Introduction
The term Asian Tigers or Asian Dragon refers to Taiwan, South Korea, Hong Kong and Singapore, which are highly developed economically. These nations got this name as a result of their ability to maintain a high economic growth rate of about seven percent every year. The nations were also characterized by a rapid rate of industrialization between the year 1960s and 1990s. The four nations later developed to a status of fully developed economies and advanced in their income to be high income economies. These countries participated in various areas of the economy that were competitive. For instance, Taiwan and Korea established themselves as giants in the manufacture of information technology globally while Singapore and Hong Kong became the world’s leading country in terms of financial centers. Kim (1998) observes that this success in terms of the growth and development of the economies in the four countries served as indicators and examples to vary many countries that were and are in the verge of developing. The four countries referred to as the Asian Tigers underwent super changed growth in their economies over decades. This was mooted by the industrial policies that they had that had a lot of support for the exports to the industrialized nations which were rich. This fact was underlined by the World Bank when it acknowledged the role played by policies in the financial sector. The four economies therefore enjoyed a high rate of economic growth that they were able to sustain over decades. (Woo-Cumings, 1999)
The growth of the ‘Asian Tigers’ in the 1960’s
The growth of the Asian Tigers was at its peak in the 1960s. During this period, the four countries had invested highly in human capital and the physical development aspects more than all the other countries that had a similar development level as them. The effect of this investment ultimately led to the level of per capita income growing rapidly. In these countries, the human capital played a vital role in the growth of the economies just as well as the high levels of investments. Education was also instrumental in the growth of the economies and was cited as having an effect in the Asian miracle. During that period, the four Asian countries registered a very high level of enrollment in education that was even higher than the level that was predicted to be able to be accommodated by the income. The universal primary education was achieved by the four countries by the year 1965.
How they achieved the growth
The Asian Tigers’ economic growth is basically tied on their export policies. The approaches that they took differed in the four countries but had a great impact on the growth of their economies. Singapore and Hong Kong had neoliberal trade regimes introduced. This encouraged free trading hence the growth of the economies. Taiwan and South Korea on the other end had a mixture of regimes that accommodated the industries for their export. Singapore and Hong Kong had their domestic prices linked to the international markets due to their domestic market being small. There were introductions of incentives in exports by both Taiwan and South Korea especially for the sector of traded goods. The Taiwan, South Korea and Singapore governments also worked on the promotion of exporting industries specifically to foster a push as a strategy in exporting their countries’ strategies. These policies were instrumental in the achievement of the constant and stable 7.5 percent economic growth in the four countries throughout the decades. This therefore led to the achievement of the developed country status by each of the four Asian Tigers. (Sung, 2006)
The four countries followed a similar development path in the 1960s, with emphasis being laid on the import substitution. The four countries managed to raise the primary industry by placing very high taxes on imports. This had a positive impact on the economy as the local industry got a chance to flourish. These countries worked towards industrialization and the development that was aimed at penetrating into the markets of North America and Europe, which had very high industrialized economies. The countries’ political systems were also non democratic hence they could easily make plans and implement them. The labor force was sophisticated through education as primary and secondary school education was made compulsory to all the students. The countries extensively invested in university education and made the foreign university accessible to the students in the countries. The period of economic growth was further characterized by a discouragement of trade organizations as there was more reaffirmation on the security of jobs by the workers in the four countries. The land owners were also assured of security of tenure of the lands they owned, thus, the people were overtly encouraged to invest in their lands without fearing any negative consequences attributed to loss of land or land grabbing. Notably, all the tiger countries were influenced by China. For instance, South Korea had 65% Chinese influence, Singapore had 75% influence from China, Hong Kong had 95% while Taiwan was 98% influenced by China.
This period of growth in the Asian Tigers was referred to as the economic miracle period. The term economic miracle was used to refer to great change that conduits dramatic economic development and growth period especially that was undergone by the four Asian Tigers in the 1960s all the way to the 199s. This miracle in their economies was majorly driven by the shift to an economy that was more export driven that target the nations that were highly industrialized in America and Europe.
