Newly Industrializing Countries

Newly industrializing countries (NICs), sometimes also called newly industrializing economies, are a group of states in the developing world that developed substantial manufacturing bases in the late 20th century. Definitions of this group vary, but they are generally taken to be states that exhibited rapid and sustained increases in GDP, incomes, and industrial employment. Most are located in Asia, although several are found in Latin America as well (Figure 1). Other definitions of NICs include South Africa and Turkey.

The emergence of the NICs has significant implications for development theory as well as the lives of billions of people in the world. Modernization theorists trumpet their success as proof of the wonders of the market. Whereas dependency theorists maintained that the diffusion of manufacturing from the First World to the Third was unlikely or impossible, the rise of the NICs in the 1970s indicated that the status of the developing world was hardly fixed or static. In terms of world-systems theory, the NICs pointed to states that moved from the global periphery to its semiperiphery.

Common to many NICs was a shift from import substitution to export-led industrialization, in which tariffs and quotas on imports were reduced, foreign direct investment (FDI) was encouraged, and exports aggressively promoted, including through the use of export processing zones. Such moves were often justified by an appeal to neoclassical economic notions, such as comparative advantage. Many states such as South Korea and Taiwan began to develop a capacity in footwear and textiles by the 1960s, moving into more capital-intensive, higher-value-added sectors, such as automobiles, ships, steel, precision machinery, and electronics over the next several decades.

The East Asian NICs are perhaps the most representative members of this group. Following the example set by Japan, which industrialized early, several generations of Asian NICs began to imitate the Japanese model in the famous “flying geese” formation of development. The original “Four Tigers” or “Minidragons” included South Korea, Taiwan, Hong Kong, and Singapore (the latter two former British city-state colonies), all of which developed high-quality educational systems, infrastructures, and government policies conducive to capital accumulation. Some observers point to the legacy of Japanese occupation in this regard, while others note the importance of Confucianism in producing a compliant labor force, as well as a high domestic savings rate. Yet others argue that the NICs’ growth had little to do with a “free market” and much to do with oppressive and authoritarian government strategies that repressed labor. South Korea and Taiwan, for example, were run by military dictatorships for much of the early period of their growth. Yet another factor was the active intervention of the United States in the region during the Cold War (including defense subsidies and [Page 2022]preferential trade agreements), an advantage not afforded to other regions, such as Latin America. Singapore, in particular, developed not only as a center of light manufacturing but also thrived with a very large port and a growing capacity in financial services and telecommunications to become the second wealthiest country in Asia.

Figure 1 Newly industrializing countries in 2008. Definitions of the NICs vary, but all exhibit rapidly growing economies and exports.

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