The of the Korean War (1950-1953) were still felt

The
name of the “Four Asian Tigers”, sometimes also referred to as the “Four Asian
Dragons” was given to Hong Kong, Singapore, South Korea and Taiwan, or rather to
their economies. These nations saw rapid industrialization and had a steady
growth during the 1960s throughout the 1990s. The average growth rates in these
years were 6% for Hong Kong, Singapore, and Taiwan, and 7% for South Korea. The
images below show the evolution of Real GDP per capita for each country between
1960 and 2011. The average growth rates between these years are 5% for Hong
Kong and Singapore, and 6% for South Korea and Taiwan. Through these
estimations, we see the incredible rates at which these countries have grown.
Except for some isolated falls in their growth rates during the second half of
the 1970s, we notice that they have all experienced an almost continuous and
positive growth up until 1995. In 1996, the countries were hit by the Asian
Financial Crisis, and by looking at the images we can see that this event
lowered their annual growth rates. Nonetheless, it is still impressive how fast
the countries’ economies bounced back, a recovery many economists refer to as
“the Asian Miracle”. In the images below we can see another period of time when
the growth rates had a considerable decrease, which is when the Financial
Crisis of 2007-2008 hit the entire world and had repercussions on every
country.Before
talking about each country in particular or how they developed, it is relevant
to discuss about their historical background. The effects of World War II and
of the Korean War (1950-1953) were still felt in the early 1960s. All countries
had a similar development pattern starting with that time. Besides new imports
and exports policies, they all pursued education as a way of ensuring skilled
labor force, which was obviously able to produce more output than less-skilled
labor force. Some studies show that the average years of schooling in 1965 in
these four countries was 1.5 years. If we measure human capital based on the
expected years of schooling, we notice that it is a factor influencing the
economic growth. This may be one of the reasons why the Four Asian Tigers
decided to make primary and secondary school attendance mandatory, while at the
same time investing in universities and making it easier for Asian students to
attend universities abroad.             All four countries had a fairly well
established post-colonial infrastructure, Singapore having been a British
colony in the past, Hong Kong still being one, South Korea having an American
influence, and respectively Taiwan a Chinese influence. The first two
mentioned, Singapore and Hong Kong were able to sustain great rates of growth
also due to their importance as trade centers. The story of
each TigerHong
KongManufacturing
industries, textile exports and re-exports of goods to China are the main
factors that caused Hong Kong to have a rapid industrialization, making it the
first out of the four economies to take off. The population started to grow,
while the labor costs remained cheap, meaning the standards of living began to
rise. This, and favorable tax incentives are what attracted investors and many
corporations to the city. Employing large sections of the population during the
1960s meant that the manufacturing industry moved to a new stage. The following
years (i.e. 1970s and 1980s) brought a period of high development due to the
country’s new-found wealth. Hong Kong now had city-wide constructions,
skyscrapers, public housing and commuter train lines. The GDP grew 180 times
between 1961 and 1997, making Hong Kong one of the wealthiest countries in the
world.SingaporeWorld
War II left Singapore into a state of violence and disorder. Much of its
infrastructure suffered during the war, including harbor facilities at the Port
of Singapore. Crude oil, rubber and tin were the main materials that were
transported from the Malay Peninsula to Singapore, in order to be shipped afterwards
to Britain or other international markets. This was the main function of the
port of Singapore during the colonial period. The lack of food that caused
malnutrition, disease, crimes and violence throughout Singapore, combined with the
high level of food prices and unemployment led to a series of strikes in 1947,
causing interruptions in public transport and other services. The
population of Singapore faced increased levels of unemployment and poverty in
1965 as well, when it became independent from Malaysia. As a response to this
problem, the government set to make Singapore an attractive destination for
Foreign Direct Investments by establishing the Economic Development Board. In
the years that followed, FDI had a great increase, and by 2001 foreign companies
accounted for 75% of manufactured output and 85% of manufactured exports. As of
now, Singapore is one of the world’s leading currency exchange countries. It
managed to capitalize on its reputation as a trade center and it now possesses
a vast expat community, evidence of the high volumes of foreign investment
received over the years. Singapore currently has the highest GDP of all Four
Asian Tigers.South
KoreaThe
Korean War started in June 1950, when North Korea invaded South Korea, and
continued until 1953. Because of huge losses among civilians in both the north
and the south, the war reached somewhat of a dead end. The two countries
remained technically still at war, since no peace treaty was signed. An
economic growth based on exports was met while Park Chung-hee was president.
