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Economy of Asia
During 2003 unless otherwise stated
Population: 4 billion (2002)
GDP (PPP) (as of 2008): US$28.38 trillion
GDP (Currency): $8.782 trillion
GDP/capita (PPP): $4,518
GDP/capita (Currency): $2,195
Annual growth of
per capita GDP:
Income of top 10%:
Millionaires: 2.0 million (0.05%)
Estimated female
Most numbers are from the UNDP from 2002, some numbers exclude certain countries for lack of information.

The economy of Asia comprises more than 4 billion people (60% of the world population, living in 46 different states. Six further states lie partly in Asia, but are considered to belong to another region economically and politically.

As in all world regions, the wealth of Asia differs widely between, and within, states. This is due to its vast size, meaning a huge range of differing cultures, environments, historical ties and government systems. The largest economies in Asia in terms of nominal GDP are Japanmarker, Chinamarker, Indiamarker, and South Koreamarker. Economies range from Japan, as the world's second largest economy by nominal GDP, to Cambodia as one of the poorest. In terms of GDP by purchasing power parity, Chinamarker has the largest economy in Asia and the second largest economy in the world, followed by Japanmarker and Indiamarker as the world's third and fourth largest economies respectively.

Wealth (if measured by GDP per capita) is mostly concentrated in east Asian countries such as Japanmarker and South Koreamarker, as well in oil rich Middle Eastern countries such as Saudi Arabiamarker, Qatarmarker, and United Arab Emiratesmarker. Asia, with the exception of Japan and South Korea, is currently undergoing rapid growth and industrialization spearheaded by China and India - the two fastest growing major economies in the world. While east Asian and southeast Asian countries generally rely on manufacturing and trade for growth, countries in the Middle East depend more on the production of commodities, principally oil, for economic growth. Over the years, with rapid economic growth and large trade surplus with the rest of the world, Asia has accumulated over US$4 trillion of foreign exchange reserves - more than half of the world's total.

Economic development

Ancient and medieval times

Chinamarker was the largest and most advanced economy on earth for much of recorded history, until the British Empire (excluding India) overtook it in the mid 19th century.


Prior to World War II, most of Asia was under colonial rule. Only relatively few states managed to remain independent in the face of constant pressure exerted by European power. Such examples are Siammarker and Japanmarker.

Japanmarker in particular managed to develop its economy due to a reformation in the 19th century. The reformation was comprehensive and is today known as the Meiji Restoration. The Japanese economy continued to grow well into the 20th century and its economic growth created various shortages of resources essential to economic growth. As a result the Japanese expansion began with a great part of Koreamarker and China annexed, thus allowing the Japanese to secure strategic resources.

At the same time, Southeast Asia was prospering due to trade and the introduction of various new technologies of that time. The volume of trade continued to increase with the opening of the Suez Canalmarker in the 1860s. Manilamarker had its gallion or Manila galleon wherein products from the Philippinesmarker were traded to Europe. The Philippinesmarker was the first Asian country to trade with Latin America via Acapulcomarker. Tobacco, coconut, corn, and sugar trade was the most in demand during that time. Singaporemarker, founded in 1819, rose to prominence as trade between the east and the west increased at an incredible rate. The Britishmarker colony of Malaya, now part of Malaysiamarker, was the world's largest producer of tin and rubber. The Dutch East Indiesmarker, now Indonesiamarker, on the other hand, was known for its spices production. Both the British and the Dutch created their own trading companies to manage their trade flow in Asia. The British created the British East India Company while the Dutch formed Dutch East India Company. Both companies maintained trade monopolies of their respective colonies.

In 1908, crude oil was first discovered in Persia, modern day Iranmarker. Afterwards, many oil fields were discovered and it was learnt later that the Mideast possesses the world's largest oil stocks. This made the rulers of the Arab nations very rich though the socioeconomic development in that region lagged behind.

In the early 1930s, the world underwent a global economic depression, today known as the Great Depression. Asia was not spared, and suffered the same pain as Europe and the United Statesmarker. The volume of trade decreased dramatically all around Asia and indeed the world. With falling demand, prices of various goods starting to fall and further impoverished locals and foreigners alike. In 1941, Japan invaded Malaya and thus began World War II in Asia.


