Anything Worth Doing Well Takes A Little Chaos
Is Asia really a complex and unruly beast? Absolutely, but if it was easy, then everybody would be making their fortunes here. What we have tried to make clear in this series of dailies is that, with a solid understanding of the historical context in which today’s paper tigers and roaring dragons were formed you can only help your future investment endeavours.
After having a historical overview, then using the right model is, of course, the second most important thing. One reason why so many western advisors fail in Asia is that they brazenly try to apply western-oriented models to the east. That simply won’t fly. You couldn’t eat a whole steak with chopsticks, you cannot eat chow mein with a knife.
Along those lines, it is observed that North Asian countries were able to attain economic growth much faster than their Southeast Asian counterparts. We have applied the ACD or Asian Development Model to explain the reasons for the (growing) divide.
From our standpoint, without a nation properly initiating land and banking reform from the get-go, it’s very difficult, nay impossible, for them to apply further needed reform. Lacking critical reform, the movement between sectors – agriculture, manufacturing and services – both lags and is arduous.
From history and models, we’ve moved on to show how the hand above directs natural and human capital. This is of course the ruling government for each nation. Even when different parties can change, like in Thailand or Malaysia, or if it’s a one party system (China) the fact still remains that these are people of immense power attempting to enrich themselves, their families and their friends through their position.
The country is just something that has been inherited – by hook or by crook – and it is something to be used. That includes everything: rocks, rivers and people within the assigned borders.
As stated above, if a government is to succeed in growing the economy, land and banking reform needs to occur, thus allowing a country’s workforce to improve and natural capital to be better utilized.
Asia and all its commerce is growing at an intense pace – so it’s understandable that there are quite a number of stumbling blocks. As seen in our case study on Timor Leste, just dumping a ton of money into services doesn’t raise human capital overnight. Immense training, time and investment is needed.
Moving on, the creation of a central bank, and how it is this bank that holds all the real money in an economy, leads us into our next series of dailies. What we have in our physical wallets are just government-backed bits of debt.
Debt and credit are two things that, surprisingly, even those who work in the industry have trouble defining. Worry not, we’re here to uncover the truth behind the greatest economic driver the world has ever known.