 68,553 114,151 3,655 West Asia
 Israel 215,727 202,562 28,473 West Asia
 Japan 5,073,000 4,141,000 32,817 East Asia
 Jordan 21,225 32,416 5,661 West Asia
 Kazakhstan 135,601 177,835 11,434 Central Asia
 North Korea 27,820 40,000 1,800 East Asia
 South Korea 800,300 1,343,000 27,791 East Asia
 Kuwait 114,878 137,450 38,875 West Asia
 Kyrgyzstan 5,050 11,604 2,184 Central Asia
 Laos 5,374 13,310 2,127 Southeast Asia
 Lebanon 32,660 53,818 13,952 West Asia
 Macau 21,700 18,140 59,451 East Asia
 Malaysia 221,606 383,388 14,081 Southeast Asia
 Maldives 1,261 1,713 4,967 South Asia
 Mongolia 4,212 10,480 3,567 East Asia
 Nepal 12,283 31,634 1,144 South Asia
 Oman 59,946 68,331 24,674 West Asia
 Pakistan 164,557 422,392 2,624 South Asia
 Papua New Guinea 8,092 13,064 2,108 Southeast Asia
 Philippines 166,909 317,964 3,515 Southeast Asia
 Qatar 102,302 94,404 86,008 West Asia
 Russia 1,255,000 2,126,000 15,039 North Asia
 Saudi Arabia 469,426 592,886 23,814 West Asia
 Singapore 181,939 239,146 51,226 Southeast Asia
 Sri Lanka 39,604 92,168 4,589 South Asia
 Syria 55,024 94,563 4,756 West Asia
 Taiwan (ROC) 379,400 693,200 29,829 East Asia
 Tajikistan 5,135 13,062 2,022 Central Asia
 Thailand 273,313 547,060 8,239 Southeast Asia
 Turkey 729,983 915,212 13,138 West Asia
 Turkmenistan 18,269 30,332 5,756 Central Asia
 United Arab Emirates 228,578 187,851 38,283 West Asia
 Uzbekistan 27,918 71,618 2,634 Central Asia
 Vietnam 89,829 240,757 2,793 Southeast Asia
 Yemen 26,909 55,393 2,410 West Asia

Trade blocs

Asia-Pacific Economic Cooperation

The Asia-Pacific Economic Cooperation (APEC) is a group of Pacific Rim countries who meet with the purpose of improving economic and political ties

Association of Southeast Asian Nations

The Association of Southeast Asian Nations (ASEAN) is a political, economic, and cultural organization of countries located in Southeast Asia. Founded in 1967, its aim is to foster cooperation and mutual assistance among members. The countries meet annually every November in summits.

The current member countries of ASEAN are Myanmar (Burma), Laos, Thailand, Cambodia, Vietnam, Philippines, Malaysia, Brunei Darussalam, Singapore and Indonesia. Papua New Guinea is given an observer status.

In 2005 ASEAN was instrumental in establishing the East Asia Summit (involving all ASEAN members plus China, Japan, South Korea, India, Australia and New Zealand) which some have proposed may become in the future a trade bloc, the arrangements for which are far from certain and not yet clear.

The Asian Currency Unit (ACU) is a proposed currency unit for the ASEAN "10+3" economic circle. (ASEAN, the mainland of the People's Republic of China, Japan, and the Republic of Korea).

Closer Economic Partnership Arrangement

The Closer Economic Partnership Arrangement (CEPA) is an economic agreement between the People's Republic of China and both the Hong Kong SAR government (signed on 29 June 2003), and the Macau SAR government (signed on 18 October 2003), in order to promote trade and investment facilitation.

The main aims of CEPA are to eliminate tariffs and non-tariff barrier on substantially all the trade in goods between the three, and achieve liberalization of trade in services through reduction or elimination of substantially all discriminatory measures.

Commonwealth of Independent States

Flag of the Commonwealth of Independent States

The Commonwealth of Independent States (CIS) is a confederation consisting of 12 of the 15 states of the former Soviet Union, both Asian and European, (the exceptions being the three Baltic states). Although the CIS has few supranational powers, it is more than a purely symbolic organization and possesses coordinating powers in the realm of trade, finance, lawmaking and security. The most significant issue for the CIS is the establishment of a full-fledged free trade zone / economic union between the member states, to be launched in 2005. It has also promoted cooperation on democratisation and cross-border crime prevention.