Following World War II, the People's Republic of Chinamarker and Indiamarker, which account for half of the population of Asia, adopted industrial policies to promote their domestic economy. These policies limited the economic growth of the region. In contrast, the economies of superiors Japanmarker, South Koreamarker and the other tigers Taiwanmarker, Singaporemarker, and Hong Kongmarker--were economic successes, and the only successful economies outside of North America, Western Europe and Australia. The Philippinesmarker from the post-World War II until the late 1960s had the second largest economy in Asia. The Philippine economy during the 1980s was marked by stagnant growth as a result of dictatorship and martial law.

One of the most pronounced Asian economic phenomenons during this time - the Japanese post-war economic miracle greatly impacted the rest of the world. After World War II, under central guidance from the Japanese government, the entire economy was undergoing a remarkable restructuring. Close cooperation between the government, corporations and banks facilitated easy access to much-needed capital, and large conglomerates known as keiretsu spurred horizontal and vertical integration across all industries, keeping out foreign competition. These policies, in addition to an abandonment of military spending, worked phenomenally well. Japanese corporations as a result exported and still export massive amounts of high quality products from The Land of The Rising Sun.

Another equally amazing economic success story is that of South Koreamarker's, also referred to as the Miracle on the Han River. The country was left improverished after the Korean War, yet was able to recover at double digit percentiles. Many conglomerates, also known as Chaebols, such as Samsung, LG, Hyundai, Kia, SK, and more grew tremendously during this period. South Koreamarker has now become the world's most wired country in the world.

While mainland China stagnated, Taiwanmarker and Hong Kongmarker experienced rapid growth up till the 1990s. Taiwan became, and still remains one of the main centers of consumer electronics R&D as well as manufacturing. However, unlike in Japan and South Korea, the bulk of Taiwan's economy is dependent on small to medium sized businesses. Hong Kong, on the other hand, experienced rapid growth in the financial sector due to liberal market policies, with many financial institutions setting up their Asian headquarters in Hong Kong. Till today, Hong Kong has been ranked as the world's freest economy for many years running, and it remains among one of the world's top 5 leading financial centers.

This period was also marked by military conflict. Wars driven by the Cold War, notably in Vietnam and Afghanistan, wrecked the economies of these respective nations. When the Soviet Unionmarker collapsed in 1990-91, many Central Asian states were cut free and were forced to adapt to pressure for democratic and economic change. Also, several of the USSR's allies lost valuable aid and funding.


After the liberalization of the economy of India, undertaken by then finance minister and current Prime Minister of India, Dr. Manmohan Singh, the Indian economy coupled with the Chinese economy to power Asia into being one of the hotspots for world trade. The Chinese economy was already booming under the economic measures undertaken by Deng Xiaoping, in the 1980s, and continuing under Jiang Zemin in the 1990s. In 2007, China's economic growth rate exceeded 11% while India's growth rate increased to around 9%. One of the factors was the sheer size of the population in this region.

Meanwhile, Thailandmarker, Malaysiamarker and Indonesiamarker emerged as the new Asian tigers with their GDPs growing well above 7% per year in the 1980s and the 90s. Their economies were mainly driven by growing exports. The Philippinesmarker only began to open up its stagnated economy in the early 1990s. Vietnam's economy began to grow in 1995, shortly after the United Statesmarker and Vietnammarker restored economic and political ties.

Throughout the 1990s, the manufacturing ability and cheap labor markets in Asian developing nations allowed companies to establish themselves in many of the industries previously dominated by companies from developed nations. Asia became one of the largest sources of automobiles, machinery, audio equipment and other electronics.

At the end of 1997, Thailand was hit by currency speculators, and the value of the Baht along with its annual growth rate fell dramatically. Soon after, the crisis spread to Indonesia, Malaysia, South Korea, Hong Kongmarker, Singapore and many other Asian economies, resulting in great economic damage on the affected countries (Japan largely escaped the crisis). In fact, some of the economies, most notably those of Thailand, Indonesia, and South Korea actually contracted. This later would be known as the Asian financial crisis. By 1999, most countries had already recovered from the crisis.

