Transcript Newly Industrialized Countries

Newly Industrialized Countries
Asia’s Economic Tigers
Important Terms for Review
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Exports – goods to be traded outside of a
country
Free trade -- trade that occurs without
government controls.
Good -- any kind of product.
Imports – goods brought into a country
Newly industrialized country (NIC) -- a
country that is in the stage between being a
relatively poor, developing nation and a
relatively rich, developed nation. A NIC is
progressing from labor-intensive to hightechnology-intensive industries.
Important Terms for Review
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Protectionism -- a general term used to describe
government actions designed to limit or eliminate
imports that compete with domestically produced
goods.
Quota -- a quantitative restriction on imports.
Tariff -- a tax on specific imports, which creates a
trade barrier by protecting domestic firms and
industries from foreign competition.
Trade -- the exchange of goods, services, and
information between nations or within a single
nation.
The East Asian Tigers, sometimes also
referred to as Asia's Four Little
Dragons, referred to the economies of
Taiwan, Hong Kong, South Korea, and
Singapore; these nations were noted for
maintaining high growth rates and rapid
industrialization between the early 1960s
and 1990s.
Characteristics of the Tiger
Economies
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The East Asian Tigers pursued an exportdriven model of economic development;
these nations focused on developing
goods for export to highly-industrialized
nations.
Domestic consumption was discouraged
through government policies such as high
tariffs.
Characteristics of the
Tiger Economies (cont)
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The East Asian Tigers singled out education as a
means of improving productivity; these nations
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.
Characteristics of the Tiger
Economies (cont)
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Since the East 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 East Asian Tigers committed to equality 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.
Common Characteristics of the Tiger Economies
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Focused on exports to rich industrialized nations
Sustained rate of double-digit growth for decades
Non-democratic and relatively authoritarian
political systems during the early years
High tariffs on imports
Undervalued currencies
Trade surplus
High level of U.S. Bond holdings
High savings rate
Problems with Export-driven Trade Model
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The East Asian Tigers were strongly
affected by the Asian Economic Crisis,
which impacted each Tiger to varying
degrees. While Taiwan was not as strongly
affected, South Korea was badly battered
by the crisis. Because of the focus on
export-driven growth, many of the Tigers
became caught up in a game of currency
devaluation.
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Problems with Export-driven Trade Model
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The current criticism of the East 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.
Problems with Export-driven Trade Model
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In addition, these nations have met
difficulties after their initial competitive
edge, cheap productive labor, no longer
exists, especially with the emergence of
India and China
Taiwan
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Taiwan has many
elements in place for
the successful
development of hightech and bio-tech
industries. These
include strong
intellectual property
protection, good
infrastructure and
networks, and ample
funding.
Hong Kong
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It was acquired by
Britain from China in
1897 as a result of
China's loss in the 1895
Sino-Japanese War.
The world's busiest
deep-water harbor
Banking capital of Asia
Hong Kong (cont)
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Hong Kong is one of the
most densely populated
regions in the world
with a population of
over 7 million.
Hong Kong still has a
dual Chinese and
English school system.
Hong Kong has a varied
mix of religions and all
major religions such as
Christianity, Hinduism,
Buddhism, Daoism, and
Islam
South Korea
Busan, South Korea
 11th largest economy in the world
 In the aftermath of WWII, GDP per capita was
comparable with levels in the poorest countries of Africa
and Asia. Then the Korea War made conditions in Korea
even worse.
 This success was achieved by a system of close
government-business ties, including directed credit, import
restrictions, sponsorship of specific industries, and a strong
labor effort.
South Korea (cont)
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The Asian financial crisis of
1997 exposed longstanding
weaknesses in South Korea's
development model,
including high debt/equity
ratios, massive foreign
borrowing, and an
undisciplined financial sector.
Korea's population is one of
the most ethnically and
linguistically homogeneous in
the world, with the only
significant minority being a
small Chinese community.
Seoul, South Korea
Singapore
Singapore
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Characterized by an export-oriented
economy, relatively equitable
income distribution, trade surpluses
with the United States and other
developed countries, and a
common heritage of Chinese
civilization and Confucian values.
The small island had no resources
other than its strategic location and
the skills of its nearly 2.7 million
people.
An incredibly clean city, nothing is
allowed to dull the shine - even
down to the banning of chewing
gum.
Singapore (cont)
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It has an economy characterized by a seemingly
paradoxical adherence to free trade and free markets in
combination with a dominant government role in
macroeconomic management and government control
of major factors of production such as land, labor, and
capital.
Other tiger economies
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Over time, the term Tiger has become
synonymous with nations that achieve high
growth by pursuing an export -driven trade
strategy. More recently, the Southeast Asian
nations of Indonesia, Malaysia, Philippines
and Thailand have often been considered
Tigers. The term is not limited to Asian
nations; Ireland has been called the Celtic
Tiger for its rapid growth in the 1990s, while
Estonia is known as the Baltic Tiger for its
presently high growth rates.