The Story Behind the Four Asian TigersAuthor: Kathryn Gaw
Hong Kong, Singapore, Taiwan, and South Korea – we know these countries to be among the most productive and profitable in the world. But it wasn’t always like that. The ‘Four Asian Tigers’ rose to prominence in the boom years of the 1960s by taking advantage of emerging technology and globalization, and they have held onto their position as economic leaders ever since. In fact, just last year the last of the Four Asian Tigers officially overtook Japan in terms of GDP, placing them second only to China in terms of economic success.
So what is the story behind the Four Asian Tigers? And what can we learn from their success? Read on to learn more about the economic history of the Asian Tigers from 1960 to 2000.
The birth of the tigers
In the early 1960s, the global economy was just starting to recover after the traumas of the Second World War and the Korean War of 1950-1953. Tentative world peace combined with major advances in air travel and telecommunications meant that borders were opening up around the world, and the four ‘tigers’ were perfectly positioned to benefit. All four countries boasted long-established ports and developed trade economies, highly educated populations, as well as robust post-colonial infrastructure (as a result of the British influence in Hong Kong and Singapore, the Chinese in Taiwan, and the Americans in South Korea).
The four ‘tiger’ governments took this opportunity to invest heavily in industrialization, building major industrial estates, offering tax incentives to foreign investors, and implementing compulsory education for its young population in order to secure the future of the workforce. Soon, these countries were in high demand, exporting everything from textiles and toys, to plastics and personal technology.
Hong Kong already had a thriving stock exchange (established in 1891), so it made sense when it diversified away from the export market and into financial services. Singapore soon followed, and these two tiny countries are now widely regarded as two of the world’s most influential financial hubs. Meanwhile, Taiwan and South Korea helped to drive the tech boom of the 1980s and 1990s, and today Taipei and Seoul are home to the biggest names in electronics and cutting-edge technology. These economic developments took hold so quickly that they became known as ‘The Asian Miracle’, attracting even more international interest and growing ever stronger.
The Four Asian Tigers were so robust that they were able to weather the 1997 Asian Financial Crisis (as well as the 2008 Global Financial Crisis) relatively unscathed.
Today, they regularly feature on the IMF’s list of the world’s most prosperous and stable economies, and each country has developed its own – highly successful – niche.
Asian Tiger 1 – Hong Kong
The economy of Hong Kong really started to take off in the 1950s, making it the first of the Four Asian Tigers. Cheap labor and favorable tax incentives attracted many medium and large sized corporations to the city, and the 1970s and 80s saw a period of city-wide construction, with skyscrapers, public housing and commuter train lines all funded by the country’s new-found wealth.
Between 1961 and 1997, the GDP of Hong Kong grew by 180 times, making it one of the world’s wealthiest countries. A supportive government, strong regulation and lack of public debt means that it is well placed for continued growth, albeit at a less dramatic pace.
Asian Tiger 2 – Singapore
Like Hong Kong, Singapore’s high growth economy is rooted in the world of finance. Originally prized for its impressive docks and strategic position in South East Asia, it was easily able to capitalize on its reputation as a trade hub. In fact, it is now one of the world’s foremost currency exchange centers, and boasts an incredibly diverse expat community which is indicative of the high volumes of foreign investment received over the years. Today, Singapore has the highest GDP of all the Four Asian Tigers.
Asian Tiger 3 – Taiwan
Taiwan’s proximity to China has allowed the island to flourish alongside its neighbor. Chinese investment has helped establish a futuristic city filled with skyscrapers, high speed trains, and a strong education system, while foreign investment has meant that Taipei is home to some impressive headquarters such as Foxconn (where Apple’s products are made). In the early 1960s, Taiwan had a GDP per capital of just $170, but in 2015 it was $22,469. It may not be the wealthiest ‘tiger’, but it has arguably experienced the most notable growth.
Asian Tiger 4 – South Korea
Once an agricultural country, South Korea spent much of the 20th century driving modern industries such as electronics, robotics and software development. This strategy has paid off dividends – according to the World Bank, South Korea’s GDP grew by an average of 10% per year between 1962 and 1995 and it is now regarded as one of Asia’s most advanced economies.
What can we learn from the Four Asian Tigers?
There is an argument to be made that the Four Asian Tigers benefited from being in the right place at the right time – war was over, colonialism was coming to an end, and globalization required at least one strong Asian trade hub. However, behind the scenes, the ‘miracle’ growth of these economies was largely down to good governance. Each of the four ‘tigers’ has prioritized strong regulation and anti-corruption measures, while conservative economic plans have allowed each country to avoid public debt and build up large reserves of capital and savings. This meant that when crisis hit, they were only affected on a superficial level, and recovered almost as soon as the markets picked up again.
Furthermore, the patronage of China has been a hugely influential factor in each of these countries. China has undergone a remarkable economic transformation over the past 50 years, and the Four Asian Tigers have been able to benefit from this through Chinese investment, while continuing to chart paths of their own.
Hong Kong, Singapore, Taiwan and South Korea are currently sitting high on most of the global economic rankings, and as long as they keep on doing what they’ve always done there is every reason to believe that they will stay there for the foreseeable future.