In 2004, parts of Sumatra and South Asia were severely damaged by an earthquake and the subsequent tsunamimarker. The natural disaster wiped out huge amounts of infrastructure throughout the affected area and displaced millions.


Asia's large economic disparities are a source of major continuing tension in the region. While global economic powers Chinamarker, Indiamarker, Japanmarker, and South Koreamarker continue powering through, and Indonesiamarker, The Philippinesmarker, Malaysiamarker, Thailandmarker, and Vietnammarker have entered the path to long-term growth, regions right next to these countries are in need of severe assistance.

Given the large number cheap and amply available labor in the region, particularly in Chinamarker and Indiamarker, where large workforces provide an economical advantage over other countries, the rising standard of living will eventually lead to a slow-down. Asia is also riddled with political problems that threaten not just the economies, but the general stability of the region and world. The nuclear neighbors—Pakistan and India—constantly pose a threat to each other, causing their governments to heavily invest in military spending.

Military intervention by the United States in Iraq and Afghanistan has also inflamed extremism and resulted in several terrorist attacks in a number of Asian countries. Another impending crisis is the depletion of oil reserves in the Middle East. Most of these economies have traditionally been over-dependent on oil and have had difficulty establishing another pillar in their economies.

Yet another potential global danger posed by the economy of Asia is the growing accumulation of foreign exchange reserves. The countries/regions with the largest foreign reserves are mostly in Asia - China (Mainland - $988 billion & Hong Kong - $130 billion, September 2006), Japan ($881 billion, September 2006), Russia ($412 billion, June 2009), Taiwan ($261 billion, September 2006), the Republic of Korea ($228 billion, September 2006), Singaporemarker ($129 billion, June 2005), India ($252 billion, April 2009). This increasingly means that the interchangeability of the Euro, USD, and GBP are heavily influenced by Asian central banks. Some economists in the western countries see this as a bad thing, prompting their respective governments to take action.

The economies of Asia are expected to be unequally divided for a long period of time. East Asian nations such as economic leaders Chinamarker, Japanmarker and South Koreamarker will continue to flourish. Japanese products such as Sony and Hitachi are commanding premium prices in the western world. South Korean conglomerates Samsung and LG are respectively the second and fifth largest in Asia in terms of annual revenues. These two rivaling countries are expected to be joined by new economic competitors such as China and India. On the other hand, the Middle East and a few parts of South East Asia are will be in a state of trouble.

Trade blocs

Asia-Pacific Economic Cooperation

The Asia-Pacific Economic Cooperation (APEC) is a group of Pacific Rim countries who meet with the purpose of improving economic and political ties

Association of Southeast Asian Nations

The Association of Southeast Asian Nations (ASEAN) is a political, economic, and cultural organization of countries located in Southeast Asia. Founded in 1967, its aim is to foster cooperation and mutual assistance among members. The countries meet annually every November in summits.

The current member countries of ASEAN are Myanmarmarker (Burma), Laosmarker, Thailandmarker, Cambodiamarker, Vietnammarker, Philippinesmarker, Malaysiamarker, Brunei Darussalammarker, Singaporemarker and Indonesiamarker. Papua New Guineamarker is given an observer status.

In 2005 ASEAN was instrumental in establishing the East Asia Summit (involving all ASEAN members plus Chinamarker, Japanmarker, South Koreamarker, Indiamarker, Australia and New Zealandmarker) which some have proposed may become in the future a trade bloc, the arrangements for which are far from certain and not yet clear.

The Asian Currency Unit (ACU) is a proposed currency unit for the ASEAN "10+3" economic circle. (ASEAN, the mainland of the People's Republic of Chinamarker, Japanmarker, and the Republic of Koreamarker).

Closer Economic Partnership Arrangement

The Closer Economic Partnership Arrangement (CEPA) is an economic agreement between the People's Republic of Chinamarker and both the Hong Kongmarker SAR government (signed on 29 June 2003), and the Macaumarker SAR government (signed on 18 October, 2003), in order to promote trade and investment facilitation.

The main aims of CEPA are to eliminate tariffs and non-tariff barrier on substantially all the trade in goods between the three, and achieve liberalization of trade in services through reduction or elimination of substantially all discriminatory measures.

