The East Asian Miracle
Following World War 2, several East Asian economies underwent rapid and unprecedented economic change shifting from agrarian societies to high-income countries. The Four Asian Tigers, Taiwan, Singapore, Hong Kong, and South Korea, have demonstrated remarkable industrialization and exceptionally high growth rates over the past few decades. To this day, the success of the Asian Tigers serves as a model for any developing country seeking to emulate their success.
It all began in the 1960s when many East Asian countries were finally liberated from the yoke of colonialism, whether from the Europeans or the Japanese. The new governments implemented neoliberal policies such as low taxes, minimal welfare, and export-oriented policies. The neoliberal philosophy aimed to minimize state intervention in factors of economic liberalization and deregulation, increasing the role of the private sector in the economy and society.
The first "tiger" to undergo industrialization was Hong Kong. Following the war's end, Hong Kong had quickly developed a textile industry and, by the 1960s, was diversifying into sectors such as clothing, plastics, and electronics. This is an example of export-oriented industrialization, a policy that speeds up industrialization by exporting goods in which the nation has a comparative advantage. In the 1960s and 70s, Hong Kong managed to develop a significant comparative advantage in those sectors but, by the 21st century, managed to transform itself into a financial center and, to this day, remains a hub for banking and financial markets.
After Malaysia expelled Singapore, it sought to promote its manufacturing sector and attract foreign investment. Industrial parks were set up across the city, especially in the reclaimed swamplands, and an Economic Development Board was set up in 1961 to formulate strategies for Singapore's economic development. Government ministers went on a world tour to attract foreign investment, and tax holidays were given to new investors. Singapore's port made it the perfect spot for efficient export and import trade. The ships stopping at the popular port would drive demand for a booming service industry, helping improve employment rates.
Taiwan began to industrialize in the mid-1960s using aid from the US/ The first step was to implement land reforms and shift away from agriculture into an industry-oriented economy. As the US cut back aid, Taiwan focused on export-led growth. Initially, Taiwan favored cheap and labor-intensive manufacturing of textiles toys. This transformed into infrastructure and heavy industry by the 70s. By the turn of the millennium, Taiwan made a name for itself in advanced electronics. Today, it is a leader in semiconductor chips, producing almost all the most advanced processors.
The Korean War had devastating impacts on South Korea's economy and society. It emerged as one of the poorest countries in the world. The government began subsidizing and giving tax breaks to family conglomerates such as Hyundai, Samsung, and LG. Chaebols are the name for these conglomerates, and they soon came to dominate the domestic economy. Eventually, they rose to become internationally competitive, and to this day, these chaebols dominate their respective industries. Domestically, the chaebols brought employment opportunities and gave fair wages and conditions to their workers. This raised domestic demand and consumption.
After industrialization's immediate success, all these countries invested heavily in their education sector. Its educated populace gave rise to knowledge workers who could contribute to innovative and technological sectors. This allowed the countries to capitalize on their short-term success and achieve long-term economic prosperity.
Ultimately, the East Asian Miracle demonstrated for the first time that economic success is not reserved for Western Civilization but could be emulated anywhere in the world. Through shrewd government policies and economic liberalization, the Asian Tigers transformed from one of the poorest into one of the wealthiest nations in the world. Even the 2008 credit crunch showed little hindrance to the growth of the Tigers. They serve as models to the Tiger Cub economies of Indonesia, Malaysia, Philippines, Thailand, and Vietnam, South East Asian countries similarly poised for economic success. Now all 4 of the Asian Tigers are listed by the IMF in the top 35 most advanced economies and are essential financial hubs of the world.
Written by Anuar Kul-Muhammed
