|The age of the Asian Tigers: Dawn or dusk?|
|Written by Megan Erasmus (1) Wednesday, 02 February 2011 08:16|
Between the years 1965 and 1990, the East Asian Tigers stunned the world, becoming a ‘how to’ model for developing states seeking to achieve rapid economic growth and development.(2) These four newly industrialised states, Republic of Korea (hereafter Korea), the Republic of Singapore, Taiwan and the Hong Kong Special Administrative Region (SAR), accomplished a feat otherwise considered impossible by the world at large. They successfully altered the foundation of their economies, moving from agricultural-based growth towards industrialisation and finally services, each becoming economic powerhouses in their own right.(3) However, the financial crisis of 2008 caused a global downturn, and forced importers to reign in their spending, hitting tech-exporting states hard.(4)
Nevertheless, the Tigers survived, maintaining a low profile and continuing to grow their economies at significant rates every year. This article aims to determine the likely path of the Tigers into the next decade, by assessing the Gross Domestic Product (GDP), growth rate and unemployment data for all four states.
The Tigers in the new millennium
Four decades ago, Korea was as poor as any African state, but today it is one of Asia’s most affluent states, a leading exporter of cars and electronic goods, as well as a member of the trillion dollar GDP club.(5) It experienced moderate growth between the years 2000-2007, reaching as much as US$ 1,049 billion GDP in 2007.(6) Sector contributions mirror this success, with over 57.6% of GDP being attributed to services and only 39.4% accredited to industry in 2008.(7) Korea has indeed moved from the periphery to the core. Korea has also very nearly managed to achieve full employment, with only 3.3% of the working population unemployed in 2010.(8) Korea’s overall growth rate is averaged at a moderate 4-5%, and is expected to continue well into the next decade.
The second best performing Tiger, Taiwan, has through hard work and effective economic management achieved consistent growth between the years 2000-2010, experiencing only a small dip (-1.9%) during the financial crisis in 2008/2009.(9) Despite the diplomatic isolation enforced by China, Taiwan has managed to become one of Asia’s biggest traders and one of the world’s top computer producers.(10) This is evidenced by the fact that US$ 203.7 billion of the overall US$ 378.25 billion GDP for 2009 is generated by trade.(11) Similar to that of Korea, the sector contributions to GDP are largely in favour of services (67.5%) rather than industry (31.3%),(12) with agriculture trailing far behind. Unemployment is more of an issue in Taiwan than any of the other Tigers, with approximately 5% of the working population without work. However, this does not seem to hinder growth, and it is very likely that this will be solved in the coming years.
Hong Kong SAR and Singapore have achieved similar levels of GDP, also only dipping slightly as a result of the 2008/2009 financial crisis.(13) Singapore is a high-tech, rich economy with a high standard of living, regardless of the fact that it has no natural resources. The citizens of Singapore earn on average significantly more per annum than those of the other Tigers, and there is very little unemployment (approximately 2% in 2010).(14) Between the years 2005-2007, Singapore experienced an annual growth rate of between 8.6 and 8.5%, which further rebounded from 1.8% and -1.3% in 2008 and 2009 respectively, to almost 15% in 2010.(15) There is no agricultural sector in Singapore, but 72.8% of GDP is derived from services, according to 2009 estimates.(16)
If Singapore is a strict and conservative society,(17) then Hong Kong SAR is a vibrant metropolis.(18) Granted a high degree of economic and social autonomy by the Chinese Government, Hong Kong is the confluence of east and west. Hong Kong recovered quickly from the financial crisis having not been very affected, something many attribute to the relationship with China. However, the country’s unemployment rate in 2010 was 4.3%, the second highest of the Tigers. With 92.3% of GDP originating from services, Hong Kong does not really rely on any other sectors, indicating that it is more industrialised than the other Tigers.(19)
The performance of the Tigers over the past few years has been impressive. These states have managed to climb up the ladder of the international economy, and stand in good stead to benefit for many years to come. However, in order for the Tigers to maintain their positions in the global economy, it is important that their economies remain open,(20) and that they keep a close eye on states such as Vietnam,(21) Indonesia and Malaysia, each crouching tigers in their own right. These states possess the same overall potential as did the Tigers decades ago, and in addition, Indonesia and Malaysia have the added benefits of oil and natural gas.(22)
If one looks at the performances of the Tigers, it is clear to the naked eye that the age of the Tiger has only begun. Korea’s ascension from dirt poor to one of the top 20 economies in the world in only four decades speaks to the hidden ability of these nations. There is no denying that East Asia is determined in its growth trajectory, while China is establishing itself as one of the global superpowers. As such, it is quite possible that one day the world will turn east, instead of west.
(1) Contact Megan Erasmus through Consultancy Africa Intelligence's Asia Dimension Unit (