Commonwealth of Independent States

Flag of the Commonwealth of Independent States
The Commonwealth of Independent States (CIS) is a confederation consisting of 12 of the 15 states of the former Soviet Union, both Asian and European, (the exceptions being the three Baltic states). Although the CIS has few supranational powers, it is more than a purely symbolic organization and possesses coordinating powers in the realm of trade, finance, lawmaking and security. The most significant issue for the CIS is the establishment of a full-fledged free trade zone / economic union between the member states, to be launched in 2005. It has also promoted cooperation on democratisation and cross-border crime prevention.

South Asian Association for Regional Cooperation

The South Asian Association for Regional Cooperation (SAARC) is an association of 8 countries of South Asia, namely Bangladeshmarker, Bhutanmarker, Indiamarker, Maldivesmarker, Nepalmarker, Pakistanmarker, Sri Lankamarker and Afghanistanmarker. These countries comprise an area of 5 130 746 km² and a fifth of the population of the world.

SAARC encourages cooperation in agriculture, rural development, science and technology, culture, health, population control, narcotics control and anti-terrorism.

South Asia Free Trade Agreement (proposed)

The South Asia Free Trade Agreement is an agreement reached at the 12th South Asian Association for Regional Cooperation summit. It creates a framework for the creation of a free trade zone covering 1.6 billion people in Indiamarker, Pakistanmarker, Nepalmarker, Sri Lankamarker, Bangladeshmarker, Bhutanmarker and the Maldivesmarker.

Arab League

The Arab League is an association of Arab countries in Africa and Asia. The Arab League works to combat terrorism.


Below is a list of the currencies of Asia, including all fully Asian states plus Russia, with exchange rates between each currency and both the Euro and US Dollars as of 9 December 2004.

Country Currency worth in Euro worth in USD Central bank
Afghani 0.0171287 0.0228157
Bahraini Dinar 1.99136 2.65957
Taka 0.0125917 0.0167723 Bangladesh Bank
Ngultrum 0.0170095 0.0226630
Brunei Dollar 0.455736 0.606944
Riel 0.000305774 0.000260068

Hong Kong Dollar
Macanese Pataca



People's Bank of China
Hong Kong Monetary Authority
Monetary Authority of Macao

New Taiwan Dollar 0.0233412 0.0310945 Central Bank of the Republic of China
US Dollar 0.750803 1
Indian Rupee .0175701 .0253710 Reserve Bank of Indiamarker
Rupiah 0.0000819210 0.000109059 Bank Indonesia
Iranian Rial 0.0000847274 0.000112852 Central Bank of Iran
Iraqi Dinar 0.000513340 0.000683737 Central Bank of Iraq
Sheqel 0.172654 0.229975 Bank of Israel
Yen 0.00718413 0.00956539 Bank of Japanmarker
Jordanian Dinar 1.06031 1.41243
Tenge 0.00576997 0.00768610 National Bank of Kazakhstan
North Korean Won 0.341229 0.454545
South Korean Won 0.000711045 0.000947424 Bank of Korea
Kuwaiti Dinar 2.54691 3.39425
Kyrgyzstani Som 0.0181059 0.0241177
Kip 0.0000692876 0.0000922935
Lebanese Pound 0.000495695 0.000659979
Ringgit 0.197525 0.263219 Bank Negara Malaysia
Rufiyah 0.0637958 0.0849618
Tugrik 0.000618514 0.000823723
Kyat 0.135242 0.180112
Nepalese Rupee 0.0105153 0.0140041 Nepal Rastriya Bank
Omani Rial 1.95241 2.60077
Pakistani Rupee 0.0124665 0.0166064 State Bank of Pakistan
Sheqel (Israeli) 0.17 0.23 no central bank
Philippine Peso 0.0133941 0.0178531 Bangko Sentral ng Pilipinas
Qatari Riyal 0.206213 0.274786
Russian Ruble 0.0267806 0.0356723 Central Bank of the Russian Federation
Saudi Riyal 0.200178 0.266660
Singapore Dollar 0.455762 0.607083 Monetary Authority of Singapore
Sri Lankan Rupee 0.00715451 0.00953107 Central Bank of Sri Lanka
Syrian Pound 0.0143770 0.0191527
Tajikistani Somoni 0.269553 0.359066
Baht 0.0189565 0.0252245 Bank of Thailand
Manat 0.000144365 0.000192306
United Arab Emirates dirham 0.204394 0.272301 Central Bank of
the United Arab Emirates
Uzbekistani Som 0.000715188 0.000952628
Dong 0.0000476064 0.0000634115
Yemeni Rial 0.00409130 0.00544959

