{"id":222719,"date":"2023-01-16T21:10:57","date_gmt":"2023-01-16T15:40:57","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=222719"},"modified":"2023-02-20T19:13:48","modified_gmt":"2023-02-20T13:43:48","slug":"asias-prospects-status-quo-or-a-rougher-ride","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/asias-prospects-status-quo-or-a-rougher-ride\/","title":{"rendered":"Asia’s prospects: Status quo or a rougher ride?"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cAsia’s prospects: Status quo or a rougher ride?<\/strong>\u201d <\/strong>published in Business Standard <\/strong>on\u00a016th<\/sup> January 2023<\/strong>.<\/p>\n

Syllabus: GS 3 \u2013 <\/strong>Economy<\/strong><\/p>\n

Relevance: <\/strong>Development model in Asia and issues associated with it.<\/strong><\/p>\n

News<\/strong>: The article discusses the prevailing Asia\u2019s development model and the problems associated with it.<\/p>\n

What are the features of Asia\u2019s development model?<\/strong><\/h2>\n

Asia\u2019s development model is mainly based on – a)<\/strong> the way in which governments have used industrial policy to help new sectors and businesses develop, b)<\/strong> government\u2019s reliance on business groups which is mostly absent in the advanced economies.<\/p>\n

However, such reliance on business groups has negative consequences for the economy.<\/p>\n

What are the issues with reliance on business groups?<\/strong><\/h2>\n

Business groups and politicians both rely on each other for their mutual benefits.<\/p>\n

For example,<\/strong> businesses protect politicians from competitors, provide them with cheap loans, subsidies, and public-sector contracts whereas politicians provide support through state-led initiatives, etc.<\/p>\n

However, the problem with such business groups is that the market power is accumulated in few hands.<\/strong><\/p>\n

This power allows them to control the economy of a nation<\/strong> because of their large share in the economy. For example,<\/strong> the revenues of the largest 10 businesses account for around 15 percent of gross domestic product (GDP) in India and China.<\/strong><\/p>\n

Further, businesses having connections with politicians do not allow the way for new businesses to come up in the market. Thus, it decreases the competition<\/strong>.<\/p>\n

This decrease in competition withholds productivity growth and limits the number of high-quality jobs.\u00a0<\/strong><\/p>\n

It also limits the scope of innovation<\/strong> in any economy as resources are controlled by few and those companies which are good at innovation are unable to access the resources.<\/p>\n

It further leads to accumulation of wealth in few hands<\/strong> along with capturing a large amount of economic territory of a nation.<\/p>\n

Therefore, these kinds of connections between the politicians and business groups make other businesses and entrepreneurs unable to compete with large business groups along with workers unable to get good jobs.<\/p>\n

What steps can be taken to improve these connections?<\/strong><\/h2>\n

First,<\/strong> it will require a strict policy for the transformation.\u00a0For example, <\/strong>the US under Franklin Roosevelt in the 1930s addressed the problem of business groups by prohibiting families acquiring the businesses and related-party transactions while enhancing protection for minority shareholders.<\/p>\n

Second,<\/strong> coming up with additional tax on the ownership format can also be an effective incentive to change. For example<\/strong>, South Korea has introduced a high inheritance tax which aims to limit family control across generations.<\/p>\n

Third,<\/strong> there is the need to limit the scope for politicians to benefits their business connections by bringing greater transparency and the strengthening of civil society.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cAsia’s prospects: Status quo or a rougher ride?\u201d published in Business Standard on\u00a016th January 2023. Syllabus: GS 3 \u2013 Economy Relevance: Development model in Asia and issues associated with it. News: The article discusses the prevailing Asia\u2019s development model and the problems associated with it. What are the… Continue reading Asia’s prospects: Status quo or a rougher ride?<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-222719","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704724719},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/222719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=222719"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/222719\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=222719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=222719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=222719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}