South Asian Association for Regional Cooperation

The South Asian Association for Regional Cooperation (SAARC) is an association of 8 countries of South Asia, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan. These countries comprise an area of 5 130 746 km² and a fifth of the population of the world.

SAARC encourages cooperation in agriculture, rural development, science and technology, culture, health, population control, narcotics control and anti-terrorism.

South Asia Free Trade Agreement (proposed)

The South Asia Free Trade Agreement is an agreement reached at the 12th South Asian Association for Regional Cooperation summit. It creates a framework for the creation of a free trade zone covering 1.6 billion people in India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.

Arab League

The Arab League is an association of Arab countries in Africa and Asia. The Arab League works to combat terrorism.

Currency

Below is a list of the currencies of Asia, including all fully Asian states plus Russia, with exchange rates between each currency and both the Euro and US Dollars as of 9 December 2004.

Country Currency worth in Euro worth in USD Central bank
 Afghanistan Afghani 0.0171287 0.0228157
 Bahrain Bahraini Dinar 1.99136 2.65957 Central Bank of Bahrain
 Bangladesh 0.0167723 Bangladesh Bank
 Bhutan Ngultrum 0.0170095 0.0226630
 Brunei Brunei Dollar 0.455736 0.606944 Brunei Currency and Monetary Board
 Cambodia Riel 0.000305774 0.000260068 National Bank of Cambodia
 China

Renminbi
Hong Kong Dollar
Macanese Pataca

0.09
0.11
0.11

0.12
0.13
0.13

People's Bank of China
Hong Kong Monetary Authority
Monetary Authority of Macao
 Taiwan New Taiwan Dollar 0.0233412 0.0310945 Central Bank of the Republic of China
 Timor-Leste US Dollar 0.750803 1
 India Indian Rupee .0175701 .0253710 Reserve Bank of India
 Indonesia Rupiah 0.0000819210 0.000109059 Bank Indonesia
 Iran Iranian Rial 0.0000847274 0.000112852 Central Bank of Iran
 Iraq Iraqi Dinar 0.000513340 0.000683737 Central Bank of Iraq
 Israel Sheqel 0.172654 0.229975 Bank of Israel
 Japan Yen 0.00718413 0.00956539 Bank of Japan
 Jordan Jordanian Dinar 1.06031 1.41243
 Kazakhstan Tenge 0.00576997 0.00768610 National Bank of Kazakhstan
 North Korea North Korean Won 0.341229 0.454545
 South Korea South Korean Won 0.000711045 0.000947424 Bank of Korea
 Kuwait Kuwaiti Dinar 2.54691 3.39425 Central Bank of Kuwait
 Kyrgyzstan Kyrgyzstani Som 0.0181059 0.0241177
 Laos Kip 0.0000692876 0.0000922935
 Lebanon Lebanese Pound 0.000495695 0.000659979
 Malaysia Ringgit 0.197525 0.263219 Bank Negara Malaysia
 Maldives Rufiyah 0.0637958 0.0849618
 Mongolia Tugrik 0.000618514 0.000823723
 Myanmar Kyat 0.135242 0.180112
 Nepal Nepalese Rupee 0.0105153 0.0140041 Nepal Rastriya Bank
 Oman Omani Rial 1.95241 2.60077
 Pakistan Pakistani Rupee 0.0124665 0.0166064 State Bank of Pakistan
 Palestinian Authority Sheqel (Israeli) 0.17 0.23 Bank of Israel
 Philippines Philippine Peso 0.0133941 0.0178531 Bangko Sentral ng Pilipinas
 Qatar Qatari Riyal 0.206213 0.274786
 Russia Russian Ruble 0.0267806 0.0356723 Central Bank of the Russian Federation
 Saudi Arabia Saudi Riyal 0.200178 0.266660
 Singapore Singapore Dollar 0.455762 0.607083 Monetary Authority of Singapore
 Sri Lanka Sri Lankan Rupee 0.00715451 0.00953107 Central Bank of Sri Lanka
 Syria Syrian Pound 0.0143770 0.0191527
 Tajikistan Tajikistani Somoni 0.269553 0.359066
 Thailand Baht 0.0189565 0.0252245 Bank of Thailand
 Turkmenistan Manat 0.000144365 0.000192306
 United Arab Emirates United Arab Emirates dirham 0.204394 0.272301 Central Bank of
the United Arab Emirates
 Uzbekistan Uzbekistani Som 0.000715188 0.000952628
 Vietnam Dong 0.0000476064 0.0000634115
 Yemen Yemeni Rial 0.00409130 0.00544959