Table correct as of 9 December 2004 (see [98074] for latest)

Economic sectors

Primary Sector

Asia is by a considerable margin the largest continent in the world, and is rich in natural resources. The vast expanse of the former Soviet Unionmarker, particularly that of Russiamarker, contains a huge variety of metals, such as gold, iron, lead, titanium, uranium, and zinc. These metals are mined, but inefficiently due to continued use of poorly maintained, obsolete machinery left over from the communist era. Nevertheless, profits are high due to a commodity price boom in 2003/2004 caused largely by increased demand in China. Oil is Southwest Asia's most important natural resource. Saudi Arabia, Iraq, and Kuwait are rich in oil reserves and have benefited from recent oil price escalations.

Asia is home to some four billion people, and thus has a well established tradition in agriculture. High productivity in agriculture, especially of rice, allows high population density of many countries such as Bangladesh, Pakistan, southern China, Cambodia, India, and Vietnam. Agriculture constitutes a high portion of land usage in warm and humid areas of Asia. Many hillsides are farmed in a terrace method to boost arable land. The main agricultural products in Asia include rice and wheat. Opium is one of major cash crops in Central and Southeast Asia, particularly in Afghanistan, though its production is prohibited everywhere. Forestry is extensive throughout Asia except Southwest and Central Asia, with many of the items of furniture sold in the developed nations made out of Asian timber. Fishing is a major source of food, particularly in Japan.

Secondary Sector

The manufacturing sector in Asia has traditionally been strongest in the East region - particularly in Chinamarker, Taiwanmarker, Japanmarker, South Koreamarker and Singaporemarker. The industry varies from manufacturing cheap low value goods such as toys to high-tech added value goods such as computers, CD players, Games consoles, mobile phones and car. Major Asian manufacturing companies are mostly based in either South Koreamarker or Japanmarker. They include Samsung, Hyundai, LG, and Kia from South Koreamarker, and Sony, Toyota, Toshiba, and Honda from Japanmarker. Many developed-nation firms from Europe, North America, Japanmarker and South Koreamarker have significant operations in the developing Asia to take avantage of the abundant supply of cheap labor. One of the major employers in manufacturing in Asia is the textile industry. Much of the world's supply of clothing and footwear now originates in Southeast Asia and South Asia, particularly in Vietnammarker, Chinamarker, Indiamarker, Thailandmarker, Bangladeshmarker, Pakistanmarker, and Indonesiamarker.

Tertiary Sector

Asia has six important financial centers, located in Dubaimarker, Mumbaimarker, Hong Kongmarker, Shanghai, Singaporemarker and Tokyomarker. Indiamarker has been one of the greatest beneficiaries of the economic boom. The country has emerged as one of the world's largest exporters of software and other information technology related services. World class Indian software giants such as Infosys, HCL, Wipro, Mahindra Satyam and TCS have emerged as the world's most sought after service providers. Call centers are also becoming major employers in India and Philippines due to the availability of many well educated English speakers. Here again India holds close to 60% of the trade share. The rise of the Business Process Outsourcing (BPO) industry has seen the rise of India and China as the other financial centers. Experts believe that the current center of financial activity is moving toward "Chindia" - a name used for jointly referring to China and India - with Shanghai and Mumbaimarker (Bombaymarker) becoming major financial hubs in their own right. Other growing technological and financial hubs include Dhakamarker (Bangladeshmarker), Bangaloremarker (Indiamarker), Chennaimarker (Indiamarker), New Delhimarker (Indiamarker), Hyderabadmarker (Indiamarker), Jakartamarker (Indonesiamarker), Kuala Lumpurmarker (Malaysiamarker), Kolkatamarker (Indiamarker), Karachimarker (Pakistanmarker), Manilamarker (Philippinesmarker) and Bangkokmarker (Thailandmarker).

See also


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