Asian Tigers

Asian tigers as a term originally referred to the four economies of Hong Kong, Singapore, Korea (South), and Taiwan, which are all known for their very high growth rates and rapid industrialization following Japan from the late 1960s onward. Although usually reserved for the original four economies, the expression “new tigers” since the 1990s and early 2000s has been used for some other economies in Asia (e.g., India) due to their increased visibility in world high-technology competition.

Similarities between the original four are, first, an export-driven model of economic development, where goods were exported to the highly industrialized nations. At the same time the governments tried to put a brake on domestic consumption by way of, for example, high tariffs against imports. Other common traits are that the governments focused explicitly on improved education levels as a means to increase productivity. All four economies suffered the impact of the Asian financial crisis of 1997, although in slightly different degrees, with Taiwan seemingly suffering the least.

Differences between the original four Asian tigers are depicted in a book by C. Edquist, L. Hommen, and colleagues: Variation in policies and specialization within different kinds of industries, in addition to obvious cultural and historical variations. Korea is the largest economy of the four, and also has a high complexity of industrial structures. Its industrialization process was rapid and remarkable in that it evolved from being a poor, agricultural economy, undergoing exploitation during Japanese colonization, and experiencing devastation during the Korean War, into a full-fledged industrialized state in a very short time. As in Taiwan, Japanese colonial rule resulted in a capitalist basis for the economy and infrastructure such as railways, marine ports, roads, and irrigation systems, whereas post-colonial development has been [Page 79]an interplay between indigenous policies and relations with selected foreign ideas.

According to the Total Economy Database (TED), Korean gross domestic product (GDP) per capita for the year 1960 was estimated at US$4,071, increasing to US$9,541 (1975), US$15,457 (1985), US$26,161 (1995), and US$30,568 (1999, compared to US$57,460 for the United States). Korea has a dual structure of firms divided into large firms able to have an international technology and market orientation and a large segment of domestic-oriented smaller firms. Industry networks (chaebol groups) and their affiliated firms are dominant in the country also in terms of research and development (R&D), although there is a significant amount of R&D organized as a large government research institute sector rather than in universities. The financial system has predominantly been a banking system and underwent reforms that are in part a result of the more liberalized environment triggered by the aftereffects of the Asian financial crisis. In the case of Taiwan, the TED figures for GDP per capita are US$4,976 (1960), US$11,559 (1975), US$21,117 (1985), US$31,256 (1995), and US$37,589 (1999). Taiwan can be characterized as a predominantly government policy-led system, although the actual development obviously has been an interplay between government and private firms. However, Taiwan is a prime case of government playing a key strategic role by changing the economic base itself in order to create new market segments in which Taiwanese firms could compete. The Taiwanese system is strongly focused on specialized production, often in the form of original equipment manufacturing (OEM) and original design manufacturing (ODM). This strength is simultaneously a challenge for the system, since it might be necessary to foster new trajectories of growth in the future. For example, the economic growth of mainland China has in part become a source of competition for Taiwan's existing specializations.

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