Newly Industrialized Countries (NICS)

As the name implies, newly industrialized countries or NICs are generally understood to be those countries that have in the past few decades transitioned their economies from being primarily agricultural to newly industrialized. The economies of these countries are not as advanced as those of the developed countries such as the United States, Japan, and Western European states. However, they are more advanced than those of the so-called undeveloped or Third World countries. NIC is a socioeconomic term applied to countries that derive a significant portion of their national income from the goods-producing sector, which consists of industries associated with manufacturing, construction, and mining operations.

NICs began to be recognized in the 1970s when countries such as Hong Kong, South Korea, Singapore, and Taiwan underwent rapid industrial growth, most now having evolved beyond this status. Current examples are Turkey, Thailand, Malaysia, Mexico, Brazil, Argentina, South Africa, China, and India. Each of these countries is experiencing a general rise in per capita income, although a higher income does not necessarily reflect a higher development status. For example, India and China, due to large populations, are likely to have low per capita incomes even though they have experienced significant economic growth rates and have large manufacturing sectors. Industrialization and growth in NICs has been achieved through diverse means: for example, import-substitution in India, export-orientation in Taiwan and South Korea, investment in heavy industries in Russia, and attraction of inward foreign investment in China.

Yet there are some common features usually shared by NICs. These include recent political and economic reforms allowing for greater civil rights and market liberalization, strengthening of the legal and economic environment to foster privatization of ownership in industry and increased competition, and trade liberalization policies allowing increased exchange of goods and cross-border investment. In almost all NICs, greater industrialization has led to increased trade, participation in regional trading blocs, and attraction of foreign investment especially from developed countries.

However, NICs face certain problems that have ethical implications. Despite the attempt to decrease government regulation and increase market efficiency, governments continue to play a large role in artificially controlling currency exchange rates. Such controls have led to financial crises in countries such as Malaysia, Taiwan, South Korea, Mexico, Russia, and Argentina. To restructure their debt, these countries sought the assistance of the IMF, whose stringent conditions like raising taxes caused hardship to the local population, often creating controversy regarding the role played by the IMF. Furthermore, many of these countries follow an active industrial policy that encourages investment in certain sectors of the economy, and due to the considerable control exercised by the State, there is a great opportunity for corruption and bribery of public officials. Corruption in turn is a major detriment to further industrialization and contributes to an unfavorable business climate. Often, in NICs, rapid industrialization is not accompanied by the concurrent increase in investment in infrastructure, thereby creating unbalanced development in different regions of the country. Migration of labor from rural to urban areas often results in problems such as overcrowding in cities, pollution, environmental degradation, and water shortages. While laws exist on paper, they may be unenforceable due to lack of resources to fund adequate law enforcement or due to lack of political will, resulting in low labor standards reflected in low wages, unsafe and unhealthy working conditions, and use of child labor. Furthermore, wealth created by industrialization, more often than not, is unequally distributed among different sectors of society leading to huge disparities in incomes and standards of living. From an international perspective, corporations operating in NICs are frequently accused of cutting corners on wages, working conditions, and environmental protections, leading to a “race to the bottom” in terms of labor practices and contributing to global environmental problems. Others, however, argue that it would be unrealistic to expect the same wages, working conditions, and environmental protections in all countries no matter the stage of development, and to demand this would only serve to entrench the position of advantage of developed countries.

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