During this time, a nationwide expressway system and the Seoul subway system
were developed by the government, and the basis for economic progress was laid.South
Korea made up for the shortage in resources by having cheap and flexible
workforce. The country focused on drawing large Transnational Companies, like
Sony from Japan, and on stimulating Foreign Direct Investments from the United
States, since agricultural production was not the right way towards economic
growth. South Korea’s strategy was to improve on modern industries such as
electronics, robotics and software development, which is what they did most of
the 20th century. This paid off, because the GDP increased by an
average of 10% each year between 1962 and 1995, making South Korea one of
Asia’s most advanced economies.Taiwan            After Japan surrendered at the end
of World War II, Taiwan was placed under the governance of the Republic of
China, starting with October 25th 1945. On February 28th 1947,
there was an anti-government movement happening in Taiwan that was suppressed
in a violent manner by the Republic of China’s government. The number of
Taiwanese deaths was estimated to be around 10,000. The massacre, also known as
the “February 28 Incident”, or the “February 28 Massacre” indicated the
beginning of the White Terror – the suppression of political dissidents following
the February 28 Incident – in which tens of thousands of people went missing,
died or were imprisoned.             Things were not looking good for Taiwan
during the post-war period: the island was short on goods and materials, the
economy was depressed and inflation was severe. Agriculture was the first to
grow, helping Taiwan’s economy go back to its level before the war. After 1953,
a policy of “Nurture industry with agriculture” was pursued, and with the
capital, manpower and skilled labor that Taiwan had at the time, and some other
factors, the island’s economy had a rapid growth. The government increased
taxes, controlled foreign exchange and put a limit on imports, all with the
purpose of protecting domestic industry. In
1960, the government established the “Regulations for Encouraging Investment”,
competing for foreign business in Taiwan. Just like South Korea, Taiwan was
also a target for Transnational Companies. For example, the American toy
company Mattel decided to move the main factory from Japan to the island, in
order to lower its labor costs. Fulfilling the role of a manufacturing station,
Taiwan became a link in the international system of division of labor. The
country’s proximity to China did not only allow it to grow at the side of it,
but the Chinese investments also provided them the opportunity to have a
futuristic city with skyscrapers, high speed trains, and a strong education
system. Foreign investments played an important role as well, helping Taiwan become
home to impressive headquarters, such as Foxconn, where Apple products are
made. Some studies show that in the 1960s, Taiwan’s GDP per capita was $170,
whilst in 2015 it grew up to $22,469. Variables that
permitted a fast and sustainable growth            When we talk about the variables
that permitted the fast and sustainable growth of the Four Asian Tigers, we can
divide them into three categories: the initial conditions of each country
regarding the natural resources and their geography, government policies and
demographic variables.            The first category, natural
resources and geography can be split into four other sub-categories that
influence economic on different levels: the initial abundance of natural
resources, the proximity to the sea, the percentage of people living in the
coastal area and the location in the tropics. Studies have shown that countries
with plenty of natural resources performed worse than countries with a lower
level of natural resources. The cause for this inverse relation is not exact,
but one idea that had many people agreeing on is the “Dutch disease”, which
consists in the appreciation of the real exchange rate which makes the
manufacturing industry aimed at exporting profitable. The Four Asian Tigers,
which mostly lacked natural resources, invested a lot in the manufacturing
industry and they had high returns in exporting said manufactured goods. This
was the first step towards industrialization. Regarding another sub-category,
namely the countries’ proximity to the sea, they are all in convenient
positions, meaning the costs for transport and shipping are relatively small.
