The most important characteristic of developing countries or less developed countries is that it has low per capita income. In addition, people in developing countries or less developed countries usually have poor health, low levels of literacy, extensive malnutrition, and little capital to work with.
The growth, in developing countries, is improving living standards – rides on four wheels. There are (1) human resources, (2) natural resources, (3) capital formation and (4) technology. These four wheels operate in rich and poor countries. Let’s see how each of four wheels operates in developing countries and consider the policy of the government can steer the growth process in favorable direction. Now we study about the process of development of economy of a developing country in Asia- China.
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China is also a developing country in Asia. For last two decades, China’s economy has growth very fast. With growing annually average about 10% of GDP, China has been seen as only one economic potential country instead of Japan’s position in the world. China’s economy might continue the high growth because Chinese government promises to adopt strong economic measure to reduce impact of global economic crisis on its nation. What factors have made China develop its economy faster than other developing counties in Asia?
China has experienced since its economic reforms were launched in the late 1978 looks very different to much more gradual development than other counties in Asia. The points of China’s growth were high investment in development of Small and Medium Enterprises and foreign firms, via FDI industry sectors, development of human resources, human capital, technology, and development in industry sectors,
Human Capital and Development
In all factors of economic and social development, human resources are set as the most important one by the Chinese Government. Therefore, efforts should be made to bring China’s personnel management into the new stage of the strategy of strengthening China to catch up with that of developed countries. At the same time, the training and educational level and employees’ professional capacity have been greatly enhanced due to the human capital theory, public administration and talents evaluation skills drawn from developed countries. The implementation of the strategy of strengthening China with talented people resulted in the formulation of strengthening provinces and municipalities with talented people. Dazhou City of China’s southwest Sichuan Province, for example, is an undeveloped city. The personnel sector of this city holds that the shift from human resources to human capital is the objective requirement of Dazhou’s economic construction and rapid social development. In promoting the shift from human resources to human capital, Dazhou City attaches great importance to the accumulation of human capital, increase of investment, and enhancement of education, training, and recruiting foreign talents to improve the quality and capacity of talents. At the same time, Dazhou City manages to stimulate the vigor of the talents and trigger the potentials of the talents in management system, operation system, and environmental conditions. Dazhou City also encourages the talents to do hard pioneering work to incorporate human capital into other productive factors to pursue multiplication efficiency. This case illustrates that training results in the innovation of human resources development concepts and practice. It is therefore easy to imagine the importance of innovation in central areas and places at middle-upper levels. The MPA training program provides governments and the society with high-level public managerial personnel.
Moreover, China also encourages to consider factors such as management, technology, capital, and labor force in distribution field and conduct in-depth implementation of the principle of income distribution according to work, clear-cut the income differences of employees, break away from traditional egalitarianism in income distribution, and at the same time properly handle the relationship among market guidance pricing of personnel, people’s capacity and contribution, current economic situation of corporations and employees’ affordability.
Natural Resource and development
China remains a major producer and distributor of resources. It is in fact, a world leader in the production and manufacturing of many coveted natural resources. The geography of such a large area provides many opportunities, in terms of accessibility and availability of these items, for China.
Most large countries depend on the realization and utilization of their natural resources for their ultimate economic success. Other small countries with few natural resources to extort depend on larger countries like China to provide necessary goods and supplies to keep their economies stable. Becoming familiar with what certain countries like China have to offer the world makes people realize the importance of stable relationships across the globe.
Many countries depend on goods supplied by China. The applications of oil, coal and natural gas are obvious; most countries require fuel and heat to thrive. “According to Web Elements, goods like batteries require antimony as a lead hardener. Tungsten, because it has such a high melting point and high conductivity, is used in such applications as light bulb filaments.” Both of these metals are manufactured in China where they occur naturally and are relatively easily accessible.
In the April 2009 updated version of the Central Intelligence Agency’s “World Factbook,” crude oil and natural gas remain two of China’s more abundant and profitable natural resources. China’s oil production was estimated at 3.725 million barrels per day in 2008, which made it the fifth-largest oil producer in the world. China had 19.6 billion barrels of crude oil in reserves, according to 2008 estimates. In 2007, estimates held the country’s natural gas production at 69.27 billion cubic meters. China’s reserves of natural gas were estimated at 2.265 trillion cubic meters in 2008.
