Four Asian Tigers

Four Asian Tigers
A map showing the Four Asian Tigers Hong Kong Singapore South Korea Taiwan
Chinese name
Traditional Chinese	亞洲四小龍
Simplified Chinese	亚洲四小龙
Literal meaning	Asia's Four Little Dragons
Transcriptions Standard Mandarin Hanyu Pinyin Yàzhōu sì xiǎo lóng Tongyong Pinyin Yàjhōu sìh siǎo lóng Wade–Giles Yachou szu hsiao lung Yale Romanization Yàzhōu sz̀ syǎu lúng Yue: Cantonese Jyutping aa3 zau1 sei3 siu2 lung4 Yale Romanization aa jāu sei síu lòhng Southern Min Hokkien POJ A-chiu Sì-sió-lêng
Korean name
Hangul	아시아의 네 마리 용
Literal meaning	Asia's four dragons
Transcriptions Revised Romanization asia ui ne mari yong McCune–Reischauer asia ŭi ne mari yong

The Four Asian Tigers or Four Asian Dragons is a term used in reference to the highly free-market and developed economies of Hong Kong, Singapore, South Korea, and Taiwan. These nations and areas were notable for maintaining exceptionally high growth rates (in excess of 7 percent a year) and rapid industrialization between the early 1960s (mid-1950s for Hong Kong) and 1990s. By the 21st century, all four had developed into advanced and high-income economies, specializing in areas of competitive advantage. For example, Hong Kong and Singapore have become world-leading international financial centers, whereas South Korea and Taiwan are world leaders in manufacturing information technology. Their economic success stories have served as role models for many developing countries, especially the Tiger Cub Economies.

Despite a World Bank report crediting neoliberal policies with the responsibility for the boom, including maintenance of export-led regimes, low taxes, and minimal welfare states, institutional analysis also states some state intervention was involved. The World Bank report acknowledged benefits from policies of the repression of the financial sector, such as state-imposed below-market interest rates for loans to specific exporting industries. However, it also pointed out free trade and less government spending were the driving force. As a result, these economies enjoyed extremely high growth rates sustained over decades. Other important aspects include major government investments in education, non-democratic and relatively authoritarian political systems during the early years of development, high levels of U.S. bond holdings, and high public and private savings rates. However this is highly debated, and many have argued that industrial policy had a much greater influence than the World Bank report suggested.

A period of liberalization did occur, and the first major setback experienced by the Tiger economies was the 1997 Asian financial crisis. While Singapore and Taiwan were relatively unscathed, Hong Kong came under intense speculative attacks against its stock market and currency necessitating unprecedented market interventions by the state Hong Kong Monetary Authority, and South Korea underwent a major stock market crash brought on by high levels of non-performing corporate loans. As a result, and in the years after the crisis, all four economies rebounded strongly. South Korea, the worst-hit of the Tigers, has managed to triple its GDP per capita in dollar terms since 1997.

Overview

Prior to the 1997 Asian financial crisis, the growth of these four Asian tiger economies (commonly referred to as "the Asian Miracle") has been attributed to export oriented policies and strong development policies. Unique to these economies were the sustained rapid growth and high levels of equal income distribution. A World Bank report suggests two development policies among others as sources for the Asian miracle: factor accumulation and macroeconomic management.

Hong Kong's economy was the first out of the four to undergo industrialization with the development of a textile industry in the 1950s. By the 1960s, manufacturing in the British colony had expanded and diversified to include clothing, electronics and plastics for export orientation. Following Singapore's independence from Malaysia, the Economic Development Board formulated and implemented national economic strategies to promote the country's manufacturing sector. Industrial estates were set up and foreign investment was attracted to the country with tax incentives. Meanwhile, Taiwan and South Korea began to industrialize in the mid-1960s with heavy government involvement including initiatives and policies. Export-orientated industrialization as in Hong Kong and Singapore was followed by both countries.

