The Future Of CurrencyEssay Preview: The Future Of CurrencyReport this essayThe Future of CurrencyIn the present day, the worlds economy is ever-changing and adjusting. Many different reasons control the reasons for this. The future of currency is something that can only be predicted and is not guaranteed. However, there are many determing factors behind the changes that can take place. Asia and North America are two continents that have economies that have recently changed or are in the midst of change.
World War 2 drew a hard blow and left a serious and lasting effect to many Asian countries. This however, did not hamper the growth of countries such as China, Japan and Vietnam as their governments were taking serious steps to recover economically. Thus, the global market cannot deny a place for these Asian Dragons, because these countries are growing at a tremendous pace to the extent of being capable in emerging as global market leaders.
Chinas capitalism and boom was born when their president, Deng Xiaoping permitted the provinces to dismantle their communes and collective farms. This led China to venture into free-market economics, although they were still under the communist political system. When President Deng announced that they needed Western money and expertise, China flung their trade doors wide open and China went on a capitalist drive without ever looking back. By mid 1960s, the Chinese Revolution settled down to the job of ruling China. Its main goal was essentially nationalist: a prosperous modern economy. While there continued to exist substantially economic inequalities, distribution of wealth was probably a bit more equal than in most Western countries.
(Moise 171)While there were great variations in income between different villages, and between different jobs in the urban sector, the overall averages showed a clear pattern: the cities were much richer than the countryside. Most capital investments were going into urban industries. The urban workers, using considerable amount of heavy machinery, had a much higher average level of productivity compared to the rural workers. The natural consequence was, for the city people, an average income level twice as high as that of the people in the countryside. The most obvious way to attack this poverty problem was to increase production, in all sectors of the economy. Though the easiest way to increase production was to increase capital inputs, China could only afford a limited amount of capital construction. In accordance to this, China went on a construction binge. Whole factories were purchased from abroad while others were built with local resources. By 1978, the frenzy for new projects reached a level that reminded some people of the Great Leap Forward. In an effort to promote agricultural production, the government released many of the restrictions on the spontaneous capitalist tendencies of the peasantry. (173) In the late 1980s, the government decided to expand the scope of private marketing. The next step was to increase the amount land assigned to the peasants. The peasants were now not responsible to the government for the use they made to the private plots. They simply could grow what they wished, for the sale to the government or to private markets. This led to furious rebuilding and inflow of foreign investments. All this enabled China to remake itself into Asians hub of finance, trade and culture.
By 1984, they were producing more than $1 million worth of rice and a range of side products, including rice wine. Their residential earning was up to about $200 a year. (Prager 52 ) This meant that they could begin replacing their mud-and-straw hats with solid brick houses. Shanghai today is a vast construction site with more than 20,000 projects, with 27,000 companies building bridges, tunnels, flyovers, ring roads, hotels, villas, golf courses and also public housing. This sparked national growth of about 10% a year.( 53 ) The Chinese now are going home with fat wallets, stocks, bonds and large bank accounts. Banks are reporting that savings have increased sixty-fold and is still growing. This has led China to join the world economic community and has become the globes third largest economy. China is now ranked 11th in the world in exports of trade goods. (54)
Off the coast of China, there was another growing country. Japan recovered tremendously well after the bombing of Hiroshima in World War 2. Under post war conservative governments, Japan made a remarkable economic recovery. American aid of $2 billion gave an initial boost and then the Korean War acted as a further stimulant by creating a demand for military hardware. (Rich 191) By the early 1970s, Japan was the worlds third biggest steel producer, one of the biggest ship builders, and ranked very high as a manufacturer of general engineering and chemical goods. Japans motorcycles were winning import races in Europe, and Japanese cameras, transistor radios, cars, sewing machines, TV sets and optical goods competed successfully in the global market.
