Asian Tigers: Economics and the Development of the Asian Nations

From the Lecture Series: Interpreting the 20th Century—The Struggle Over Democracy

By Pamela Radcliffe, Ph.D., University of California, San Diego

The Japanese model of development has transformed not only its own economy but also that of the entire region. In the 1960s, Hong Kong, Singapore, Taiwan, and South Korea (later known as The Four Tigers) followed their Japanese counterparts through a similar developmental path, with comparable strengths and endemic problems.

Banknotes from different countries of ASIA
(Image: By glen photo/Shutterstock)

Making Textiles Work for The Asian Tigers

In 1945, the Asian Tigers had a lack of natural resources and a small amount of farmland. They were also overpopulated, poor, and could not feed their own populations. Not surprisingly, they had low capital resources for development, and thus they faced some of the same general problems as Japan. The standard Third World model for development is to increase agricultural production and to mine gold, silver, or other natural resources the country has for export.

This is a transcript from the video series Interpreting the 20th Century: The Struggle Over Democracy. Watch it now, on Wondrium.

This was the classic Latin American model in the 19th century and the classic model for Africa in the 20th century. Because the Gang of Four did not have the farmland or natural resources like their global counterparts, they had a strong incentive for finding other kinds of exports that would give them the money needed to buy the food and other essentials they had to import.

Learn more: The Rise of the East Asian Tigers

Following Japan’s Lead

Like their neighbor Japan, the Asian Tigers embarked on a strategy to build cheap export manufactures using the same low-wage labor that could undersell First World products. Japan had captured its markets by underselling textiles made in the United States and Europe in the 1950s. Like the Japanese, Hong Kong, Singapore, Taiwan, and South Korea began in the textile industry. It required little capital investment but a large number of low-skilled workers willing to work long hours assembling ready-to-wear garments.

Asian Seamstress or worker in an Asian textile factory sewing with a industrial sewing machine
The Asian Tigers captured the Japanese export market by underselling Japanese-made textiles in the 1960s. (Image: By Kzenon/Shutterstock)

The Asian Tigers competitively captured the export market and undersold Japanese-made textiles during the 1960s. It was partly the emergence of these cheaper products, as well as the accumulation of capital, that pushed the Japanese government into channeling its industries in a different direction and to leave the textile business in the 1960s. They replaced Japan as the low-wage, low-cost producers of the global economy.

Learn more: East Asia’s Tiger’s—Restore the Roar?

Electronic Revolution in Asia

Old vintage different radios, television and electronic in antique store shelves.
The Asian Tigers were able to produce radios, televisions, sewing machines, and motorcycles more cheaply than Japan. (Image: By ShutterStockStudio/Shutterstock)

In the 1970s, the group continued to follow Japan’s lead from a decade earlier. By this time, they had accumulated sufficient capital to embark on the next phase of capital-intensive development. Once again, there was a push/pull mechanism with Japan as these four countries were able to produce radios, televisions, sewing machines, and motorcycles more cheaply than their Japanese competitors. This shift helped push Japan into the high-technology industries.

By the 1980s, the Gang of Four were beginning to encroach on Japan’s high-technology industries with the production of computers and biotechnology. By 1976, the Asian Tigers produced an astonishing 60 percent of the Third World’s manufactured exports, with only 3 percent of its population.

From 1963 to 1976, their combined growth rate was higher than 6 percent, compared to less than 2 percent for India and other South Asian nations. In terms of per capita income, to give one example, Korea rose from an annual per capita income of $146 in the 1950s to $1,500 in 1980. After the less certain 1980s, the economic growth in the 1990s hovered at approximately 8 percent in the entire region until the regional crash of 1997. This is in contrast to approximately 3 percent in the United States during the same period.

Tables Turn for Manufacturing 

By the mid-1980s, the United States and Europe could no longer sell manufactured goods to East Asia and entered into a reverse of the traditional neocolonialist relationship. The West was exporting food and raw materials to East Asia and buying their manufactured goods; two-thirds of Asian exports were sold in the First World. This trade dynamic is partly responsible for the huge trade deficit between the United States and East Asia.

