Analyse the impact of development strategies on the economic growth and the quality of life for an economy other than Australia. (20 marks)
Globalisation is the process of increasing integration between different countries and economies resulting in the establishment of a single world market and the increased impact of international influences on all aspects of life and economic activity. This essay will look at how globalisation has affected the Chinese economy in areas of economic growth, trade, foreign investment, labour market, wealth and income levels and environmental conditions; and analyse the policies used by the Chinese Government to encourage economic growth and their quality of ...view middle of the document...
Adopted under the leadership of Deng Xiaoping, the “Open Door” policy has been carried out for more than 20 years since the 1980’s. This strategy was extremely beneficial for the Chinese economy as it started by setting up the Special Economic Zones (or SEZ) in southern coastal provinces, to attract foreign trade and investment; it offered low tax rates, cheap labor and less regulation. Most importantly this strategy integrated china in the global economic market and had a great impact in promoting high economic growth and development.
Recent trends show that with improvements in their economic growth and development, China’s Human Development Index (or HDI) has risen from 0.368 in 1975 to 0.687 in 2011. There has also been an increase in overall education level and overall reduction in poverty. However, despite the improvements in economic growth and development in China, in recent decades, the richest 10% of the Chinese population (mostly living in coastal cities) owns 45% of the nation’s wealth, while the poorest 10% own only 1.4% of it. The coastal cities benefit more from globalisation because of its closeness to the rest of the world. This uneven distribution of income shows that the improvements in the quality of life are not equally shared. Statistics also show that although economic development is overall improving, the gap between the richest and poorest is still widening. 28.4% of the population in 2005 was classified by the World Bank as being below the international poverty line of US$1.25 per day.
As mentioned above, globalisation encourages international trading and economic growth, and China has benefited particularly from this. During the past 30 years the average export levels have increased by 17% annually. This shows that China’s international trade levels have increased dramatically due to globalisation.
In 2001, China joined the World Trade Organization in response to the globalisation trend and reduced its trade barriers, opening up to foreign investments and international trade. This was beneficial to the economy as it further enhanced the spirit of integration and trade liberalisation. This strategy has brought major beneficial changes in its economy such as having access to the world market, attracting foreign investment, adopting new ways of management, the access of new technologies, market information, global production, and market network and distribution. In 2010, China contributed 13.6% to global growth and accounted for 9.4% of world merchandise trade. In the same year, they became the second largest goods trading nation in the world after the USA.
China is the second largest recipient of Foreign Direct Investment (or FDI) in the world. They are receiving $US116.01 billion in 2011, which is up 9.72% year-on-year. FDI and Transnational Corporations (or TNCs) have increased rapidly since globalisation and the opening of markets and deregulation by the Chinese economy. Foreign investment capital became a...