Table correct as of 9 December 2004 (see [1] for latest)

Economic sectors

Primary Sector

Asia is by a considerable margin the largest continent in the world, and is rich in natural resources. The vast expanse of the former Soviet Union, particularly that of Russia, contains a huge variety of metals, such as gold, iron, lead, titanium, uranium, and zinc. These metals are mined, but inefficiently due to continued use of poorly maintained, obsolete machinery left over from the communist era. Nevertheless, profits are high due to a commodity price boom in 2003/2004 caused largely by increased demand in China. Oil is Southwest Asia's most important natural resource. Saudi Arabia, Iraq, and Kuwait are rich in oil reserves and have benefited from recent oil price escalations.

Asia is home to some four billion people, and thus has a well established tradition in agriculture. High productivity in agriculture, especially of rice, allows high population density of many countries such as Bangladesh, Pakistan, southern China, Cambodia, India, and Vietnam. Agriculture constitutes a high portion of land usage in warm and humid areas of Asia. Many hillsides are farmed in a terrace method to boost arable land. The main agricultural products in Asia include rice and wheat. Opium is one of major cash crops in Central and Southeast Asia, particularly in Afghanistan, though its production is prohibited everywhere. Forestry is extensive throughout Asia except Southwest and Central Asia, with many of the items of furniture sold in the developed nations made out of Asian timber. Fishing is a major source of food, particularly in Japan.

Secondary Sector

The manufacturing sector in Asia has traditionally been strongest in the East region - particularly in China, Taiwan, Japan, South Korea and Singapore. The industry varies from manufacturing cheap low value goods such as toys to high-tech added value goods such as computers, CD players, Games consoles, mobile phones and cars. Major Asian manufacturing companies are mostly based in either South Korea or Japan. They include Samsung, Hyundai, LG, and Kia from South Korea, and Sony, Toyota, Toshiba, and Honda from Japan. Many developed-nation firms from Europe, North America, Japan and South Korea have significant operations in the developing Asia to take avantage of the abundant supply of cheap labor. One of the major employers in manufacturing in Asia is the textile industry. Much of the world's supply of clothing and footwear now originates in Southeast Asia and South Asia, particularly in Vietnam, China, India, Thailand, Bangladesh, Pakistan, and Indonesia.

Tertiary Sector

Asia has six important financial centers, located in Dubai, Mumbai, Hong Kong, Shanghai, Singapore and Tokyo. India has been one of the greatest beneficiaries of the economic boom. The country has emerged as one of the world's largest exporters of software and other information technology related services. World class Indian software giants such as Infosys, HCL, Wipro, Mahindra Satyam and TCS have emerged as the world's most sought after service providers. Call centers are also becoming major employers in India and Philippines due to the availability of many well educated English speakers. Here again India holds close to 60% of the trade share. The rise of the Business Process Outsourcing (BPO) industry has seen the rise of India and China as the other financial centers. Experts believe that the current center of financial activity is moving toward "Chindia" - a name used for jointly referring to China and India - with Shanghai and Mumbai (Bombay) becoming major financial hubs in their own right. Other growing technological and financial hubs include Dhaka (Bangladesh), Bangalore (India), Chennai (India), New Delhi (India), Hyderabad (India), Jakarta (Indonesia), Kuala Lumpur (Malaysia), Kolkata (India), Karachi (Pakistan), Manila (Philippines) and Bangkok (Thailand).

See also

References








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