Learn more: Asian Tigers—The New Industrialized Nations

The ASEAN Nations and Economic Development

During the late 1960s, another group of Asian lands—Indonesia, the Philippines, Malaysia, and Thailand—tried to get on the bandwagon. They formed the Association of Southeast Asian Nations (ASEAN) to promote development, and by the early 1970s, they were drawn into the region’s trading network. These countries deviated from the original model of Japan and the Gang of Four because they were in contrast to those countries: rich in natural resources such as petroleum, natural gas, wood, and foodstuffs.

It was this complementarity with the Gang of Four and Japan that first got them into the regional trading network. The initial trading relationships between the ASEAN countries, the Gang of Four, and Japan, looked more like a conventional dependence relationship. Those countries exported raw materials and food to Japan and the Gang of Four, and Japan and the Gang of Four imported manufactures back. What happened next is classic in these dependence models: The Japanese, Korean, and Taiwanese businesses invested heavily in the ASEAN countries’ natural resources of oil, mining, logging, and farming enterprises.

By the end of the 1970s, the ASEAN nations began to deviate from the classic dependency model. They embarked on the same low-wage labor-intensive development strategy Japan and the Gang of Four had in the 1960s and the 1970s. Just as the Asian Tigers had displaced Japan, so these newly industrialized countries began to displace the Asian Tigers in the 1980s with cheaply made textiles that captured the market; however, the slight difference here is that they continued to export commodities as well, and did not make the full transition to manufactured exports.

Still, the attraction of ever-lowering wages brought in major Western clothing industries, which increasingly searched out the lowest available labor markets for assembling their products. This is what allows the Wal-Mart chain to push prices even lower. Thus, during this period, when many Third World nations were struggling under the weight of foreign debt and the effects of the post–1973 recession, these ASEAN countries experienced growth rates between 6 and 8 percent.

Learn more: Government versus Market in East Asia

Labor Unrest in Japan and Asian Countries

One of the keys to the success of this growth development was the ability to repress potential labor unrest arising from this low-wage strategy; here, the authoritarian state played a crucial role. All of the countries in the region had some form of an authoritarian or soft-authoritarian state—at least in the initial decades of industrialization—that could perform this repressive function. Starting in 1961, South Korea, like Japan, had a democratic constitution—but it had a military-dominated, one-party system.

One of the keys to the success of this development strategy, as in Japan, was the ability to repress potential labor unrest arising from this low-wage strategy

Taiwan, after they left China, had an openly undemocratic, one-party system dominated by the Guomindang (GMD), the Communists who ruled from 1949 until 1986. Beginning in the mid-1980s, the country began a 10-year transition to a freer electoral system.

Hong Kong was a special case because it was a British colony, up until its transfer to China in 1997. The Philippines and Indonesia began their postcolonial status with democratic political systems, but in both cases, the countries experienced military coups in the mid-1960s, which established long-term dictatorships in the crucial period of industrial development. The Philippines did not experience a restoration of democracy until1986; Indonesia’s took place in the 1990s.

In the Philippines, Indonesia, and Thailand, growing tensions were caused by their low-wage industrialization model, and resulted in violent rural insurrections that were ruthlessly put down by their authoritarian governments. The insurrections rose out of resentments caused by the widening gap between the entrepreneurial few and the poverty of the rural masses. Rural populations faced the choice of working as landless laborers in the countryside, or emigrating to the cities and taking low-wage jobs in sweatshops.

Thus, each government’s ability to prevent labor pressure from rising wages and improving conditions was critical to maintaining its edge in the global market and, thus, was critical to its development strategy.

Common Questions About Asian Tigers

Q: What countries make up the four Asian tigers?

The four Asian Tiger countries are Hong Kong, Singapore, South Korea, and Taiwan.

Q: What is Asian Tiger economy?

Asian Tiger economy refers to the way in which four Asian countries underwent a burst of economic growth, rapidly becoming a major exporter of goods shipped globally.

Q: What are the characteristics of the Asian Tigers?

The Asian Tiger countries are primarily concerned with producing exports, educating their citizens, and minimizing costs of production through cheap, low-skilled labor.

Q: How did the Asian Tigers develop?

As Hong Kong, Singapore, South Korea, and Taiwan experienced rapid growth, they became world leaders in technology products and benefited from improved infrastructure, education, and standard of living. They are now known as the Asian Tiger countries.

This article was updated on August 29, 2019

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