Opportunities and Challenges of the New Economy for East Asia

Opportunities and Challenges of the New Economy for East Asia

Donghyun Park (Nanyang Technological University, Singapore)
Copyright: © 2005 |Pages: 31
DOI: 10.4018/978-1-59140-363-0.ch016
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Abstract

The IT revolution has sharply reduced the cost of information and increased its availability. This revolution is also said to be creating a New Economy in which the old rules of economics no longer apply. The first part of my paper discusses the economic impact of the New Economy on East Asia. First, we discuss the potential economic benefits of the New Economy for the region. We argue that East Asian countries should focus on applying existing technology to local needs, since doing so promises large tangible returns, especially in terms of improving the efficiency of the manufacturing sector, the main engine of the region’s economies. In the long run, the IT revolution will also raise the quality of corporate governance in the region. Second, we point out that while the IT revolution may enable East Asian countries to leapfrog some technological barriers, it does not enable them to leapfrog sound economic policies. Such policies remain as relevant to good economic performance in the New Economy as they did in the Old Economy. Furthermore, the potential of IT to accelerate growth and reduce poverty will be largely unfulfilled in the absence of complementary investments such as a sound infrastructure for transportation and logistics. Third, East Asian countries must fulfill certain pre-conditions to make sure that the New Economy takes hold. Above all, they must liberalize their telecommunication sectors so as to improve the quantity and quality of telecom services. They should also make the necessary investments in human resource development to maximize their returns from the IT revolution. In short, although the New Economy holds out tremendous economic potential for East Asia, realizing that promise will require a lot of determination and hard work. The second part of this chapter deals with the implications of the IT revolution for regional development. Most of the main points raised in the first part of this chapter apply to the second part and in this sense, the second part is essentially an application of the first part, which addressed the broader issue of economic development, to the narrower issue of regional development. East Asian countries suffer from significant inter-regional economic inequalities and these inequalities often extend into all other spheres of national life. Such inequalities inevitably interfere with well-balanced economic development and impose costs on both the magnet cities and the rest of the country. A more balanced pattern of development is therefore desirable, and IT can make significant contributions toward this objective. In particular, by reducing the concentration of information and knowledge in the main city and disseminating those valuable resources to the rest of the country, IT reduces the inequality of opportunity that lies at the root of the inter-regional economic inequality. However, we must be realistic about what IT can do and cannot do in terms of promoting greater inter-regional equality. IT by itself will not enable poorer regions and cities to catch up with the main cities, and will facilitate regional development only if the fundamental ingredients of regional development are in place. Finally, East Asian economies must fulfill certain pre-conditions, especially greater inter-regional equality in telecom and other IT infrastructure, to fully realize IT’s potential benefits for regional development. In the last section of this chapter, we summarize our main points and provide some concluding thoughts. In addition, we discuss the policy implications of our analysis for FDI in Asia, along with implications for potential foreign investors, especially in the telecommunications industry. FDI into IT sectors cannot only be profitable for the investors, but can also promote the host country’s economic growth.

Complete Chapter List

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Dedication
Table of Contents
Acknowledgments
Harbhajan Kehal
Chapter 1
Sushil K. Sharma
Innovations in information and communications technologies have created a digital revolution that is changing the way the world works, learns... Sample PDF
Socio-Economic Impacts and Influences of E-Commerce in a Digital Economy
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Chapter 2
Parthasarathi Banerjee
Contrary to the common belief that e-commerce disintermediates—or even while reintermediation takes place the economic circuit fails to get... Sample PDF
Re-Intermediation and Deferment through E-Commerce: Neo-Austrian Interpretation of Capital and Time
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Chapter 3
Irene Henriques, Perry Sadorsky
In this chapter, quantitative modeling and simulation techniques are used to estimate various risk measures and the associated cost of equity for... Sample PDF
Risk and Investment in the Global Telecommunications Industry
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Chapter 4
Thomas Pfahler, Kai M. Grebe
This chapter introduces the Transaction Cost Approach as a means of analyzing specific transactions in financial services by using the theoretical... Sample PDF
Reduction of Transaction Costs by Using Electronic Commerce in Financial Services: An Institutional Empirical Approach
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Chapter 5
Yutaka Kurihara
It has been several years since the words “digital cash” and other related terms were introduced. Although e-commerce has been growing, digital cash... Sample PDF
The Spreading Use of Digital Cash and Its Problems
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Chapter 6
Fjodor Ruzic
E-Business, as well as all of the active participants in the digital economy environment, raises a host of new legal issues that must cope with the... Sample PDF
Electronic Signature: The Core Legislation Category in Digital Economy
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Chapter 7
Simon Mowatt
This chapter examines changes in innovation and competition made possible in two traditional industries by the adoption of integrated information... Sample PDF
Impacts of the Digital Economy: The Shift to Consumer-Driven Competition and Life-Span Products
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Chapter 8
Gary P. Schneider
Products that exist in digital form can be bought, sold, and, in some cases, delivered, online. The pricing issues that arise in the sale of these... Sample PDF
Digital Products on the Web: Pricing Issues and Revenue Models
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Chapter 9
On Software Piracy  (pages 175-199)
Sougata Poddar
The pervasiveness of the illegal copying of software is indeed a worldwide phenomenon. Economists argue that when the piracy takes place at the... Sample PDF
On Software Piracy
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Chapter 10
Stanley D. Brunn
The world’s capital cities perform various political functions for their populations, contain embassies, consulates, and missions of other... Sample PDF
An E-Classification of the World's Capital Cities: URL References to Web Sites
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Chapter 11
Helen Thompson
This chapter examines community empowerment, economic and business development, and equity of service as the issue of success and decline in... Sample PDF
Online Services and Regional Web Portals: Exploring the Social and Economic Impacts
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Chapter 12
Saundarjya Borbora
This chapter examines the role of technology in economic and social development in developing countries, with a particular emphasis on India as an... Sample PDF
ICT Growth and Diffusion: Concepts, Impacts and Policy Issues in the Indian Experience with Reference to the International Digital Divide
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Chapter 13
Joanne Roberts, Chipo Mukonoweshuro
This chapter explores the role of Information and Communication Technologies (ICTs) in the international development of South African banks. It is... Sample PDF
Digital Technologies and the Cross-Border Expansion of South African Banks
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Chapter 14
Alev M. Efendioglu, Vincent F. Yip
The number of Internet users around the world has been steadily growing and this growth has provided the impetus and the opportunities for global... Sample PDF
Technology and culture: E-Commerce in China
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Chapter 15
Kyonghwan Park
This chapter attempts to lay the groundwork for in-depth discussions on the economic, social and cultural dimensions of the online game business as... Sample PDF
Internet Economy of the Online Game Business in South Korea: The Case of NCsoft's Lineage
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Chapter 16
Donghyun Park
The IT revolution has sharply reduced the cost of information and increased its availability. This revolution is also said to be creating a New... Sample PDF
Opportunities and Challenges of the New Economy for East Asia
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Chapter 17
Milind J. Mahajan, Sunil S. Umrani, Narendra S. Chaudhari
In this chapter, we introduce two existing web-based, e-learning approaches, and examine economic and social aspects of their usage in society.... Sample PDF
Digital Engineering Campus: Economics, Acceptance, and Impact
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Chapter 18
Purva Kansal, Keshni A. Arora
These days, the majority of management literature stresses the concept of “learning organizations”, i.e., an organization’s capacity to change.... Sample PDF
Corporate Strategies in a Digital World: Supply Chain Management and Customer Relationship Management- Development and Integration-Focus
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About the Editors
About the Authors