China has the largest potential for hydropower out of any other country in the world. Numerous mountain ranges with quickly flowing rivers and tributaries add to this potential. If this potential is realized, hydropower can prove to be one of China’s most valuable natural resources. If hydropower was harnessed at such a volume as to provide for other neighboring.
year
production
consumption
year
production
consumption
1980
2114
1765
1994
2939.29
3160.61
1981
2012
1705
1995
2990
3363.16
1982
2045
1660
1996
3131.34
3610.09
1983
2120
1730
1997
3200.34
3916.27
1984
2296
1740
1998
3198.19
4105.83
1985
2505
1885
1999
3195
4363.6
1986
2620
2000
2000
3248.76
4795.71
1987
2690
2120.04
2001
3300
4917.88
1988
2730
2275
2002
3389.65
5160.71
1989
2756.5
2379.52
2003
3408.87
5578.11
1990
2774
2296.4
2004
3485.31
6437.48
1991
2835
2498.8
2005
3608.62
6695.44
1992
2845
2661.6
2006
3672.74
7235
1993
2890
2959.49
Source: United States Energy Information Administration
Capital Formation
Since 1992, with the renewal of economic reforms, China has enjoyed faster economic growth, with a rate of nearly 10 per cent annually, while its external trade grew by more than 15 per cent a year (Zhai and Wang 2002). During this period, SMEs expanded rapidly in all sectors. Rural SMEs, which include almost all TVEs and all rural household and PEs, produced about one-third of China’s GDP since 1996 and employed over 130 million rural workers. Urban SMEs, comprising small- and medium-sized SOEs, urban collective enterprises (COEs), urban household and private firms, and enterprises with other ownership forms, mainly joint venture (JV) enterprises, produced about another one-third of GDP and employed 115 million urban workers (Sun 2000).
The significance of SMEs has continued to grow in China. SMEs not only help to expand the scale of the market economy, but also contribute to the creation of the system of the market economics as a whole. Most management systems in China, for instance, began first in SMEs
and then became widespread (Fan 2003). The important role of SMEs in China suggests that their development is critical for sustained growth of the economy.
Increasingly, China may have also have benefited from a further element of domestic competition. Even in the command economy period, for instance, the central plan controlled probably less than half of industrial output (Brandt et al. 2008). Over the last three decades of much more open markets, scope was given to decentralized experimentation in novel institutions and forms of organization (Brandt and Rawski,2008). The provision of tax receipts has also led local governments to compete against each other by concentrating spending on productive investment and trying to create hospitable economic environments designed, in particular, to attract FDI (Qian and Weihgast, 1996)
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China’s trade and investment reforms and incentives led to a surge in foreign direct investment (FDI), which has been a major source of China’s capital growth. Annual utilized FDI in China grew from $636 million in 1983 to $61 billion in 2004. FDI will continue to pour into China as investment barriers are reduced under China’s WTO commitments and Chinese demand for imports continues to increase.
Country
Cumulative Utilized FDI:
1979-2004
Utilized FDI in 2008
Amount
($ billions)
% of Total
Amount
($ billions)
% of Total
Total
563.8
100.0
92.4
100.0
Hong Kong
241.6
42.9
41.0
44.4
United States
48.0
8.5
2.9
3.2
Japan
46.8
8.3
3.7
4.0
Taiwan
39.6
7.0
1.9
2.1
British Virgin Islands
36.9
6.5
16.0
17.3
South Korea
25.9
4.6
3.1
3.4
Technological Progress
Improvement in the production is the most literal interpretation of technical progress, result from a combination of research, innovation, and development. Since the founding of the People’s Republic, industrial development has been given considerable attention. Among the various industrial branches the machine-building and metallurgical industries have received the highest priority. These two areas alone now account for about 20-30 percent of the total gross value of industrial output. In these, as in most other areas of industry, however, innovation has generally suffered at the hands of a system that has rewarded increases in gross output rather than improvements in variety, sophistication and quality. China, therefore, still imports significant quantities of specialized steels. Overall industrial output has grown at an average rate of more than 10 percent per year, having surpassed all other sectors in economic growth and degree of modernization. Some heavy industries and products deemed to be of national strategic importance remain state-owned, but an increasing proportion of lighter and consumer-oriented manufacturing firms is privately held or are private-state joint ventures.
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