What is a Tiger Economy?
A Tiger Economy is a term used to define several booming economies in Southeast Asia. The Four Asian Tigers, also known as the Asian Dragons, typically include Hong Kong, Singapore, South Korea, and Taiwan, that have consistently maintained high levels of economic growth since the 1960s, and have together joined the ranks of the world’s richest economies.
The Asian Tigers have transitioned from predominantly agricultural economies to industrialized nations. The economic growth in each of the countries is typically export-led but with sophisticated financial and trading markets. Singapore and Hong Kong are among the foremost global financial centers, while Taiwan and South Korea are essential hubs for the global manufacturing of automobile and electronic components, as well as information technology.
Sometimes, China is mentioned as an Asian tiger, but it has separated itself from the pack to become one of the most important economies of the world. The Asian cub economies, which have developed more slowly than the tigers but have experienced rapid growth over the last several years, include Indonesia, Malaysia, Thailand, Vietnam, and the Philippines.
The emergence of the Four Tiger Governments
The world economic growth began taking off during the early 1960s after World War II and the Korean War in the early 1950s. A significant increase in air telecommunications and air travel combined with probable world peace indicated that world economies were opening up their borders and thus the Asian Tigers took advantage of this opening. All the Four countries had viable trade economies, high literacy levels, established ports, and advanced infrastructure inherited from their colonial masters.
Owing to this development, the Asian Tigers took advantage of their position. Since they were quite poor in the 1960s, these countries had plenty of cheap labor. Coupled with educational restructuring, they were smart to leverage this amalgamation into a low-cost, yet industrious labor force. Each country among the four devoted to social equality in terms of land reforms, promotion of property rights, and welfare of agricultural workers. In a short while, products and services from these nations were in high demand.
A booming stock market had already begun in 1891 in Hong Kong; thus it was reasonable when it shifted to financial services from the export market. Hotly followed by Singapore, the two tiny nations are currently among the most prominent global financial centers. During that interval Taiwan and South Korea were driving the 1980s -1990s tech boom, nowadays Taipei and Seoul are leaders in cutting-edge technology and also home to the biggest names in electronics. These advancements happened so quickly and hence the nickname ‘The Asian Miracle‘. The basis of this Asian miracle was the institution of a particular macroeconomic setting. Each Asian Tiger coped with the three variables of the financial system in budget deficits, exchange rates, and external debt to various levels of accomplishment. The Four Asian Tigers’ financial plan arrears were kept close to the ground limits in that it couldn’t interfere with the macroeconomy. External debts were also not in existence apart from South Korea whose high borrowing levels were canceled by elevated exportation.
Understanding the Tiger Economies
With the injection of huge amounts of foreign investment, the Asian tiger economies grew substantially between the late 1980s and early- to mid-1990s. The nations experienced a financial crisis in 1997 and 1998, which, in part, stemmed from huge debt-servicing expenses and inequitable distribution of wealth. The majority of these countries’ wealth remained in the control of an elite few. Since the late 1990s, the tiger economies have recovered relatively well and are major exporters of goods like technology and electronics. The Four Tigers share various characteristics, including an emphasis on exports, high savings rates, an educated population, and a growing standard of living.
Many of these tiger economies are deemed to be emerging economies. These are economies that generally don’t have the level of market efficiency and strict standards in accounting and securities regulation as many advanced economies (such as the United States, Europe, and Japan). However, emerging markets do usually have a financial infrastructure, including banks, a stock market, and a unified currency. For example, the Asian tiger economies have import restrictions to assist promote the development of local industries and boost export-led GDP growth. However, Singapore and Hong Kong have begun to normalize trade by allowing a rise in the free trade of goods and services.
The Four Asian Tigers
From 1966 to 1990, while real income per person was growing about 2 percent per annum in the United States, it grew over 7 percent per annum in each of these countries. In the course of a single generation, real income per person increased fivefold, moving the Tigers from among the world’s poorest nations to among the wealthiest. The economies of the Four Dragons have proven resilient enough to withstand local crises like the Asian financial crisis of 1997 and global shocks like the credit crunch of 2008. The International Monetary Fund includes the Four Asian Tigers in its list of 35 most advanced economies.
Hong Kong’s economic growth began to pick up during the 1950s, therefore, becoming the first of the East Asian Tigers. Encouraging tax incentives and low-priced labor allured many large and mid-sized companies to invest in Hong Kong. Therefore, the 1970 and ’80s was a phase of construction, with housing development, skyscrapers, and rail user trains being financed by the new-found riches. Hong Kong’s GDP between 1961 to 1997 grew by 180 times making the country one of the wealthiest nations in the world. A supportive regime, lack of public debt, and stringent regulations showcase that the country is placed well for continued growth despite a less impressive rate.
In the 1960s, South Korea’s per capita GDP was comparable to the poorest countries in Asia and Africa. However, in the following four decades, South Korea switched from an agrarian society by embracing robotics, software development, and electronics. This policy was successful as the country observed substantial growth, affected partly by a system of close government, directed credit, and import restrictions. South Korea, a contemporary economy that has developed into one of the most prosperous Asian economies, is also home to Hyundai Motor Company and exports over $60 billion in vehicles annually.
Although Singapore has one of the smallest populations–with just over 5 million people– the Dragon has delivered consistent growth over the years. Deemed one of the least corrupt nations in the world, Singapore features a notoriously transparent regulatory environment and well-secured property rights, which give valuable commercial security to its private sector. Singapore has developed into a financial center, in particular, hosting a large foreign exchange trading market. Singapore exports electronic circuit boards, petroleum products, and turbojets. Singapore is one of the smallest nations but has the highest GDP amongst the Tigers.
The proximity of Taiwan to China has provided a leeway for economic development. Despite its litigious association with China, Taiwan has thrived over the last four decades. Due to pressure from China, the country isn’t a part of the United Nations, but it has nevertheless emerged as a prominent exporter. The country has over 24 million people and is home to the manufacturer of Apple’s most notable products. The Tiger also exports computers, electrical machinery, plastics, medical devices, and mineral fuels. Taiwan might not be the richest ‘tiger’; however, it has possibly gone through the most remarkable growth.
Lessons learned from the economic growth of the four Asian Tigers
It is debatable that the Four Asian Tigers benefited from being positioned at the proper places and time, world war II had come to an end, imperialism was drawing to a close, and proliferation needed at least one economically powerful Asian business center.
Alternatively, without anyone knowing, the ‘miracle’ intensification of these four countries was principally attributed to excellent governance. Each of the Four Tigers has placed anti-corruption measures and firm directives, while conventional economic arrangements have permitted each country to remain away from public debt and increase large reserves of savings and capital. These actions preordained that, when predicament hit, they only had a minimal effect, and recovered immediately when the markets did well again.
Also, the benefaction of China was a hugely significant factor in four countries. China has undergone an impressive economic revolution over the past five decades, and the Tigers have been able to benefit from this via the Chinese investment while being ambitious to create paths of their own.
The economic growth of a nation depends on its economic guidelines and the facilitation of an export-leaning trade. The Four East Asian governments benefited from these strategies and institutions of free trade and it is no shocker that the four countries now have the urbanized state status.
The Asian economic crisis of 1997 affected all the Four Asian Tigers. The worst-hit was South Korea, which depended on external loans, as it affected its currency when it fell to as low as 50%. Losses in Hong Kong, South Korea, and Singapore were as low as 60% in terms of dollars. The Dragons, however, recovered from this calamity more quickly than usual. The four Asian Tigers are currently well-placed in the global economic rankings and provided that they remain on persisting on what they have always endeavored to, there is every reason to consider that they will continue to be economically sound for a long time.