A leaf from Asian Tigers

27 Sep, 2013 - 00:09 0 Views

The Herald

This is part 2 of the first article published on this column last week as Zimbabwe seeks to adopt proven, credible and sound Economic policies the Asian Tigers provide an appealing model.
THE term Tiger Cub Economies collectively refers to the economies of Indonesia, Malaysia, the Philippines, and Thailand, the four dominant countries in Southeast Asia.

Tiger cub economy indicates that these economies are on a similar, albeit slower, growth trajectory as the original Asian tigers: Hong Kong, Singapore, South Korea and China.

The tiger cub economies have significant disparity in characteristics, such as their size, development and economic growth model.

Indonesia is the largest of the tiger cub economies, with a population of more than 235 million, making it the world’s fourth-most populous nation, with a gross domestic product (GDP) in excess of US$500 billion.

On the other hand, Malaysia has a population of only 28 million, but had per-capita GDP on a purchasing power parity basis, of US$13 800 in 2009; thrice that of Indonesia.

Tiger Cub Economies are so named because they follow the same export-driven model of economic development pursued by Hong Kong, Singapore, South Korea and China, which are collectively referred to as the Four Asian Tigers.

Young tigers are referred to as “cubs”, the implication being that the four newly industrialized countries who make up the Tiger Cub Economies are rising Tigers.

In fact, all four countries are included in HSBC’s list of top 50 economies in 2050, while Indonesia and the Philippines are included in Goldman Sachs’s Next Eleven list of economies because of their rapid growth.

Initially the West particularly the US played a leading role in the building of Asian Tigers by pumping capital, ideas, technology and offering markets to the Asian Tigers.

This was during the peak of the Cold War when the Americans were trying to attract more small nations away from Socialism and Communism.

So while the West may not fund Zimbabwe’s economy, the country has other advantages which the Tigers didn’t have such as the presence of huge mineral resources like Diamonds ,Gold ,Platinum etc whose royalties can be securitised to raise needed capital.

But looking back at the Tiger States themselves we see that although they still sit behind the Asian powerhouses, such as China (they were never going to be rivals to China or Japan’s dominance) they critically stay in front of the Tiger Cub economies.

Malaysia may have come a long way but economic power in South East Asia remains firmly in Singapore.
Singapore and Hong Kong, being city states, focused on service industries and big business.

They became centres of international finance, with stock markets that easily rival the FTSE 100 in London or the Dow Jones in New York.

They became the site for business’s Asian and even global headquarters and their understanding of the importance of making international hubs of their respective cities have been critical to their success (there’s a reason that people consistently vote Singapore’s Changi Airport and Hong Kong International as the world’s best airports).

By contrast the larger nations of China and South Korea have become manufacturing giants. South Korea has easily become the new focus of Asia’s technology boom.

Whereas Japanese brands, such as Panasonic, Toyota and Sony, dominated trade in the 1980?s and 90?s they have been surpassed by Korean brands, such as Samsung, HTC, LG and Hyundai which now represents Asian technology globally.

Manufacturing has made Seoul, South Korea and Taipei, China global cities of neon skylines and skyscrapers and their countries destinations for businesses and politicians the world over.

But more than the economics they have used their wealth to bring about real terms social development. They have developed strong education and healthcare systems, have established policies to counteract poverty and they have put many back into the system to improve the quality of life for all their citizens.

It is this development of progressive and affluent societies that have marked them out from China’s great economic boom and
have ensured that they stay ahead of the competition from the Philippines and Indonesia, who still have a long way to go in the fight against poverty.

These are nations that rose rapidly on the back of the first waves of Asian development and have maintained their position on top of the economic pile, despite competition from new rising powers. They are centres for global trade, symbols of the spread of global capitalism and manufacturing giants that have ensured a global saturation of their brands.

Overseas Chinese entrepreneurs played a prominent role in the development of the region’s private sectors.

These businesses are part of the larger bamboo network, a network of overseas Chinese businesses operating in the markets of Malaysia, Indonesia, Thailand, and the Philippines that share common family and cultural ties.

China’s transformation into a major economic power in the 21st century has led to increasing investments in Southeast Asian countries where the bamboo network is present.

Now fast approaching the regional leaders, “Tiger Cub” economies are performing well across the overall prosperity rankings, thanks in large part to increasing levels of foreign direct investment (FDI), as more investors have been attracted by regional stability, relatively low labour costs and a high output of electronics and components.

Among the Tiger Cubs, Thailand and Indonesia receive the highest levels of FDI (US$8,6 billion and US$8,1billion) while each of the Tiger Cubs receives higher average inflows of FDI than South Korea.

Indonesia is a particular success story of the ‘Tiger Cubs’, climbing 26 places in the prosperity rankings since 2009 (now in 63rd position), while Malaysia ranks in 43rd position overall and 15th in the Economy sub-index — the highest position of all the Tiger Cub nations.

The Legatum Prosperity Index™ is a unique and robust assessment of global wealth and well-being, which benchmarks 142 countries around the world in eight distinct categories: economy, education, entrepreneurship & opportunity, governance, health, personal freedom, safety and security and social capital.

Jeffrey Gedmin, president and CEO of the Legatum Institute, said: “The Legatum Prosperity Index™ allows us to paint a comprehensive picture of what makes a country truly successful, encompassing traditional measures of material wealth, as well as capturing citizens’ sense of well-being — from how safe they feel, to their perceived personal freedom.

“It is encouraging to see a new generation of promising economies come to the fore in this year’s Index. However, GDP alone can never offer a complete view of prosperity.

“In order for these Tiger Cubs to fulfil their full potential and continue to scale the global prosperity rankings, leaders in these countries must overcome the barriers that remain — encouraging tolerance, providing top quality education and distributing wealth more equally amongst citizens.”

Malaysia, one of the “Tiger Cubs”, represents the new wave of economic power in Asia. Its capital, Kuala Lumpur, stands as the glittering centre of economic development, with the Petronas Towers acting as the show-piece for the progress Malaysia has made in recent years.

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