expected to have detrimental effects on the two economies. Furthermore,
the
international exchange rate realignment (Table 9) in the latter half of the 1980s
adversely affected to some extent the competitiveness of Japan's and the ANIES' exports
in the international market." In addition, as a result of a rising demand for workers,
emigration and structural rigidities, these Asian economies are experiencing labour
shortage and thus rising productions cost. Chart 1 reveals the increase in the effective
exchange rates (and therefore decreasing international competitiveness) of Taiwan,
South Korea, Hong Kong and Singapore during the period 1987-89, and to some extent
in 1990.
move their
Amidst internal and external shocks, rapid economic growth continued. Economic
hardships have, in fact, served as an locomotive for economic transformation in these
Asian countries. For examples, a survey found that both Hong Kong and Taiwan
investors (in toys manufacturing) in China claimed that they would not
production out of China in the face of new protection measures. Rather, they planned
to diversify their production and find new markets.7 It had also been extensively
discussed that as a result of massive relocation of manufacturing activities to less
developed, labour abundant economies, the manufacturers of the ANIES have assumed
new roles in the process of transformation from process-based to product-based
manufacturing. Since a large part of the manufacturing process has shifted overseas, the
home manufacturers are taking up new roles such as designing, marketing, researching
and quality control. In some cases, resources in the home country are released to
develop its services sector and new industries. Its traditional industries may either be
upgraded or phased out smoothly.
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