Newly Industrialized Countries

The term newly industrialized countries (NICs) refers to a group of once-developing economies that industrialized—or are still industrializing—with an emphasis on the production and export of manufactured goods; newly industrializing economies is often taken as a synonym. The term generally applies to those countries that industrialized after World War II. Comparability between different studies of these countries is not always straightforward, not least because there is no precise definition of an NIC. Moreover, each study regards a different range of countries as NICs depending on their level of industrialization at the moment of analysis. Through the 1980s and 1990s, the NIC category gained prominence in economic and policy analysis, especially in regard to the economies of east Asia, but popular use of the term has waned since then in favor of the broader concept of “emerging economies.” As a unique category, however, the term NIC retains some distinction in classifying some of the economies achieving industrialization during the latter part of the 20th century.

In 1979 the Organisation for Economic Co-operation and Development (OECD) published a report called The Impact of the Newly-Industrialising Countries, which along with a conference on NICs hosted by the OECD, brought the term to prominence. This initial usage was quickly reinforced by the adoption of the term by researchers at the World Bank, the Royal Institute of International Affairs, and by academia in general. Yet from the start, there was no common definition of an NIC or a universal method of quantifying NIC status.

For the OECD, an NIC exhibited the following characteristics: (1) fast growth in both the absolute level of industrial employment and its share of total employment; (2) a rising share of the world exports of manufactured products; (3) fast growth in real per capita gross national product (GNP) such that the country was successful in narrowing the gap with the advanced industrial countries. Using these criteria, 10 countries were generally considered to exhibit NIC characteristics from the early 1960s: Hong Kong, Singapore, South Korea, Taiwan, Brazil, Mexico, and from Europe, Spain, Greece, Portugal, and Yugoslavia. With a slightly wider interpretation, a range of other countries were also mooted as NICs, which would have doubled the original list.

While the OECD criteria were somewhat vague, other definitions were more specific. Working for the World Bank, Bela Balassa thought that to qualify for NIC status countries needed per capita income greater than $1,100 and for manufacturing to account for at least 20 percent of gross domestic product (GDP). Inevitably, this resulted in a variation on the OECD listing, indicating the somewhat arbitrary nature of specifying a quantitative economic threshold in determining what constitutes an NIC.

A further limitation of this economic approach was identified by Anis Chowdhury and Iyanatul Islam. They argued that identifying NICs purely in terms of manufacturing and trade was too limiting because it failed to consider the sustainability of the industrialization or the improvement in the standard of living or quality of life. Hence, in reaching a definition of an NIC, they broadly accepted the OECD/Balassa approach and added that a savings ratio of 15 percent was required, along with a Human Development Index of 0.75 (above average performance in purchasing power, life expectancy, and literacy). In their analysis, 22 countries could be classified as NICs in 1988, with a further 10 on the cusp of reaching the thresholds, including India and China.

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