Japans economy is second only to the U.S in absolute terms with a G.D.P of $3,385 billion dollars. By 1987, the Japanese were richer than the Americans with per capita income of almost $20,000. ( World 247 )This was because the Japanese saved five times as much from their paychecks as did the Americans. Lower military spending, a consequence of the Yoshida doctrine, was an essential contributor to Japans economic advancement. Japan net assets rose to about $1 trillion and thus making Japan effectively the worlds banker. In the 50s through to the 70s, the Japanese economy was averaging 11% of growth. (250) The Bank of Japan backed commercial banks in providing capital for investments.
Economic growth rates were the highest in the world based on high levels of savings and investments, rapid productivity growth and remarkable social consensus.
Japan was willing to forego immediate reward for long term benefits. Therefore, in large sections of world manufacturing, notably electronics, Japanese producers had no rivals. Manufacturing was the mainstay of the economy, improving quality and price. Japan has continually upgraded its economy and shifted from heavy industry with high-energy requirements to high technology, high value added industries such as semi-conductors, industrial robots and computers. Japanese manufactures than began investing heavily in foreign countries because of its own rising yen. This massive outflow of money pushed many Japanese financial institutions to the top of the global financial markets. Japan was also the world largest importer of agricultural products where 60% of its food is imported. (Rich 192). If counted based on efficiency however, per unit
a. The percentage of Japan’s gross domestic product at the time of the World Food Programme, or in other words, per worker that exported is more than double that at the beginning of the century. This is partly due to Japan’s low birthrates. As the early 1950s, Japan’s birthrate was already higher. Today, Japan has a female population of only 16.5 million (unconfirmed but probably exaggerated, 23 million, the figure that many Japanese are told is around 3.3 million; see Table 1) and women today are considered the majority. As the figure above suggests, Japan is the second fastest growing country in the world (behind the United States) and the world’s second largest economy.
Table 1(per unit. per worker with female population. Source: World Food Programme )
Table 1(per unit. per worker with female population. Source: World Food Programme )
Table 1(per unit. per worker with female population. Source: World Food Programme ) Japanese manufacturing was an important component of the globalization of China, where the growth in the proportion of the population of Asia has been linked to changes in population size, higher education and employment. To take a more general example, China increased its per capita income by 12 yuan, the most recent recorded rise following the Chinese Cultural Revolution of 1979. As the figure above supports, Chinese growth in Asia is projected to exceed the growth in Japan. (Rich 191) In Asia, Chinese manufacturing has increased from a modest but growing ratio to the overall increase in industrial exports to 15% (with other industrial exports accounting for roughly half of total exports in Asia) of raw materials, metals and chemicals. In other words, this means that China’s per capita income has grown since 1990 (the rise of Western-made products in the 1990s coincided with the growing number of cheap imported products from the West). (Rich 191) For a more complete picture view of Japanese per capita income, see the World Food Programme’s summary. Japan’s per capita income (source: World Food Programme )
Japan’s per capita income growth is based on per unit production. There are two main components of Japan’s per capita income, per worker and per child. (In the World Hunger Index, which compares the world to the world population in 1960, Japan ranked first in per capita expenditures but second in per child per child per capita costs. The data for 2000 used this approach and shows that Japan’s per capita consumption in 2010 was around 30%. (Rich 191) The World Index is updated quarterly to reflect the latest data provided by the Institute of Justice, and has been conducted for over 100 years by the United Nations. (Rich 191). In 2006, Japan’s per capita income increased from a year of about 60% of GNP per capita to about 90% of GNP per capita in a trend toward growth. (Rich 191) Since the beginning of this century Japan (and others around the world) has grown at a rate which is larger than that of any other country – about 30% compared to the United States at the same time in 1900. (Rich 191) This is driven by higher investment, more government expenditure and, ultimately, greater trade and investment opportunities for Japan’s people. This growth continues till the end of the decade, when it will come back to a level already reached in the beginning of the century. (Rich 191) Japanese employment peaked in 2010 (the same