By the end of the 1960s, levels in physical and human capital amongst the four 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 is cited as playing a major role in the Asian miracle. The levels of education enrollment in the 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 1987. There was also a notable decrease 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 limits of their financial limits, as to not destabilize the macro-economy. South Korea in particular had deficits lower than the OECD average in the 1980s. External debt was non-existent for Hong Kong, Singapore and Taiwan, as they did not borrow from abroad. Although South Korea was the exception to this - its debt to GNP ratio was quite high during the period 1980-1985, it was sustained by the country’s high level of exports. 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 steep devaluation of managed floating rate regimes. This active exchange rate management allowed the 4 tiger economies to avoid exchange rate appreciation and maintain a stable real exchange rate.

Export policies have been the de facto 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 neoliberal in nature and encouraged free trade, while South Korea and Taiwan adopted mixed regimes that accommodated their own export industries. In Hong Kong and Singapore, due to small domestic markets, domestic prices were linked to 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.

1997 Asian financial crisis

The 1997 Asian financial crisis had an impact on all of the four Asian tiger economies. South Korea was hit the hardest as its foreign debt burdens swelled resulting in its currency falling between 35-50%. By the beginning of 1997, the stock market in Hong Kong, Singapore, and South Korea also saw losses of at least 60% in dollar terms. However, four Asian tiger nations recovered from the 1997 crisis faster than other countries due to various economic advantages including their high savings rate (except South Korea) and their openness to trade.

2008 financial crisis

The export-oriented economies of the four Asian tiger nations which benefited from American consumption, were hit hard by the financial crisis of 2007–08. By the fourth quarter of 2008, the GDP of all four nations fell by an average annualized rate of around 15%. Exports also fell by a 50% annualized rate. Weak domestic demand also affected the recovery of these economies. In 2008, retail sales fell 3% in Hong Kong, 6% in Singapore and 11% in Taiwan.

As the world recovers from the financial crisis, the four Asian tiger economies have also rebounded strongly. This is due in no small part to each country’s government fiscal stimulus measures. These fiscal packages accounted for more than 4% of each country's GDP in 2009. Another reason for the strong bounce back is the modest corporate and household debt in these four nations.

A recent article published in Applied Economics Letters by Financial Economist Mete Feridun of University of Greenwich Business School and his international colleagues investigates the causal relationship between financial development and economic growth for Thailand, Indonesia, Malaysia, the Philippines, China, India and Singapore for the period between 1979 and 2009, using Johansen cointegration tests and vector error correction models. The results suggest that in the case of Indonesia, Singapore, the Philippines, China and India financial development leads to economic growth, whereas in the case of Thailand there exists a bidirectional causality between these variables. The results further suggest that in the case of Malaysia, financial development does not seem to cause economic growth.

Gross domestic product (GDP)

In 2013, the combined economy of the Four Asian Tigers constituted 3.81% of the world's economy with a total Gross Domestic Product (GDP) of 2,366 billion US dollars. The GDP in Hong Kong, Singapore, South Korea and Taiwan was worth 274.01 billion, 297.94 billion, 1,304.55 billion and 489.21 billion US dollars respectively in 2013, which represented 0.44%, 0.48%, 2.10% and 0.79% of the world economy. (Source: tradingeconomics.com) Together, their combined economy is close to United Kingdom's GDP of 4.07% of the world's economy.

Cultural basis

The role of Confucianism has been used to explain the success of the Four Asian Tigers. This conclusion is similar to the Protestant work ethic theory promoted by German sociologist Max Weber in his book The Protestant Ethic and the Spirit of Capitalism. The culture of Confucianism is said to have been compatible with industrialization because it valued stability, hard work, and loyalty and respect towards authority figures. There is a significant influence of Confucianism on the corporate and political institutions of the Asian Tigers. Confucianism was taught in Singaporean schools until the 1990s. Confucian seminars were offered by South Korean companies like Hyundai for company management. Prime Minister of Singapore Lee Kuan Yew advocated Asian values as an alternative to the influence of Western culture in Asia. This theory was not without its critics. There was a lack of mainland Chinese economic success during the same time frame as the Four Tigers, and yet China was the birthplace of Confucianism. During the May Fourth Movement of 1919, Confucianism was blamed for China's inability to compete with Western powers.

