Four Asian Tigers is a term given to the economies of four countries – Hong Kong, Taiwan, Singapore, and South Korea. Driven by exports and rapid industrialization, the Four Asian Tigers have steadily retained a high rate of economic growth since the 1960s, joining the ranks of the richest countries in the world.
Singapore and Hong Kong are seen as leading foreign financial hubs, while Taiwan and South Korea are pioneers in the manufacture of electronic components and computers. Their economic growth serves as a model for many developing nations, particularly Southeast Asia’s Tiger Cub Economies (Indonesia, Philippines, Malaysia, Thailand, and Vietnam).
Four Asian Tigers is a term given to the economies of four countries – Singapore, Hong Kong, South Korea, and Taiwan.
The Four Asian Tigers have steadily retained a high rate of economic growth since the 1960s, driven by exports and rapid industrialization.
The primary reason for the rise of the economies of the Four Asian Tigers was their export policies.
Overview of Four Asian Tigers
Before the Asian Financial Crisis of 1997, the rise of the economies of the Four Asian Tiger nations (known as the Asian Miracle) was due to export-oriented policies and strict development policies. The economies were unique in terms of continued economic growth and high levels of fair income distribution. A World Bank study recommends two growth strategies, among others, as a cause of the Asian miracle – macroeconomic management and factor accumulation.
The economy of Hong Kong experienced industrialization with growth in the textile industry during the 1950s. By the 1960s, production in the British Colony had grown and diversified to include electronics, garments, and plastics for exports.
After Singapore’s independence, the Economic Development Board developed and adopted national economic policies to boost the country’s manufacturing sector. Industrial estates were established, and the country offered tax incentives that attracted foreign investment.
Meanwhile, South Korea and Taiwan started to industrialize in the mid-1960s with significant government intervention, including programs and policies. Both countries followed export-oriented development, as in Singapore and Hong Kong.
The Four Asian Tigers were motivated by Japan’s recognizable progress and followed the same strategy through investments in the same categories – education and infrastructure. They benefited from the international exchange assistance that set them apart from other nations – the most important being the economic assistance from the United States, which could be demonstrated by the spread of American electronic goods in traditional households of the four countries.
Reason for Economic Growth of Four Asian Tigers
The primary reason for the rise of the economies of the Four Asian Tigers was their export policies. The four countries followed different approaches; Singapore and Hong Kong implemented neo-liberal trading regimes that promoted free trade.
Whereas, Taiwan and South Korea adopted hybrid regimes that suited their export businesses. Because of limited domestic markets in Singapore and Hong Kong, domestic and foreign prices were linked.
South Korea and Taiwan implemented export incentives for the traded goods market. The governments of South Korea, Taiwan, and Singapore all sought to promote certain export sectors, which was described as an export-driven policy. All of the initiatives helped the four countries reach an average growth rate of 7.5% per year for three decades, thereby gaining the status of developed countries.
The Four Asian Tigers and Financial Crisis
The economies of the Four Asian Tigers suffered massive losses during the Asian Financial Crisis in 1997. Hong Kong experienced extreme speculative assaults on its stock exchange and currency, prompting extraordinary market interference by the Hong Kong State Monetary Authority.
South Korea was struck worst by the increase of its foreign debt pressures, resulting in its currency crashing between 35% and 50%. At the beginning of 1997, the stock exchange in Hong Kong, South Korea, and Singapore experienced declines of at least 60% in dollar terms.
The 2008 Global Financial Crisis hit hard the economies of Four Asian Tigers that profited from consumption by Americans. By the end of 2008, the GDP of all four countries decreased by an average annualized rate of about 15%. Exports were down by an annualized rate of 50%. Poor domestic demand also impacted the revival of these economies. Retail revenue declined by 3% in Hong Kong in 2008, by 11% in Taiwan in 2008, and by 6% in Singapore.
The Four Asian Tigers economies recovered strongly as the world revived from the financial crisis. The recovery is highly attributed to government stimulus programs in each region, which resulted in greater than 4% growth in the GDP of each country in 2009. The moderate corporate and household debt in the four countries is another explanation for a quick rebound.
CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful: