The East Asian Model
From the “Asian tigers” and the East Asian “miracle”
From the “Asian tigers” and the East Asian “miracle”
The Asian Tigers or Asian Dragons
is a term used in reference to the highly free and developed economies of Hong
Kong, Singapore, South Korea, and Taiwan. These nations and areas were notable
for maintaining exceptionally high growth rates (in excess of 7 percent a year)
and rapid industrialization between the early 1960s and 1990s. By the 21st
century, all four had developed into advanced and high-income economies, specializing
in areas of competitive advantage. For example, Hong Kong and Singapore have
become world-leading international financial centers, whereas South Korea and
Taiwan are world leaders in manufacturing information technology. Their
economic success stories have served as role models for many developing
countries, especially the Tiger Cub Economies.
Despite a World Bank report
crediting neoliberal policies with the responsibility for the boom, including
maintenance of export-led regimes, low taxes and minimal welfare states were
also praised, but institutional analysis also states some state intervention
was involved. The World Bank report acknowledged benefits from policies of the
repression of the financial sector, such as state-imposed below-market interest
rates for loans to specific exporting industries. However, it also pointed out
free trade and less government spending were the driving force. As a result
these economies enjoyed extremely high growth rates sustained over decades.
Other important aspects include major government investments in education,
non-democratic and relatively authoritarian political systems during the early
years of development, high levels of U.S. bond holdings, and high public and
private savings rates.
A period of liberalization did
occur, and the first major setback experienced by the Tiger economies was the
1997 Asian financial crisis. While Singapore and Taiwan were relatively
unscathed, Hong Kong came under intense speculative attacks against its stock
market and currency necessitating unprecedented market interventions by the
state Hong Kong Monetary Authority, and South Korea underwent a major stock
market crash brought on by high levels of non-performing corporate loans. As a
result and in the years after the crisis, all four economies rebounded
strongly. South Korea, the worst-hit of the Tigers, has managed to triple its
per capita GDP in dollar terms since 1997.
By the 1960s, investment levels
in physical and human capital amongst the four countries far exceeded other countries
at similar levels of development. This subsequently led to a rapid growth in
per capita income levels. While high investments were essential to the economic
growth of these countries, the role of human capital was also important.
Education in particular is cited as playing a major role in the Asian miracle.
The levels of education enrollment in the four Asian tigers were higher than
predicted given their level of income. By 1965, all four nations had achieved
universal primary education. South Korea in particular had achieved a secondary
education enrollment rate of 88% by 1987. There was also a notable decrease in
the gap between male and female enrollments during the Asian miracle. Overall
these progresses in education allowed for high levels of literacy and cognitive
skills.
Export policies have been the de
facto reason for the rise of these four Asian tiger economies. The approach
taken has been different among the four nations. Hong Kong, and Singapore
introduced trade regimes that were neoliberal in nature and encouraged free
trade, while South Korea and Taiwan adopted mixed regimes that accommodated
their own export industries. In Hong Kong and Singapore, due to small domestic
markets, domestic prices were linked to international prices. South Korea and
Taiwan introduced export incentives for the traded-goods sector. The
governments of Singapore, South Korea and Taiwan also worked to promote
specific exporting industries, which were termed as an export push strategy.
All these policies helped these four nations to achieve a growth averaging 7.5%
each year for three decades and as such they achieved developed country status.
The role of Confucianism has been
used to explain the success of the Four Asian Tigers. This conclusion is
similar to the Protestant work ethic theory promoted by German sociologist Max
Weber in his book The Protestant Ethic and the Spirit of Capitalism. The
culture of Confucianism is said to have been compatible with industrialization
because it valued stability, hard work, and loyalty and respect towards
authority figures. There is a significant influence of Confucianism on the
corporate and political institutions of the Asian Tigers. Confucianism was
taught in Singaporean schools until the 1990s. Confucian seminars were offered
by South Korean companies like Hyundai for company management. Prime Minister
of Singapore Lee Kuan Yew advocated Asian values as an alternative to the
influence of Western culture in Asia. This theory was not without its critics.
There was a lack of mainland Chinese economic success during the same time
frame as the Four Tigers, and yet China was the birthplace of Confucianism.
During the May Fourth Movement of 1919, Confucianism was blamed for China's
inability to compete with Western powers.