With China’s economic growth slowing, Chris Pritchard offers a glimpse into what lies behind the fiscal rise of four other Asian countries.
One trend quickly becomes apparent during a trawl through recently published academic papers and media articles: Japan, South Korea and Singapore are increasingly referred to as developed economies.
Mind you, Taiwan should probably also make this list—but it’s not a common topic of study and is seldom in the news. One of the world’s more overlooked places, it quietly beavers away, successfully doing what it does and generally remaining beneath the radar.
When several Asian nations stunned the world by posting giant growth rates, leaving the rest of the continent in their wake, they were dubbed the Asian Tigers: a foursome comprising Singapore, Hong Kong, South Korea and Taiwan. Some analysts queried Japan’s omission but were chided with reminders that growth there had slowed and the country had attained developed nation status before the Tigers’ advance.
The term ‘Asian Tigers’ is seldom heard these days. Anyway, Hong Kong, wouldn’t now be among these regal beasts, having been reincorporated into China, a developing rather than developed economy. Admittedly, Hong Kong runs its economy separately but takes care not to offend Beijing.
While China is Asia’s biggest and fastest-growing economy (even with today’s greatly slowed growth), as well as many countries’ number-one trading partner, it remains basically a village-centred nation. Foreign visitors often remain oblivious to this truism. Instead, they are awestruck by futuristic cities and impressive urban infrastructures.
Many other Asian nations also boast showpiece cities: Thailand’s Bangkok and Malaysia’s Kuala Lumpur, for instance. Most have thriving and diverse manufacturing sectors. Some-India, for instance—can point to healthy growth rates. But they remain developing nations where rural life anchors societies.
The exceptions:four highly-industrialised nation—Japan, Singapore, South Korea and Taiwan—where government policy and intervention spearheaded rapid growth.
Are they role models to be emulated by other countries? Perhaps, though critics contend it’s too high a price to pay, given required erosions of civil liberties. Differences exist in how the four leapfrogged their Asian neighbours but there are common threads, notes Dr Natasha Hamilton-Hart, professor of Asian business at New Zealand’s University of Auckland, who lists three examples:
Determination to create competitive advantage and move up technology and skills ladders through interventions, rather than just following market dictates.
Timing—they took critical steps towards industrialisation during the Cold War, benefitting from a less demanding international trade regime than at present (regulatory snags on the table in current trade negotiations did not really become issues until relatively recently), allowing them to access external markets while giving them wide leeway to pursue the domestic developmental and regulatory policies that suited them.
Coherent and strong bureaucracies delivering a wide range of services effectively, from education to industrial promotion.
Mini-profiles of these four Asian nations allow peeks into their secrets of success:
Startling former enemies, a crushingly defeated Japan rapidly rose from the ashes of Wold War II and the atom-bombing of Hiroshima and Nagasaki to become Asia’s most prosperous nation, quickly attaining developed nation status.
Analysts say Japan was helped by cultural factors: national pride, tenacity, shame over military defeat, thrift, hard work and honesty. An indicator of the latter: more than 90 per cent of valuables were returned to rightful owners after the 2011 earthquake, which the Japanese media didn’t consider unusual in a nation known (despite yakuza gangsterism) for low crime rates.
Some observers of the land of shinkansen (bullet trains) and sararimen (salarymen) point to a torn social fabric, citing slowed growth rates and changed behaviour. Young people now switch jobs frequently where salarymen of previous generations held positions for their entire working lives. But customs persist: a visit to Shinjuku’s, a Tokyo nightlife area, reveals that employees are expected to accompany the boss to karaoke bars and don’t get home until he wends his (possibly unsteady) homeward way.
True, growth is less dramatic than it was but wealth allows wiggle room. Japan (population: 126.2 million) remains a major exporter of vehicles, machinery and consumer goods to foreign (including Asian) countries.
It seemed an unlikely miracle, transforming a backwater into an economic powerhouse, but it happened. Singapore decided to go it alone, breaking away from Malaysia, a former British colony. The young multiracial nation (Chinese majority with Malay and Indian minorities) celebrated its 50th anniversary this year. It now has a higher per capita income than Britain.