Criticism in the Asian Tigers’ growth model
There has been criticism directed on the model of growth of the tigers. This criticism has been based on the fact that the tigers have centralized on import substitution as a way of getting self sufficient. The policies of targeting the external market at the expense of satisfying their own customers’ markets have been criticized. This criticism was at its peak when there was loss of the neighboring markets which were competitive. This saw a loss of the Chinese, Indian and the South East Asian markets. This rapid growth in the economy led to the over valuation of the prices of products in the market. This eventually led to the crash and fall of most of the stock markets and shares. This eventually took a toll on their economies and was further fuelled by the economic crisis which forced most of the countries to lend from the International Monetary Fund. Environmental concerns were raised as characterized by the growth of industrialization. The educational opportunity and requirements led to the women pursuing careers, thus, leading to the decline of birth rate hence the population of the four countries were majorly comprised of the aging people.
Decline in the growth currently
The Asian Tigers are currently not growing as fast as they grew in the period between 1960s and 1990s. This can be attributed to several factors which took a toll on the economies of the countries. These factors are either internally or externally driven.
1997 Asian Crisis
The four Asian Tigers’ economies were hard hit by the 1997 Asian crisis. According to Ariff & Khalid (2000), the worst hit was South Korea, which led to a swelling of its financial debt burden. This led to a 35 percent to 50 percent fall in its currency. In the start of the year 1997, there was a fall in the stock markets of South Korea, Singapore and Hong Kong that led to a 60% loss in the countries in terms of dollars. The four Asian Tigers struggled to rise in order to recover from the crisis by increasing their saving rates. However, there was another crisis yet again.
The 2008 Financial Crisis
The economies of the four Tiger nations were highly dependent on the American consumption as they were exporting products to the Americans. The financial crisis of 2007 and 2008 therefore greatly disadvantaged the four countries. This led to the fall of the GDP of the four nations at a rate of 15% annually. The exports that came from the four countries also fell by a rate of 50%. The domestic demand in the four countries also fell, leading to a difficulty in the recovery of the effects of the recession. The two crises have taken a great toll on the economies of the four Asian Tigers. Despite the fact that the countries have struggled to recover fully, it has been a great challenge that they have not come over. This is the reason as to why that rapid development rate of economical growth in the four Asian Tigers has declined. (Boyes & Melvin, 2011)
Possible policy decisions undertaken to bring the economies out of the doldrums
The four Asian Tigers, just as other countries in the world, have strongly come out to pull themselves out of the recession effects. The respective governments have taken fiscal stimulus measures to see into it that the situation is salvaged. Through the fiscal stimulus, the countries’ GDP has been developing at a 4% rate. The countries also have bounced back as a result of modest corporate debts and household debts. (Lee, 1998)
Economy of South Korea verses China
South Korea, being among the Asian Tigers, is ranked 15th in the nominal GDP in terms of its market economy. It is ranked at position twelve courtesy of the purchasing power parity. Subject to its economy, South Korea is included among the G 20 major global economies. It is the only developed country that has since been included into the category of countries referred to as the Next Eleven. South Korea was among the world’s fastest growing economies in between the 1960s and the 1990s and is still regarded as one of the fastest growing countries that are developed. On the other side, China boasts of being in the second position globally in terms of economy by the nominal GDP. Its purchasing power parity is second to that of the United States of America. Unlike South Korea, China is major economy that is currently the fastest growing with an average growth rate of approximately 10% in the last thirty years. China is ranked first in terms of exports and second as far as importation of goods is concerned. Its nominal GDP makes it be at the 90thposition. (Sharma, 2003)
Work cited
Ariff, K. & Khalid, A. Liberalization, Growth, and the Asian Financial Crisis: Lessons for Developing and Transitional Economies in Asia. UK: Edward Elgar Publishing, 2000
Kim, H. The Four Asian Tigers: Economic Development and the Global Political Economy. Academic Press, 1998
Lee, E. The Asian Financial Crisis: The Challenge for Social Policy. Geneva: International Labour Organization, 1998
Sharma, S. The Asian Financial Crisis: New International Financial Architecture: Crisis, Reform and Recovery. New York: Manchester University Press, Oct 3, 2003
Sung, J. Explaining the Economic Success of Singapore: The Developmental Worker As the Missing Link. Massachusetts: Edward Elgar Publishing, 2006
Woo-Cumings, M. The Developmental State. New York: Cornell University Press, 1999
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