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A Study of a Newly Industrialising Economy

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A Study of a Newly Industrialising Economy The rise of NIEs, Globalisation ã Companies in DCs were attracted by the competitive advantage offered by the LDCs ã Advancements in technology and communications have encouraged the shift ã Physical barriers and national barriers have been overcome ã World have become more connected as in information, ideas, cultures and values between countries are exchanged ã Process known as globalization ã ã ã ã ã ã ã ã ã ã Allowed companies to conduct their busine
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  A Study of a NewlyIndustrialising Economy The rise of NIEs, Globalisation ã Companies in DCs were attracted by the competitive advantage offered by the LDCs ã Advancements in technology and communications have encouraged the shift ã Physical barriers and national barriers have been overcome ã World have become more connected as in information, ideas, cultures and valuesbetween countries are exchanged ã Process known as globalization ã Allowed companies to conduct their business on a global scale ã Companies known as TRANSNATIONAL CORPORATIONS TNCs ã Large and established thus have many regional headquarters located in other countries ã Set up units in LDCs ã Train people there to set up manufacturing operations and other aspects like marketing ã TNCs operations increase, level of Industralisation increase ã Result in LDCs to develop rapidly ---NEWLY INDUSTRALISATING ECONOMY NIEs ã First used by Organisation for Economic Co-operation and Development ã Used to describe countries that belong to less developed countries but highly successfulin industrialization process ã Can divided into first-tier, second-tier, third-tier NIEsFirst-tier   Started industralising rapidly in the 1960s  Achieved much industrial growth with high levels of productivity manufacturingoutputs and exports by the 1980s  People in these economies enjoy living high living standards close to levels of DCS  Singapore, Hong Kong, South Korea, TaiwanSecond-tier   Started industrailisation process only in 1980s  Enjoying rapid industrial growth  Mexico, Brazil, Philippines and MalaysiaThird-tier   Started in 1990s  Chile, Vietnam, China and India  China and India have achieved rapid economic growth similar to that of the first-tier but regional disparity exist in the two countries due to large populations  Characteristics of NIEs1.Fast rate of growth in manufacturing  Manufacturing sectors expand rapidly over the last few decades  Means that level of employment in industries and its share of total employment inNIEs rise accordingly  Accordingly to federal Research Division  Brazil employment in the manufacturing industry made uo only 14.1% of country total employment in 1950  Figure increased to 23.9% in 19802.Rising share of world exports in manufactured goods  Although many LDCs may have increase their output of manufactured products,a large part of it are catered for their local market  NIEs due to huge growth in manufacturing industries, they have become major exporters of manufactured products  Library of Congress Country Studies reveled that in 1970s First-tier NIEshad just a 2% share in world’s merchandise exports  By 2003, share in exports has rise to 9.4%3.Fast growth in real per capital income  Enjoys a fat growth in real per capita income  /wealth generated by each person in the country/  United States Conference on Trade and Development  Annual per capita income of South Korea increased from US$100 in 1963to about US$24500 in 2007  Generate more economic wealth , able to narrow the gap between themselvesand DCs  INDIA! ã 2006, India was Asia’s 4 th largest economy ã 2 nd fastest growing economy in the world ã India’s GDP was US$800 billion in 2005 , compared to US$ 460 billion in 2000 ã GDP growth was 9% in 2006 while it was 2% for the growth of Japan ã Rapid growth in industry had been attributed to the its growing industries, especially inmanufacturing and in services ã Contribution to the GDP by manufacturing and service sector increased between 1984and 2004, whereas contribution by the agriculture has decreased ã India’s manufactured products are gaining acceptance in the world markets even thoughthey contribute only 27% to the country GDP in 2004 ã In same year, India exported US$50 billion worth of manufactured goods with keycontributing sections being textile and apparel, automobile, specialty chemicals andelectronics product ã Electronics company showed potential to eventually manufacture the bilk of India’sexported productsElectronics industry in India ã Rise in electronics industry begin in 1960s ã India started to shift away from policy of import-substitution ã At that period most of the manufacturing activities were carried out by the government of india ã Mainly limited to basic defense and telecommunication products. ã As the economy began to expand in the 1980s, ã More consumer electronics such as radios and calculators were produced ã By 1990s, there were both local and foreign investments in the electronics industry tomeet rising demands for electronic products ã Rapid growth in India’s electronics industry had been largely due to the increasingnumber of TNCs setting up manufacturing bases in various parts of the country ã Industry was worth US$10 billion in 2006 and could grow up to US$40 billion in 2010 ã It would overtake its textile industry which was extimated to reach US$14.5 billion in2010  Why locate in India??Land  Electronics industry had become an important sector of India’s economy  Much land had been located for the industry in form of large industrial psrks that wereconstantly being expanded  2006, Technopark in the state of Kerala was considered on of India’s largest industrialparks  Occupied an area of 1.2km 2 as well as a build up space of 0.22km 2  2007, park houses more than 100 local and international companies that specialized inelectronics, software and other Information Technology products  As Technopark have been build on a extensive piece of land, plans were made toexpand the area of the park by at least 2km 2  Therefore enabling Kerala to meet the increasing demand for space in the electronicsindustrySkilled labour   Abundance of skilled labour available at lower costs as compared to other countries  Average labour cost of a skilled graduate workers in India was about US$7 per hour ascompared to an average wage of about US$40 in more developed countries likeGermany  Most of the skilled workers are proficient in English, which was in consideration for manyTNCs that had branched located in English-speaking countries  Chennai, capital city of Tamil Nadu  Area where the electronics industry take off quickly  Due to the large pool of workers that are well-equipped for jobs in the electronicsindustry  In 2007, the state consisted 250 engineering colleges , 230 polytechnics and as well asthe India Institute of Technology which provided the students with higher technologicaleducation  Tamil Nadu produced 43000 engineering graduates and 61000 diploma holders, makingone of the greatest source of educated workers in the countryGovernment support  Actively encouraging the growth of electronics industry in past 2 decades  Looking to attract more foreign investors and TNCs to set up branches in the country  To increase the amount of electronic products for export, which made up only 0.7% of global electronics industry in 2007  Introduced policies such as allowing foreign investors to have 100% private ownership of businesses that manufactured products solely for export  Special economic zones were set up around the country to provide incentives such astax exemptions on export income for a period of time

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Oct 31, 2017

Lawyer File #8

Oct 31, 2017
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