Where in the World are trade and investors flocking?
Question: In which direction does most US trade flow -- across the Atlantic or across the Pacific? Answer: The Pacific.
Question: Which area is growing fastest -- East Asia or Western Europe?
Answer: East Asia.
Says Derek Davies, editor of The Far Eastern Economic Review: "The center of gravity of the world economy is moving inexorably to the Western Pacific."
US trade with the Pacific Basin countries by 1978 had quadrupled over the eight previous years to more than $76 billion. For the first time, that transpacific trade exceeded the flow across the Atlantic. Also, more investment was flowing over the Pacific than the Atlantic.
Mr. Davies, speaking to the world's top commercial bankers at their annual International Monetary Conference here last week, speculated that this trend could become more marked as the economies of Europe decline, stagnate, or achieve small rate of growth while East Asia continues to grow faster.
The bankers' invitation to Mr. Davies to speak indicated their interest in the Pacific. Noted Kerry St. Johnston, president of Private Investment Company for Asia, at a Pacific Forum meeting in Honolulu April 30: "The commercial bankers have deluged into Asia. . . ."
It is no wonder, considering the business opportunities. Malaysia, Singapore , and Hong Kong grew at over 8 percent annual rates throughout the 1970s; Taiwan , South Korea, and Indonesia at over 7 percent; the Philippines and Thailand, over 5 percent; and Japan, about 6 percent. Those are rapid rates.
Even last year, with widespread recession and considerable protectionism in the world, the economies of East Asia grew about 5 percent on average.
Commented Mr. Davies: "These are not tin-pot, gimcrack economies."
Japan's GNP (gross national product -- the total output of goods and services) is now second only to that of the United States. Some futurologists predict that it will overtake the US by the end of this century. The GNPs of South Korea, Taiwan, Singapore, and Hong Kong are together roughly equal to those of the members of the Association of Southeast Asia Nations (Philippines, Indonesia, Malaysia, Thailand, and Singapore). And the ASEAN nation s have a GNP roughly equal to that of Australia, or about 50 percent of the 1979 GNP of Iran.
These industrializing economies, Mr. Davies says, "are no pygmies."
In fact, the GNP of the Far nations totals about $2 trillon, about two-thirds of US annual output.
Half of all manufactured exports from the world's developing nations come from South Korea, Taiwa, and Hong Kong. Hong Kong, with a population of about 5 .2 million, has foreign trade worth $40 billion. It is the world's 50th-largest trading entity. Mr. Davies made more significant points in plugging an area vital to the success of his weekly magazine:
* Growth in these Pacific Asian nations is becoming progressively more independent of the West's markets. The fastestgrowing countries already conduct half their trade within the Pacific area. Nearly one-third of Japan's foreign trade is with other countries of the Far East.
* "Japan is modernizing more efficiently than any other industrialized state." Its factories boast more industrial robots than the rest of the world put together.
* China has jettisoned much of its revolutionary ideology and is adopting market mechanisms to obtain the growth for modernization.
* "East Asia has been gradually abandoning the socialist ideas of postcolonial years (the more bitter the war for independence, the more extreme the resulting form of leftism)." It is turning to more open-market economic systems.
Mr. Davies added: "The inherent stability of the societies of East Asia (tending to extremism only under outside pressure) has reasserted itself and a newe equilibrium [has been] established since the communist victories in Indochina in 1975. This trend has been helped by China's opening and its continuing conflict with the Soviet Union, Japan's growing willingness to assume its economic responsibilities, the strengthening of ASEAN, and the unlikelihood of the partitioning of Korea or the separation of China and Taiwan creating flashpoints for conflict."
Mr. Davies sees Kampuchea (Cambodia) as the main continuing element of instability. If the question of Kampuchea's government could be solved, he says , there would be relatively few clouds on East Asia's Pacific horizons.
The region, he figures, "has all the ingredients for economic success -- stability, past performance, manpower, a growing pool of skilled workers and managers, abundant resources and capital." One danger is that its industrial-nation markets will be limited by protectionism, though new markets in the area or elsewhere in the world are being created.
Mr. Davies agrees with a Japanese economist who predicted that within 10 or 15 years the Asia-Pacific region, including New Zealand, Australia, Canada, and the US, as well as the countries of East Asia, will become "the word's most viable economic center."
He concludes: "It may take those 10 to 15 years -- and perhaps yet another president from California -- before Washington abandons in Eurocentric outlook and remembers that its future always lay to the West. . . ."