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Revision as of 01:50, 25 June 2006 by A rat tat tat yo bass (talk | contribs)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)The term East Asian Tigers (simplified Chinese: 亚洲四小龙; traditional Chinese: 亞洲四小龍; pinyin: Yǎzhōu sì xiǎo lóng (lit. Four Asian Dragons)) refers to the economies of Hong Kong, Taiwan, Singapore, and South Korea. They are also known as Asia's Four Little Dragons These countries and territories were noted for maintaining high growth rates and rapid industrialization between the early 1960s and 1990s.
The four Tigers pioneered what has come to be seen as a particularly "Asian" approach to economic development. Key differences include initial levels of education and physical access to world markets (in terms of transport infrastructure and access to coasts and navigable rivers, which are essential for cheap shipping).
Characteristics of the Tiger economies
The East Asian Tigers pursued an export-driven model of economic development; these countries and territories focused on developing goods for export to highly-industrialized nations. Domestic consumption was discouraged through government policies such as high tariffs. 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.
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 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 East Asian Tigers are:
- Focused on exports to richer industrialized nations
- Trade surplus with aforementioned countries
- Sustained rate of double-digit growth for decades
- Non-democratic and relatively authoritarian political systems during the early years
- Undervalued currencies
- High level of U.S. treasury bond holdings
- High savings rate
- A high degree of what is referred to as economic freedom. Hong Kong, Singapore, Taiwan and South Korea are 1st, 2nd, 37th, and 45th respectively on the Heritage Foundation's Index of Economic Freedom.
Economic success in Japan, followed by the baby east Asian Tigers, has been attributed to the existence of harmonious labor-management relations. “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 1819 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.
Japanese experience appears to challenge unilinear theories of modernization, and to suggest that Japan’s uniqueness lies in the creation of her 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 tradtions 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 "Industrial Harmony" is the foundation ("Grund" as it used to be) of "Asian Political economy".
Criticism of the export-driven trade model
The East 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 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. 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. In addition, these nations have met difficulties after they lost their initial competitive edge, cheap productive labour. India and China have now emerged as fast-growing economies based on cheap labour, largely replacing the Tigers.
Asian Financial Crisis
In the aftermath of the 1997 Asian Financial/Economic Crisis, many so called 'Asian Tigers' countries suffered deep depreciation of their currencies, stock market prices declined and social and political unrest. This was due to the withdrawal of foreign and domestic capital out of the East Asian countries such as Thailand, Malaysia, Taiwan, Hong Kong, Singapore, South Korea, and the Philippines. Prior to the financial crisis, all the Asian economies were enjoying very high economic growth, high interest rates to attract foreign investments.
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. Malaysia maintained a currency peg to the US Dollar. The 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 and India, they will have to create new industries, move up the value-add chain and create stronger services sectors in their economies.