The city-state’s very existence is credited to one man, father-of-the-nation Lee Kuan Yew, who died this year. Lee guided Singapore to prosperity. Under his control, the 718.3 square kilometre mini-country was, on the face of it, democratic but government intervention controlled the personal behaviour of the population (now 5.5 million) as it deftly steered economic policy. Critics charge that creativity and civil liberties were stifled. T-shirts call Singapore a ‘fine city’ (with fines for spitting, jay-walking, importing chewing gum, urinating in lifts and other offences). But the economic dream came true. Further, Singapore is Asia’s least corrupt country.
Singapore has become an important financial hub and provider of sophisticated services in education, healthcare and other areas. A little-known fact: it’s a major oil exporter. Oil is imported and then re-exported. In fact, 48 per cent of imports are re-exported, sometimes with added value.
Even in aviation, government policy dictated that Singapore Airlines should have a flag-waving role, spreading the word globally about the nation’s high standards.
Lee—who retired as Prime Minister in 1990 and from the Cabinet in 2011-created a booming, bustling entity. Controls have been relaxed in recent years (Singaporeans now jaywalk with impunity) but most analysts don’t expect consequent economic decline.
After the 1950-53 Korean War, South Korea, though victorious over North Korea, was an economic basket-case. Poorer even than Mozambique, this historically impoverished nation with minimal natural resources transformed itself by sheer tenacity into the world’s eleventh biggest economy, wealthier than Spain or New Zealand.
Often described as the world’s most-wired nation (because of ubiquitous high-speed internet connections) and bandwidth capital of the world, it has enthusiastically embraced or pioneered hi-tech innovations without diluting centuries-old traditions.
Reverence for the past is shared with role model Japan, with which the country has a love-hate relationship. Japan is home to a large Korean diaspora and the two are cordial at official levels. But resentments simmer, mainly over cruelty when Korea was under Japanese rule from 1910 to 1945. However, rivalry helped speed South Korea’s economic advancement. It’s an anything-Japan-can-do-we-can-do-bigger-and-better situation with multitudinous examples.
Consequently, South Korea (population 50.5 million) is one of the world’s major exporters of vehicles, ships and trains to a world that is also the recipient of made-in-Korea consumer electronics, including mobile phones. Observers note similar attributes to those of Japan—for example, strong national pride and encouragement of thrift and savings.
Government policies in the pre-democratic aftermath of the Korean War helped spur industrial development. One prong of official policy was creation of the chaebol (family-run conglomerates). These remain powerful, with Hyundai and Samsung among them. Critics of the chaebol system argue it bestows too much power on a few select families, but it certainly hasn’t hurt economic development.
Daniel Tudor, Seoul-based correspondent of The Economist, observes in his book Korea: The Impossible Country, that the country is often overlooked because of higher-profile neighbours, but ‘South Koreans have the most impressive story of nation-building of the past century’.
Taipei’s Directorate-General of Budget, Accounting and Statistics recently cut its predictions, forecasting the economy would grow 1.56 per cent rather than a previously predicted 3.28 per cent in 2015. A mature economy, Taiwan’s doesn’t show the spectacular growth that China’s has at times produced.
Nonetheless, it’s ticking over nicely, with a highly-educated workforce and a reputation for creativity and innovation. The fact that Taiwan is claimed by China, with Beijing successfully persuading almost all nations to shun diplomatic relations with it, hasn’t lessened Taiwan’s trading clout. Instead of embassies, Taiwan maintains economic and/or cultural liaison offices in other countries. It styles itself the Republic of China while the mainland uses the moniker People’s Republic of China.
Without hi-tech exports, the economy would definitely be weaker, contends Chiou Jiunn-Rong, a professor at Taiwan’s National Central University and a prominent commentator on government policy. It’s a message which the island, off China’s coast, obviously takes to heart. Manufacturers expect exports to grow steadily, though not dramatically, so long as global demand doesn’t slide. The world’s nineteenth-largest economy, Taiwan dominates global trade in semi-conductors as well as being an important source of other computer parts. Major exports include computers, phones and a range of other consumer electronics.
What’s more, high pay means considerable disposable income, increasing domestic demand. Increasingly, Taiwanese companies-like those in Japan and South Korea—outsource goods manufacturing to low-wage Asian countries. Commentators isolate these key traits in contributing to Taiwan’s economic success: making maximum use of business connections, national pride and manufacturing whatever buyers want.