How Finance Is Shaping the Economies of China, Japan, and Korea (Columbia Business School Publishing)
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This volume connects the evolving modern financial systems of China, Japan, and Korea to the development and growth of their economies through the first decade of the twenty-first century. It also identifies the commonalities among all three systems while accounting for their social, political, and institutional differences.
Essays consider the reforms of the Chinese economy since 1978, the underwhelming performance of the Japanese economy since about 1990, and the growth of the Korean economy over the past three decades. These economies engaged in rapid catch-up growth processes and share similar economic structures. Yet while domestic forces have driven each country's financial trajectory, international short-term financial flows have presented opportunities and challenges for them all. The nature and role of the financial system in generating real economic growth, though nuanced and complex, is integral to these countries. The result is a fascinating spectrum of experiences with powerful takeaways.
China was 29.5 percent in 1978 and increased gradually and erratically to 36.3 percent in 2002, when it began its dramatic rise, reaching 45.5 percent in 2010. (These ratios on an annual basis are in fig. 1.2.) TABLE 1.4 Incremental Capital-Output Ratios, Five-Year Averages Sources: Calculated using World Bank and OECD national accounts data. Note: Five-year cumulative gross fixed capital formation divided by 5 year cumulative increase in GDP. The incremental capital-output ratios based
remained mostly stable in the crisis period, whereas the investment-GDP ratio dropped sharply. It fell from 36 percent in 1997 to 25 percent in 1998. Figure 4.5 Quarterly Annual Real GDP Growth (in percent per annum). Source: The Bank of Korea. While overall domestic demand was sluggish, a large increase in net exports paved the way for the initial recovery. Import demand declined by 22 percent in 1998, while exports fell by less than 3 percent. It was therefore clear that net exports were
309–310; securitization and, 326–332. See also intermediation, financial; macro-prudential regulation banking, China, 59–72; big four, 62–65; credit cooperatives, 69; early evolution of, 60–62; foreign banks, 70–72; overview, 59–60; policy banks, 69–70; restructuring bank ownership, 65–69 banking, Japan, 154–161; assets, 159–161; consolidation, 156–159; regulation by government, postwar to 1990, 146–147 banking, Korea, 232, 244–245; capital market financing and TFP growth, 280; loans and
of PBOC as “stabilizing the currency and developing the economy,” which sometimes were expressed as “promoting growth, supporting full employment, maintaining currency stability, and achieving balanced external accounts.” The various statements of objectives can be placed in three groups: • Promoting growth and supporting full employment. • Maintaining currency stability (and controlling inflation). • Achieving balanced external accounts (and rebalancing the domestic economy). The
foreign ownership of 10 percent of total outstanding shares for each individual issue and a ceiling of 3 percent per issue for a single foreign investor. Thereafter, the government expanded the ceilings several times before lifting them in 1998, except for public corporations. From 2000 to 2011 the stock market capitalization of the main (KOSPI) exchange grew 454 percent, from 188 trillion to 1,042 trillion won. This reflects both price appreciation and especially new and secondary issues