Asian Tigers or Dragons is a term used to describe the highly developed economies of Hong Kong, South Korea, Singapore and Taiwan. The term started to be commonly used in the 1970s. The countries are groups in this way since the 1960s because they all followed a similar path to development and went on to reach frilly developed status. In this chapter, we shall examine the economic history of the Asian Tigers (1960 to 2000), review the development strategies and discuss the lessons for the Nigerian economy.
The conventional step taken to kick start development in the 1960’s was to implement import substitution. This involved raising tarries to reduce the imports of consumer goods and thereby allowing a country’s own industries to develop and stabilize. The Asian Tigers, however, decided to capitalist on the growing materialistic attitude developing in much of Europe and North America and so pursued an export-driven model of industrialization and development instead and this was achieved by rapidly increasing the production of goods that could be exported to the highly industrialized nations of the world.
These four countries have experienced very rapid growth and have had many things in
common some of which are:
- All four territories had a strong degree of Chinese influence, with most having a large ethnic Chinese community. Singapore had a population that included 75% ethnic Chinese, Hong Kong had 95%, Taiwan had 98% and South Korea 65%.
- They were relatively poor during the 1960’s and had an abundance of cheap labour.
- They had non-democratic and relatively authoritarian political systems during the early years. so the governments could easily drive though their plans for economic
They focused their development drive on exports to richer industrialised nations rather than focusing on import substation, which meant that they built up trade surpluses with the industrialized countries.
The Tigers singled out education as a way of improving the productivity of the labor force and so they ensured that all children attended primary and secondary school. They then went on to invest heavily in the development of their university systems and in sending students to foreign universities.
Domestic consumption and purchase of consumer goods was discouraged at first and this was done by placing a high tariff on imports. This high tariff on imports led to the encouragement of high saving rates which then allowed for specific areas industrious be invested in.
Trade unions were discouraged and in their place, governments encouraged managers to provide job security and other benefits in a paternalistic type of industrial organisation.
They all sustained double-digit rates for growth for decades.
While industry was developing, agriculture was protected by subsidies and tariff on non-essential imports. Land reforms were created to ensure that small and sensitized farmers had security of tenure, which in turn, encouraged them to invest in their land. This resulted in a cease in rural discontent and also allowed investment in the mechanization of agriculture which released rural workers from the land and enabled for further industrialization to occur.
Prior to the 1997 Asian financial crisis, the growth of these four Asian Tigers economizer (commonly referred to as, “The Asian Miracle”) has been attributed to export oriented policies and strong development policies. Unique to these economies were sustained rapid growth and high levels of equal income distribution. A World Bank report suggests two I development policies among others as sources for the Asian miracle: factor accumulation and macroeconomic management.
By the I 960s, investment levels in physical and human capital among st the four I countries far exceeded other countries at similar levels of development. This subsequently led to a rapid growth in per capita income levels. ‘While high investments were essential to the economic growth of these countries, the role of human capital was also important. Education in particular four Asian Tigers were higher than predicted given their level of income. By 1965, all four nations had achieved universal primary education. South Korea in particular had achieved a secondary education enrollment rate of 88% by I 987 There was also a notable decreased in the gap between male and female enrollments during the Asian ! miracle. Overall these progresses in education allowed for high levels of literacy and cognitive skills.
The creation of stable macroeconomic environments was the foundation upon which the Asian miracle was built. Each of the four Asian tiger states managed, to various degrees of success, three variables in: budget deficits, external debt and exchange rates. Each tiger nation’s budget deficits were kept within the limited of their financial limits, as to not destabilize the macroeconomic. South Korea in particular had deficits lower than the OECD average in the 1 980s. External debt was non-existent for Hong Kong, Singapore and Taiwan, as they did not borrow from abroad. While South Korea was the exception to this as their debt levels during 1980-1985 was quite high compared to their GNP ratios, it was sustained by the country’s high levels of export. Exchange rates in the four Asian tiger nations had been changed from long-term fixed rate regimes to fixed-but-adjustable rate regimes with the occasional step devaluation of managed floating rate regimes. This active exchange rate management allowed the four tiger economies to avoid exchange rate appreciation and maintain a stable real exchange rate.
Export policies have been the major reason for the rise of these four Asian Tiger economies. The approach taken has been different among the four nations. Hong Kong, and Singapore introduced trade regimes that were illiberal in nature and encouraged free trade, while South Korea and Taiwan adopted mixed regimes that accommodated their own export industries. In international prices. South Korea and Taiwan introduced export incentives for the traded-goods sector. The governments of Singapore, South Korea and Taiwan also worked to promote specific exporting industries, which were termed as an export push strategy. All these policies helped these four nations to achieve a growth averaging 7.5% each year for three decades and as such they achieved developed country status.
This method of development seems to have worked for the four Asian Tigers at the start
of the 21St century, they had all reached high positions in the ranking of countries by total GDP but is this path to development applicable to other countries or, in fact, should
developing countries be encouraged to use the Tigers as role-models and therefore mirror Hemingway which they developed?
Well the Asian Tigers have received quite a bit of criticism from economists and
geographers and their development has not been as smooth as it may first sound.
The biggest criticism they have faced is focused on the fact that they have relied on exports, at the cost of home demand, to develop. This has left the Tigers incredibly reliant on the economic health of their targeted export nations — a very risky factor to rely on! Their early development was also based on the utilization of their abundant cheap labor force; which has now been rivaled and surpassed by the likes of China and India; who are arguably emerging as almost like the new tigers as they have incredibly fast growing economies.
However, fast expansion of a country’s economy is not necessarily a good thing and, in the 1990’s, the Four Asian Tigers learnt this lesson the hard way. Their economies had expanded so fast (too fat in reality) that their growth provoked the prices of properties, stocks and shares to become overvalued. This caused several of the stock markets to collapse, thereby creating a worldwide financial crisis. After much social unrest and political instability the Tigers had to receive help from the International Monetary Fund.
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