Economic Growth and Population

Economic Growth and Population



Before the Industrial Revolution had taken place, Asia has been the economic center of the world, having unlimited labor resources due to its massive population. The Industrial Revolution gravitated economic power away from Asia, where the western world has dominated the global market with its technological advances. However, this dominance seems to fade away as China, Japan, and Korea become increasingly prominent in the high-tech industry. According to the Economist, the collective economic might of Asia is forecast to account for more than half of global production by 2020. The enormous population size may be a good reason why these countries experience such rapid economic growth in the past few decades. 

The sheer number of available workers in countries such as China and Japan ensures a firm to maximize its productivity. No matter what level of labor is demanded, there will always be supply. Competition exists within the working force to ensure the most qualified labor unit become employed, therefore the firm will have relatively high productivity from one single worker. The large population means the supply of labor is usually larger than the demand, this surplus makes the price of labor cheaper than most western countries. In a world without much international trade, populous countries offer the largest markets, and comparatively more opportunity to boost economic output through specialization and trade. 

There is a reason why outsourcing has become a trend for large corporations such as Google and Apple, simply because of the cost of labor in the U.S. is just unmatched to Asia. Profit-maximizing firms will find ways to lower their costs and it is natural to employ workers who are able to maintain efficiency while costing the firm little. 

On the microeconomic level, the surplus in the working force lowers the costs of firms, therefore, increase the firm's profit. On the macroeconomic level, the Asian market is able to grow because of the lower labor costs. While a large population is an advantage to employers, the surplus in workers means that some will find finding jobs very difficult, since there is relatively low demand for workers.

Comments

Post a Comment

Popular posts from this blog

The Cost of Inelastic Goods

Image
Many goods that are inelastic in terms of demand are ones that are essential or, in other words, necessary to one's self. There are several examples: basic foods, gasoline, or even medicine. I was interested in how producers can manipulate the prices of these goods and how the total revenue can change over time because those goods are inelastic. The first example I thought of was insulin. Considered inelastic because, without it, those who are diabetic might physically suffer, I looked at the price trends in the past couple of years. Just as I predicted, the price has been rising dramatically in the past decade or so as producers are taking advantage of the consumers' essential need for this good. There are about 7.4 million Americans that use insulin and many struggle to pay the costs of this increasingly expensive drug. So, while rising prices benefit insulin manufacturers, those same prices come at a serious cost for patients as the demand for insulin is inelastic. Other...
Read more

The Economics and Psychology of Gambling

Image
As gambling around the world continues to increase, governments are starting to see these often self-destructive habits as a way to get money from their residents. Gambling has been seen as immoral and manipulative on the part of casinos, as well as pitiful on the parts of the people that gamble all their money away. It is seen as immoral and a “lazy way” to make money that isn’t even assured to get you anything. So what keeps bringing people back to the card table or slot machine? There are many theories about why someone would continuously gamble any money that they make to the point of landing themselves in debt. In many cases, the gamiling becomes an addiction, though many professionals have reservations on calling it that, that gets increasingly hard to kick. It is irrational for someone to continuously lose money and keep going back only to lose more. Or is it? The utility that some get out of gambling may feel like spending the money is worth it. As far as recreational ...
Read more

The Hidden Monopolies of the World

 Monopolies are all around us in the world, and not all of them are  obvious on the surface level like Google and Facebook. For example, you might be searching for hotel rooms and browse multiple "competing" sites like Travelocity, Trivago, or Hotel.com. What you most likely do not know however, is that all three websites are actually all owned by the same company; Expedia group. This illusion of free choice is used to hide the fact that Expedia essentially hold a monopoly over the industry and all hotel bookings actually go through them. These fake competitors which are all owned by Expedia Group controls 75% of the US online travel agency industry, Similarly, apple fans and Microsoft fans stubbornly stick to their respective brands of computers; not knowing that the laptops all come from the same Chinese manufacturer. Throughout all types of industries such as the ones listed earlier and others such as smartphones, supermarkets, beer, and even sunglasses, hidden parent co...
Read more