Are the 'Four Asian Tigers' a good model for developing countries?

The Four Asian Tigers have developed in a slightly different way to most of the other developed countries in the world. The question is though; is their chosen path of development one that developing countries should follow? And, if so, is this the contemporary way to develop?

Before I can answer these questions, I think I need to go back to the very beginning...........

Who are the Four Asian Tigers?
The term the Four Asian Tigers refers to the countries South Korea, Taiwan, Hong Kong and Singapore (and primarily their economies) and the term started being commonly used in the 1970's. They are grouped in this way as since the 1960's they have all followed a similar path to development and went on to reach the fully developed status at the start of the 21st Century.

What did the Tigers do differently in terms of provoking development?
The conventional step taken to kick start development in the 1960's was to implement import substitution. This involved raising tarrifs to reduce the imports of consumer goods and thereby allowing a country's own industries to develop and stabilise. The Asian Tigers, however, decided to capitilse on the growing materlistic attitude developing in much of Europe and North America and so pursued an export-driven model of industralisation and development instead and this was achieved by rapidly increasing the production of goods that could be exported to the highly industralised nations of the world.

What common characteristics did the Tigers share?
These four countries have experienced very rapid growth and have had many things in common as they have done so:
- All four territories had a strong degree of Chinese influence, with most having a large ethnic Chinese community. Singapore had a population that included 75% ethnic Chinese, Hong Kong had 95% and Taiwan had 98%.
- They were relatively poor during the 1960's and had an abundance of cheap labour.
- They had non-democratic and relatively authoritarian political systems during the early years, so the governments could easily drive through their plans for economic development.
- They focused their development drive on exports to richer industralised nations rather than focusing on import substition, which meant that they built up trade surpluses with the industralised countries.
- The Tigers singled out education as a way of improving the productivity of the labour force and so they ensured that all children attended primary and secondary school. They then went on to invest heavily in the development of their university systems and in sending students to foreign universities.
- Domestic consumption and purchase of consumer goods was discouraged at first and this was done by placing a high tariff on imports. This high tariff on imports led to the encouragement of high saving rates which then allowed for specific areas of industry to be invested in.
- Trade unions were discouraged and in their place, governments encouraged managers to provide job security and other benefits in a paternalistic type of industrial organsiation.
- They all sustained double-digit rates for growth for decades.
- While industry was developing, agriculture was protected by subsidies and tariffs on non-essential imports. Land reforms were created to ensure that small and medium-sized farmers had security of tenure, which, in turn, encouraged them to invest in their land. This resulted in a cease in rural discontent and also allowed investment in the mechanisation of agriculture which released rural workers from the land and enabled for further industrialisation to occur.

Good or Bad???
This method of development seems to have worked for the Four Asian Tigers as, at the start of the 21st Centruy, they had all reached high positions in the ranking of countries by total GDP but is this path to development applicable to other countries or, in fact, should developing countries be encouraged to use the Tigers as role-models and therefore mirror they way in which they developed?

Well the Asian Tigers have received quite a bit of criticism from economists and geographers and their development has not been as smooth as it may first sound.

The biggest criticism they have faced is focused on the fact that they have relied on exports, at the cost of home demand, to develop. This has left the Tigers incredibly reliant on the economic health of their targeted export nations - a very risky factor to rely on! Their early development was also based on the utilisation of their abundant cheap labour force; which has now been rivalled and surpassed by the likes of China and India; who are agruably emerging as almost like the new tigers as they have incredibly fast growing economies.

However, fast expansion of a country's economy is not necessarily a good thing and, in the 1990's, the Four Asian Tigers learnt this lesson the hard way. Their economies had expanded so fast (too fast in reality) that their growth provoked the prices of properties, stocks and shares to become overvalued. This caused several of the stock markets to collapse, thereby creating a worldwide financial crisis. After much social unrest and political instability the Tigers had to recieve help from the International Monetary Fund.

Thankfully, since the 1990's crisis most of the Tiger economies have become finanically stable and now have stronger companies and regulatory frameworks in place to prevent another similar crisis. However, this has shown many Asian governments that the easy and predictable prosperity of export-led growth and cheap labour costs will not last forever. The emerging manufacturing giants of China and India are forcing the Tigers to look into creating new industries that add more value and create stronger service sectors to help provide strong demand at home, so that they can compete.

The question I really want to answer though is, should developing countries try and copy the journey taken by the Tigers?

I am not really sure, to be honest, and there is clearly no right or wrong way to develop. The 1990 crisis shows that it is ever so dependent on the economic health of other countries - something I think is extremely risky in the current global economic climate. I also question just how sustainable this development is, due much in part to its dependency on many influential factors beyond their control, but then again, as I do more and more reading around the subject of development, I struggle to see if development as we know it is actually sustainable at all (another rather large debate though so perhaps I will leave it for another blog post!). On the other hand, it seems to be an alternative to what I think I would class as the 'old-fashioned' development that utilised colonialism as the building blocks/foundations and so could, perhaps, be used be other similar countries. So, what do you think, are the Tigers a good model for other countries?