What is a Newly Industrialized Country (NIC)?
The term newly industrialized country (NIC) refers to a subcategory of countries that are still developing but show greater economic growth, compared to other developing countries. The NIC countries are continuously evolving and growing through industrialization and urbanization.
- The term newly industrialized country (NIC) refers to a subcategory of countries that are still developing but show greater economic growth, compared to other developing countries.
- The NIC concept became widely recognized in the 1970s. During these years, Asian countries – also known as the “Four Asian Tigers” – Singapore, Hong Kong, South Korea, and Taiwan dominated in terms of economic prosperity and technological innovation.
- NICs typically aim to export their capital to other developing countries. This capital is exported as foreign investments or by establishing production facilities.
Brief History and Background of NICs
The NIC concept became widely recognized in the 1970s. During the period, Asian countries – also known as the “Four Asian Tigers” – Singapore, Hong Kong, South Korea, and Taiwan, dominated in economic prosperity and technological innovation. The four countries showed great industrial growth since the 1960s and are now industrialized countries with high-income economies.
The “Asian Tigers” and countries that are now considered NICs show clear dissimilarities that can be attributed to a mixture of a high gross national income per capita, sound export-oriented economic policies, and transparent political processes.
Characteristics of NICs
NICs typically aim to export their capital to other developing countries. The capital is exported as foreign investments or by establishing production facilities. It is common in countries such as China, South and East-Asia, India, and Vietnam.
NICs tend to achieve a large sum of capital and investments. It is mainly financed from a high inclination to export machinery, consumables, and domestic savings. NICs typically experience speedy productivity growth and industrialization.
Governments of NICs tend to control their industrialization and encourage manufacturing industries to export their products. Profits generated through exports are normally reinvested into the domestic economy.
The practice brings great socio-economics benefits, including the growth of businesses and an increase in salaries and wages. The increment in salaries and wages encourages consumer spending, and the workforce can support local businesses for goods and services. It is known as the multiplier effect.
Contributors for Growth in NICs
Below are some of the contributors to the growth seen in NICs:
1. Government intervention
A majority of NIC economies were previously subjected to the government’s intervention to encourage overall development or the development of specific industries through policy interventions. The policy interventions included subsidizing weakening industries, maintaining ceilings on lending rates, making public investments, etc.
2. Circumstantial “head-starts”
Some countries enjoyed a head-start advantage, such as a better-educated workforce.
3. Financial repression
By keeping interest rates low to lessen the cost of borrowing for companies, NICs subsidize corporations by letting savers earn interest rates lower than the inflation rate.
Typically, population growth rates in NICs are declining, in comparison to other developing countries.
Countries that can be Categorized as NICs
The category of “newly industrialized country” does not come with exact requirements; thus, a list can easily be disputed. However, experts deem the following countries as NICs: Thailand, Mexico, South Africa, Brazil, Singapore, Turkey, Taiwan, India, and Hong Kong.
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