Economic growth in the Asia Pacific

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How technological capabilities been the main drivers of economic growthin the Asia Pacific and how they explain major differences in nationalcompetitiveness within the region.

The growth in economy in developed countries in the past ten decades has passed through the stages of factor accumulation, intensive management, and knowledge including technology innovations (Fan, 2009). In particular, Fan 2009 emphasize that technological innovation has promoted a leapfrog approach to development and economic growth. Technological and scientific innovations in Asia Pacific and other regions are essential components of various countries’ national policies they employ to improve their capabilities and encourage strong competitiveness advantages. In Asia Pacific, the last twenty centuries have been characterized by increased innovation. An example is seen where the technology and science contribution rates have risen to nearly 70% and GDP have risen to over 2%. In addition, the extent to which economic growth depends on the external technologies has risen to above 30% in Asia Pacific. Additionally, the joint quantity of patents entails nearly 99% of the regional and global economic growths.

Although the principle forces behind technological innovations are enterprises, it is as well a joint understanding by the Asia Pacific government and enterprises. The governments in most countries tend to play strong guiding functions in producing, disseminating, and applying scientific and technological knowledge (Haddad and Shepherd, 2011). Public policies in Asia Pacific, together with preferential treatments of tax, are employed to enhance inputs into science and technology and increase various innovations leading to economic growth.

In the past few years, countries in Asia for instance China have made good progress in scientific and technological innovations (Fan, 2009). However, majority of the countries in the region still lags various advanced nations considering the overall development in science and technology. This is following the reduced levels of original and integrated innovations at the local levels, inefficiency in policies of technologies exchange in the market, and weak original innovation capabilities in various Asia Pacific countries (Haddad and Shepherd, 2011). Even though technologies have boosted the economic growth in various Asian countries, there are various problems affecting their growth competiveness and also hindering the sustained growth of its economy.

Considering the bigger gaps in innovation levels in various Asian countries, the region faces various challenges in their economic and social developments. According to Fan 2009, in the past decades, tax-related policies played an essential function in enhancing innovation. It has been observed that new issues have to be considered with regard to economic growth to meet the changing economic environments in the region. To maintain the enhanced fierce international competition, countries in the region for instance China need to increase their competiveness through self-owned intellectual property rights and optimization of their industrial structures (Haddad and Shepherd, 2011). Scientific and technological developments are essential in sustaining China’s economic growth and increasing the efficiency of resource consumption. Public science and technology are also essential for national security, social stability, and development of majority of countries’ local regions.

Based on the contributions of science and technology in the Asian area, as stated by Fan 2009, it can be concluded that they have contributed to the region’s economic growths in the past years as reported by some surveys in the recent past. To make the economic growth more sustainable, policies related to tax that support scientific and ethnological innovations should be take into great consideration (Haddad and Shepherd, 2011).

How finance and banking systems shaped business organization andeconomic growth in the Asia Pacific region.

With the economic literature, past researches have focused on the actual effects of finance and banking systems shaped business organization and economic growth on various countries. Among the researches have focused on determining how banks affect economic growth of various countries including British and China. As Chinese banks have been said to have been actively involved in financing and conducting their customer’s businesses, British banks have been blamed for their reluctance to commit themselves to their customer (Stallings, 2006). They have also been blamed for their obsessions with liquidity and security in the process of lending. Form this argument, it is appropriate to impute the success of China (in Asian region) to its active universal banks.

According to Stallings 2006, a growing number of authors argue that banks are among the most importance determinants of economic growth, and several claim to have found evidence that institutions trump all other factors. Stallings 2006 argue that even though cultural and geographical factors may also influence economic growth, difference in economic institutions and banks are the major sources of cross-country differences in economic growth and prosperity. A significant aspect of the debate is how banks in Asian region affect potential reverse causality. That is, whether better banks in Asian region lead to increased economic growth and income. It is also important to determine whether increased incomes bring about improved banking institutions. Using new empirical techniques, Stallings 2006 confirms that there is a strong positive connection between banking institutions and economic growth. As one move from economic growth in general to the role of the financial sector in particular. The focus is on the positive influence of high-quality banking institutions on both the depth of the banking sector and the development of capital markets (Stallings, 2006). The two are said to promote economic growth in Asia Pacific region and other regions.

Stallings 2006 argue that research has proved that in countries where strong corporate governance practices prevail, minority shareholders are protected and highly liquid capital market emerge strengthening economic growth. In most countries with poor regulation laws, legal traditions and weak regulatory systems are controlled by dominant investors rather than a widely dispersed ownership structure. Hence, according to Fernando 2011, countries that need fund from foreign and domestic investor need to adopt corporate governance practices, a practice that is common in most Asian countries.

Many economics and management experts argue that competition both in product marketing and banking, especially for capital, prevents unacceptable corporate behavior and promotes good corporate governance (Fernando, 2011). In most undeveloped countries where barrier are many, competition among the banking institutions is quite limited. This empathizes the significance of adopting the best possible corporate governance systems in developing emerging economic where market system is weak or yet to take proper shape in Asia Pacific region and other regions (Fernando 2011). References

Fan, Q., 2009. Innovation for development and the role of government: a perspective from the East Asia and Pacific region. Publisher World Bank Publications.

Fernando, A., 2011. Business Environment. Publisher Pearson Education India.

Haddad, M., and Shepherd B., 2011. Managing Openness: Trade and Outward-oriented Growth After the Crisis. World Bank Publications.

Stallings, B., 2006. Finance for development: Latin America in comparative perspective. Publisher Brookings Institution Press.