Question

What are the main reasons for the rapid expansion of the Asian middle class?

Why did Asia attract large capital inflows during the early-mid 1990s? Explain the impact on asset markets.

Answer 1

Main reasons for rapid expansion of Asian middle class was-

A.Asian economy was under developed economy and when it begin to develop, the income of the people started to grow.

B. there were number of foreign direct inflows into the Asian economies which would help the economic development of Asia.

C.there were increase in the disposable income of the people in the Asian economy and that propelled them to rise from lower level to middle level.

D.lot of stimulus which has been provided by the domestic government in order to enhance the income of the lower class helped them in to grow to middle class.

E. Relative strength of domestic currencies of the countries in Asia in relation with major currencies of the world.

Asia saw large capital inflows during early to mid 1990 because there were large under penetration in the Asian economy and when they begin to develop, there were large amount of capital appreciation potential in the economy of Asia, so large number of foreign investors were investing into these markets in order to maximize their overall rate of return so Asian economy like Japan and China attracted a large number of investment and helped outside investors to enhance their overall rate of return on investment.