Newly Industrializing Countries

The term newly industrializing countries (NICs), also known as newly industrializing economies, refers to a diverse set of Asian and Latin American nations as well as broader processes of global industrial restructuring that took hold during the latter half of the 20th century. NICs emerged during the 1950s and 1960s within a broader context of industrial promotion in developing nations. Such promotion shared a historical parallel with the Economic Commission on Latin America's call for import substitution industrialization (ISI). This strategy aimed to increase industrialization (mainly in Brazil, Argentina, Chile, and Mexico, where development strategies were called “inward-oriented” strategies) through a series of tariffs that would protect nascent industries from goods manufactured in Europe and the United States. ISI mapped out a production strategy that would evolve from the domestic production of consumer goods, then intermediate goods, and ultimately capital goods. Such a normative progression proved to be elusive for most developing nations, and the NICs' so-called miracle economies came to be the exception to remarkable industrial growth rather than the norm.

As a geographic category, the term newly industrializing countries refers to those developing nations whose industrial output increased quickly over a short period to contend with manufacturing and steel producers in North America and Europe. The late 1970s witnessed a significant increase in export-led growth from these nations that went beyond ISI by producing more advanced, technologically mature, and finished manufactured items in transport equipment and machinery categories. This production also signaled a shift away from processing raw materials, including basic manufactured goods and chemicals. By the new millennium, the NICs had developed a larger domestic and global market share that was focused increasingly less on Europe, Japan, and the United States and more on the Chinese and East and South Asian markets.

As a manifestation of industrial restructuring, the NICs reflect changes in the new international division of labor that unchained industrialization outside the North Atlantic region, Japan, and Australia. Many NICs specialize in communication and transportation technologies and rely on low-cost and mostly nonunionized labor. Initially, many relied on heavy state investment. Technology-enhanced production (e.g., computer-aided design), special public and private partnerships, and a focus on quality control have further secured the output of NICs in the global consumer durable markets. Increasingly, informatics products—especially computer chips and components and plasma (LCD) and high-density screens—constitute a key industrial sector.

Although no formal membership in the list of NICs exists, analysts during the 1960s began identifying the “Four Dragons” or “Asian Tigers” as South Korea, Hong Kong, Taiwan, and Singapore—nations where the governments often were intolerant of worker strikes or unionization and where ISI typified outward-oriented strategies. Accordingly, these rapidly growing economies accelerated after 1973 when the world economy was especially dynamic. However, their growth has not been driven by unfettered market forces. Instead, close government coordination of industrial production, as well has heavy-handed tactics in disciplining labor and other components of civil society, characterized these developmental states where the national governments continue to play a key role.

The locus of successful NIC development is concentrated in Asia. After Japanese rule and a grueling war with North Korea, South Korea changed from relying on imports during the 1950s to the local manufacture of basic consumer items such as food processing, clothing, footwear, and textiles. Its Economic Planning Board enlisted a series of economic and social plans that led to investment in large steel, shipbuilding, and automobile firms. By the 1970s, large private-sector consortia (chaebols) developed important vertical and horizontal linkages while emphasizing the exports of labor-intensive products. A period of secondary ISI that ensued during the following decade emphasized skill-intensive and higher value-added products.

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