Territory and region data

Demographics

Country or territory	Area km²	Population	Population density per km²	Population of capital city
Hong Kong	1,104	7,234,800	6,544	7,234,800
Singapore	718.3	5,469,700	7,615	5,469,700
South Korea	100,210	51,302,044	490	10,143,645
Taiwan	36,193	23,373,517	644	2,647,122

Economy

Country or territory	GDP nominal millions of USD (2013)	GDP PPP millions of USD (2013)	GDP nominal per capita USD (2013)	GDP PPP per capita USD (2013)	Trade millions of USD (2011)	Exports millions of USD (2011)	Imports millions of USD (2011)
Hong Kong	274,027	382,529	37,955	52,984	944,800	451,600	493,200
Singapore	297,941	425,251	55,182	78,762	818,800	432,100	386,700
South Korea	1,304,468	1,696,996	25,975	33,791	1,084,000	558,800	525,200
Taiwan	489,089	970,909	20,925	41,539	623,700	325,100	298,600

Quality of life

Country or territory	Human Development Index (2014)	Income inequality by Gini coefficient	Median household income (2013), USD PPP	Median per-capita income (2013), USD PPP	Global Well Being Index (2010), % thriving
Hong Kong	0.891 (15th)	43.4	35,443	9,705	19%
Singapore	0.901 (9th)	47.8	32,360	7,345	19%
South Korea	0.891 (15th)	31.1	40,861	11,350	28%
Taiwan	0.882 (2011, 22nd)	34.2	32,762	6,882	22%

Technology

Country or territory	Average Internet connection speed (2014)	Smartphone usage (2013)
Hong Kong	13.3 Mbit/s	62.8%
Singapore	8.4 Mbit/s	71.7%
South Korea	23.6 Mbit/s	73.0%
Taiwan	8.9 Mbit/s	50.8%

Politics

Country or territory	Democracy Index (2012)	Press Freedom Index (2013)	Corruption Perceptions Index (2012)	Current Political Status
Hong Kong	6.42	26.16	77	Special Administrative Region of the People's Republic of China
Singapore	5.88	43.43	87	Parliamentary Republic
South Korea	8.13	24.48	56	Presidential Republic
Taiwan	7.57	23.82	61	Semi-Presidential Republic (but claimed by PR China as a renegade province to be taken back by force if necessary)

Organizations and groups

Country or territory	UN	WTO	OECD	DAC	APEC	ADB	SEACEN	G20	EAS	ASEAN
Hong Kong	N	Y	N	N	Y	Y	N	N	N	N
Singapore	Y	Y	N	N	Y	Y	Y	N	Y	Y
South Korea	Y	Y	Y	Y	Y	Y	Y	Y	Y	Y (APT)
Taiwan	N	Y	N	N	Y	Y	Y	N	N	N

See also

• Developed country
• The Pacific Pumas
• Economic miracle (full list of miracles and "tigers")
• Tiger Cub Economies
• Asian Century
• Pacific Century
• Celtic Tiger
• Baltic Tiger
• BRIC and BRICS
• MINT (economics)
• G-20 major economies
• Newly industrialized country
• Gulf Tiger
• Korean Wave
• Miracle on the Han River
• Taiwan Miracle
• Nylonkong

References

John Page, "The East Asian Miracle: Four Lessons for Development Policy". The World Bank. National Bureau of Economic Research. Vol. 9. (Cambridge, MA: MIT Press, 1994).

"Troubled Tigers; Asian Economies". The Economist. Vol.390. Issue 8616. (London, US:The Economist Intelligence Unit, 2009)

Further reading

• Ezra F. Vogel, The Four Little Dragons: The Spread of Industrialization in East Asia (Cambridge, MA: Harvard University Press, 1991).

External links

• BBC report on the Asian Tigers in the aftermath of the 1997 Financial Crisis (includes map of the Asian Tigers)
• ASEAN tigers
• The Elephant at the Gate in China Economic Review