The dusk skyline of Singapore's town area before dusk.
The skyline of Taipei, Taiwan's capital city and financial center.
The term Four Asian Tigers or East Asian Tigers refers to the economies of Hong Kong, South Korea, Singapore, and Taiwan. These regions were noted for maintaining high growth rates and rapid industrialization between the early 1960s and 1990s. In the early 21st century, with the original four Tigers at fully developed status, attention has increasingly shifted to other Asian economies which are experiencing rapid economic transformation at the present time.
Abandoning import substitution, the model advocated in the developing world following the two world wars, the Four Asian Tigers pursued an export-driven model of economic development with the exportation of goods to highly-industrialized nations. Domestic consumption was discouraged through government policies such as high tariffs. The Four Asian Tigers singled out education as a means of improving productivity; these territories focused on improving the education system at all levels; heavy emphasis was placed on ensuring that all children attended elementary education and compulsory high school education. Money was also spent on improving the college and university system.
Since the Four Asian Tigers were relatively poor during the 1960s, these nations had an abundance of cheap labor. Coupled with educational reform, they were able to leverage this combination into a cheap, yet productive workforce. The Four Asian Tigers committed to egalitarianism in the form of land reform, to promote property rights and to ensure that agricultural workers would not become disgruntled. Also, policies of agricultural subsidies and tariffs on agricultural products were implemented as well.
The common characteristics of the Four Asian Tigers are:
- Developed economies with high GDP per capita and high HDI
- Focused on exports to richer industrialized nations
- Trade surplus with aforementioned countries
- Sustained rate of double-digit growth for decades
- High level of U.S. treasury bond holdings
- Motivated and skilled workforces
- High savings rate
- They undervalued their currencies
- Protected their markets by imposing high tariffs
- Authoritarian governments that maintained strong oversight on capital flows and transfers
- Governments that weren't very democratically Western in nature, but nevertheless politicians weren't greedy and corrupt[citation needed], and were efficient in investing in the nations' education, healthcare, housing, and infrastructure
- As of 2007, the world ranking of the GDP (nominal) of South Korea, Taiwan, Hong Kong, and Singapore are 13th, 24th, 37th, and 45th, respectively.
- As of 2007, the world ranking of the GDP per capita (nominal) of Singapore, Hong Kong, South Korea, and Taiwan are 21st, 26th, 28th, and 37th, respectively.
Role of traditional philosophies
Economic success in Japan, followed by the Four Asian Tigers, has been attributed to the existence of harmonious labor-management relations.( cf. W. Dean Kinzley, "Industrial Harmony in Modern Japan. The Invention of a Tradition", Routledge, London & New York, 1991). “Industrial Harmony” is this unique “Culture of harmony” that was consciously invented and developed over the last century in Japan. A semi-bureaucratic organization called the “Kyochokai” (The Co-operation and Harmony Society) was established in 1919 to meet the needs of an emerging industrial society. The “Kyochokai” took the lead in trying to define the values which would be suitable for a new Japanese-style industrial society, at the time of great social troubles in industrial Europe. The resulting "invented" tradition has played an important role in the evolution and character of Japanese economic values and behavior of social peace for economic development.[1]
Japanese experience appears to challenge unilinear theories of modernization, and to suggest that Japan’s uniqueness lies in the creation of its own kind of modernity, sharply divergent from that to be found in Western countries, and based paradoxically upon a reaffirmation of ancient Confucian values and native Japanese traditions of harmony, self-sacrifice and non-individualistic group striving in pursuit of a common cause. Japan’s emphasis on long-term growth, scrupulous market evaluation, and process engineering are all well regarded as important components of its economic development.
This is the foundation ("Grund" as it used to be) of "Asian political economy".
These places had strong industrial economies which set them apart from all other places in Asia.
Criticism of the export-driven trade model
The Four Asian Tigers were strongly affected by the 1997 Asian financial crisis, which impacted each Tiger to varying degrees. While Taiwan was not as strongly affected, South Korea experienced a major economic bust. However, following significant economic reforms, South Korea paid off its IMF debts within 3 years and resumed its role as the world's fastest growing economy, rising to join the top ten economies in the world by 2007. This achievement is often called the Second Miracle on the Han River. Taiwan, on the other hand, stayed as the 16th largest economy in the world. Because of the focus on export-driven growth, many of the Tigers became caught up in a game of currency devaluation. The current criticism of the Four Asian Tigers is that these economies focus exclusively on export-demand, at the cost of import-demand. Thus, these economies are heavily reliant on the economic health of their targeted export nations. In addition, these nations have met difficulties after they lost their initial competitive edge, cheap productive labour. China, India and much of Southeast Asia have now emerged as fast-growing economies based on cheap labour, largely replacing the Tigers.
Some economies were becoming overheated, stock prices were overvalued, property prices were sky-high and investors were jittery and nervous. Because of the structural weaknesses in the regulatory framework, once capital flight began, the stock market nosedived and the major Asian currencies depreciated significantly. This caused social unrest, political instability, regime change and financial bailing out by the International Monetary Fund. This also gave impetus to some Asian governments to impose capital controls to restrict currency outflows and maintain monetary and financial stability. Taiwan created legislation requiring all outgoing capital transfers to be declared. However, there were no direct restrictions.
Since the crisis most of the Tiger economies have become financially stable with resilient institutions and companies and regulatory frameworks in place to prevent another crisis. This has also shown many Asian governments that the easy and predictable prosperity of export-led growth and cheap labour costs won't last forever. To better compete with the emerging manufacturing giants like China they will have to create new industries, move up the value-add chain and create stronger service sectors in their economies.
See also
References
- ^ William Dean Kinzley (1991). Industrial Harmony in Modern Japan: The Invention of a Tradition, Routledge. ISBN 0415051673.
External links
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