RECENT ECONOMIC DEVELOPMENT OF EAST ASIAN NIES

Abstract

The East Asian Newly Industrializing Economies (NIEs) - namely Hong Kong, Singapore, South Korea and Taiwan, have always been the focus of many development economics literatures. Many are fascinated by their spectacular growth performances that have been achieved in such a short period of time. Within a space of 30 years, the NIEs have advanced themselves from poor, less developed countries to semi-industrial countries, on the verge of joining the ranks of the developed countries. In recent years, the NIEs seem to be exhibiting downward trends in their growth performances. The feat of 'double-digit' growth rates of the yester-years seems unlikely to be repeated again. In short, flaws have started to appear in the once 'miraculous' growth records of the NIEs. 1997 had been a very significant year for the NIEs. Several events that occurred in that year brought about serious repercussions on all the NIEs. Firstly, there was Hong Kong's reunification with China on 1 July 1997, which held much significance for both Hong Kong and Taiwan. Secondly, the Asian region had been plagued by the Asian financial crisis since July 1997. Among the NIEs, South Korea had been most badly hit by the crisis and even had to seek help from the International Monetary Fund (IMF). Though the other NIEs did not suffer the full brunt of the crisis, they could not escape its impact. These events accentuated and exacerbated the decline in the performances of the NIEs. The rise of the NIEs had been rapid, but their unsuspected downturn had occurred far more rapidly. Many who had once praised and affirmed the East Asian miracles had began to declare it a myth. Existing literatures on the NIEs were more concerned with the making of their success and few provided updates on the recent economic development of the NIEs. Thus, this thesis serves as a bridge between past literatures and future studies and research that are likely to be done on the NIEs. Before the future of the NIEs can be charted, there is a need to evaluate their recent economic development. This thesis could not have been more timely, given the circumstances the NIEs are in right now. It explores the problems that the NIEs have faced in recent years and the counteractive policies and measures that they had implemented. Some of these problems encountered by the NIEs are born of success, while others are largely beyond their control. A glimpse into the past development experiences of the NIEs revealed the somewhat different routes that they had taken to arrive at where they are today. Apart from Hong Kong, who relied heavily on the free market system, the other NIEs have had very pragmatic and flexible government, who would not hesitate to implement the necessary reforms to revamp their economies. Given the continuous efforts taken by the NIEs to sustain their rapid growth, there is little doubt that they will recover from the temporary setbacks that had besieged them. The occurrence of the Asian financial crisis seemed to be well-timed, as it compelled the NIEs to take stock of their weaknesses and problems. After this period of consolidation and adjustment, the NIEs would emerge lean, fitter and more competitive than before. This analysis on the recent economic development of the NIEs would hold important lessons for developing countries and Third World countries, who wish to emulate their success.