The Four Asian Tigers

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The four Asian Tigers—Hong Kong, South Korea, Singapore, and Taiwan—are known for their remarkable growth over the latter half of the 20th century, which propelled them into some of the world leaders in finance and high value added manufacturing. The causes, or roots, of such a phenomenal success have been at the center of a vast literature written on these economies during the past decades, a debate still raging up to this day. The overwhelming tone of academic work on the subject, however, seems to attribute the success of these economies to their respective policies and institutions, which enabled each country to utilize their comparative advantage for advancing economic growth. Literature on the development of the Asian Tigers points to specific endogenous factors that are deemed crucial to their success. For example, the views put forth by Paul Krugman in his influential article “The Myth of Asia’s Miracle” (1994) emphasize that although the development of the Asian Tigers were noteworthy, they were predictably so—that is, not so “miraculous”—based on their growth in inputs. Literature fails to acknowledge the presence of time and geographic sensitive, exogenous factors as influential in the outcome of these economies. This paper intends to analyze the extent of the actual influence exogenous factors had on the Tigers’ growth, and argues that the Tigers’ success was a phenomenon partly dependent of the idiosyncrasies of that time in history. We will first highlight the internal factors contemporary scholars ascribe to the success of the Tiger’s economies. We will follow by examining favourable external factors that were present during the initial takeoff of the Tiger economies during the early 1960s onward, and we will draw the conclusion that the success of the Asian Tigers was a result of both internal and external factors.

Internal Factors of the Asian Tigers’ Economic Success
The majority of today’s economists have come to a common consensus that government interventions were vital to the success of the Asian Tigers. In Taiwan, the government’s strong control over fiscal spending was evident as two-thirds of the US$100 million in the annual non-military aid (1951-1965) were channelled for the development of infrastructure projects and human resources. Also, drastic efforts to improve human capital led to 13% allocation of the budget toward education (1954-1968) . Around the same time, heavy government interventions were also being documented in Singapore with the establishment of “Government Linked Companies” to ensure the government’s involvement in business negotiations with foreign investors; a method known as “State Capitalism” by some economists . In Korea, five year plans were implemented from 1962-1992, indicating the government’s strong influence in import protection, tax benefits, credit allocation, industrial targets, and export promotion . Compared to the other Asian Tigers, although the government did not directly intervene in the economy, Hong Kong’s decision to highly subsidize housing and education to accommodate refugees and entrepreneurs highlighted the government’s aggressive socioeconomic approach to spur investments, thus, implying the government’s positive non-intervention policy aimed at secure regulation, efficient administration, stable economic policy and low taxation . Other internal factors must also be taken into consideration; most importantly, the level of education amongst the population . Another variable that affects the greater savings rate of the Asian Tigers was the relatively smaller dependency ratio compared to South Asia. Moreover, the Confucian culture of savings is also reflected in the structure of the financial system. The best example of this is demonstrated by Singapore’s mandatory Central Provident Fund Scheme where a certain percentage of employees’ monthly salaries is deducted for pension funds . As a result, the government was able to allocate...
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