In regards to the third sub-category, the ratio between people living in the
coastal area and those living near the land, it is one of the highest in the
world. Even though their tropic position might have caused them trouble, Hong
Kong and Singapore were not affected by it, thanks to their characteristics as
city-states. Their GDP had to suffer mostly because of the manufacturing sector
rather than the agricultural one. This helped them avoid converting an
agricultural-based economy into and industry-based one.            Openness to trade is a factor that
influences economic growth the most. So far we saw that the Four Asian Tigers
were some of the most open to trade countries in the world, between 1965 and
1990. The main economic policies initiated to allow international trade were
the reduction of taxes for imported and exported goods, and the decrease of
restrictions concerning trade and the barriers for international inflows of
capital. Government savings is a good indicator for the solidity of
macroeconomic policies adopted and for the indirect effect of inflation and
exchange rate. Some studies have shown estimations for government savings for
the four Tigers of an average of 5.6% of GDP between 1965 and 1990, a
percentage higher than any other country in the world.            The third and final category, the
demographic variable, is about studying the correlation between the growth rate
of the working age population, the growth rate of the total population and life
expectancy at birth. It has been confirmed that as the working age population
shows an increase, so will the economic growth rate. Moreover, if the workforce
growth rate is higher than the increase in the population growth rate, we will
see an increase of income per capita. However, this is true the other way round
as well, meaning that if the workforce growth rate is smaller than the
population growth rate, a decrease of income per capita will occur. Regarding
the Four Asian Tigers and the statistics during 1965-1990, data has shown that
the countries had a workforce growth rate higher with one percent than the
population growth rate, meaning they had an increase in the growth rate of GDP
per capita. The other estimate, life expectancy at birth, has an impact on the
productivity of the workers. If a population has a higher life expectancy, the
healthier and more productive they are, meaning they are capable of producing
more output. Life expectancy at birth for the Four Asian Tigers was around 63
years in 1965, while for South or Southeast Asia, for example, it was only 49,
respectively 52 years. Impact of
exports, exports policies and the Asian MiracleAn
economic miracle is the period of time when a great change is happening, such
as the dramatic growth Hong Kong, Singapore, South Korea and Taiwan went
through during 1960s – 1980s. Because the countries were looking to discourage
imports so as to help their own primary industries, they placed taxes on
imports and focused on exporting to the highly industrialized countries of
Europe and North America. However, the nations approached this issue in
different ways. Hong Kong and Singapore chose to introduce trade regimes that
supported free trade, whilst South Korea and Taiwan went for mixed regimes that
adjusted to their own export industries. Hong Kong and Singapore, because they
had fairly small domestic markets, domestic prices were associated to
international prices. The governments of Singapore, South Korea and Taiwan also
had what was called “export push strategy”, meaning they worked to promote
certain exporting industries. All these policies led these four nations to the
status of developed countries, by having an average 7.5% growth each year for
three decades. The Asian
Financial Crisis

One
of the problems the economic growth of the Four Asian Tigers caused was that
their economies expanded too fast. The series of currency declines that began
in the summer of 1997 and spread throughout plenty of Asian markets is known as
the “Asian financial crisis”, sometimes also referred to as the “Asian
Contagion”. Prices of property and shares and stocks started being overvalued. The
financial crisis disturbed all “Tigers”, but South Korea had most to suffer, as
its foreign debt burdens enlarged resulting in the country’s currency falling
between 35-50%. The stock markets in Hong Kong, Singapore and South Korea saw
losses of at least 60% in dollar terms. Thankfully, the Asian financial crisis
was partially restrained by the intervention of the International Monetary Fund
and the World Bank. Nations like the United States, Russia and countries in
Europe saw repercussions of the Asian economies crashed. Nonetheless, the Four
Asian Tigers recovered faster than other countries from this crisis thanks to
different economic advantages, two of them being their high savings rate and
their openness to trade. Some
believe that the transformation the Four Asian Tigers went through was due to
being in the right place at the right time. The arguments for this are that war
was over, colonialism was coming to an end, and globalization needed at least
one strong Asian trade hub. Nonetheless, many others believe that their
incredible growth happened because of good governance. All four countries made
it their priority to adopt strong regulations and anti-corruption measures,
while at the same time avoiding public debt and building large reserves of
capital and savings by having conservative economic plans. This is the reason
behind their fast recovery when crisis hit, affecting them only on a
superficial level. More than this, the presence of China helped them immensely
because by the country undergoing an extraordinary economic transformation over
the past 50 years, the Four Asian Tigers benefitted through the Chinese
investments.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now