Evaluating

International
Region Risk
for Investing
EASTERN ASIA
EASTERN ASIA
Introduction:

East Asia is geographically and ethnoculturally the easternmost

region of the Asian continent. Currently recognized East Asian
countries are China, Japan, Mongolia, North Korea, South
Korea and Taiwan. The industrialization of East Asia has been
a focus of the world economy for many years. Most East Asian
economies have developed from low- to mid-level economies
over the past few decades, dubbed the 'East Asian Miracle'.
The term describes their tremendous achievements in
addressing the development challenges facing most emerging
economies. The turn of the 20th century has seen dramatic
changes, especially in countries that have outperformed the
rest of the region. China, Japan, Taiwan and South Korea
represent East Asia as some of the largest and best economies
in the world.
East Asian economic system:

The Japanese economy, like most Western countries, is said to be

a free market capitalist economy. It is the third largest economy
driven primarily by the automotive and electronics industries. As in
most developed countries, 73% of the country's Gross Domestic
Product (GDP) is made up of services, with the rest made up of
26% in various sectors and 1% in agriculture.

China's economy is essentially a socialist economy. That is, the

state owns many public sectors, all of which function as open
market economies. Less than half of GDP is 48% in the services
sector and 43% in manufacturing. This manufacturing industry has
established itself as the world's largest export economy. China is
part of her WTO, APEC and G-20.
South Korea is a mixed economy. So both the private and public
sectors are under government regulation. Like China, South Korea is
a member of the Asia-Pacific Economic Cooperation (APEC). The
country's real GDP is the result of sustainable policies that have
contributed significantly to rapid economic growth and lower poverty
rates. GDP has averaged 5.45% since 1988.

Taiwan is also a free market, a market that sets prices for goods and
services with limited government intervention. The country's GDP is
US$689 billion at the end of 2021 and is projected to reach US$700
billion by the end of 2022 and US$725 billion in 2023 based on
various econometric models.
Mongolia and North Korea are the weakest
countries in East Asia, largely due to the political
situation. For example, North Korea is run by a
dictator and most people live below poverty.
However, North Korea only exports to other East
Asian countries, which is one of its few points of
contact with the outside world. Moreover, while
most of GDP comes from agriculture, Mongolia is
primarily funded by mining.
Economic and Political Risk

Political Economy of East Asia Political growth and development of

East Asia have not received much attention since most countries focus
mainly on economic growth. Most governments use the economy as
the central measure of success. While China dominates the economy
of Asia as a whole, each country still has its system of operations.

1. COVID-19 Halts the Global Recovery

2 China Misjudges Its Response to Domestic Challenges
3. Asia Is Particularly Exposed to Cybercrime
4. Inflation Is On the Rise in Asia
5. Divisions Deepen Between the United States and China
6. Social Tensions from COVID and Climate
7. Potential Security Flash Points
Monetary Policies:

Monetary policy will play a larger role in the development of

the EAP. In recent years, central banks in the region have
introduced new tools and processes, improved existing
frameworks, and generally gained greater autonomy in
conducting monetary policy. However, to achieve greater
monetary policy effects, governments must continue their
efforts to improve central bank transparency and improve
policy and operational frameworks. More broadly, structural
reforms need to be pushed forward to strengthen
institutional and regulatory structures, increase competition
in the banking sector, and deepen financial markets.