Contents

Introduction
Singapore South Korea Hong Kong Taiwan Asian Crisis 1997 India and the Asian Tigers

 The Four Asian Tigers or Asian Dragons are the

highly developed economies of Hong Kong, Singapore, South Korea and Taiwan. These regions were the first newly industrialized countries. They are known because they had very high growth rates (they become rich very fast) and fast industrialization between the early 1960s and 1990s. Now people say that all four countries are rich countries. All four Asian Tigers have a lot of people who are very educated and good at their jobs. They also did different things, and tried to do them better than other countries. For example, Hong Kong and Singapore became very good at international finance, while South Korea and Taiwan became very good at information technology.

INTRODUCTION

Singapore became part of Malaysia on 16 September 1963.

The merger was thought to benefit the economy by

creating a common, free market, and to improve Singapore's internal security. Singapore gained its independence and became a republic following an ejection from Malaysia on 9 August 1965. Problems faced

Mass unemployment Housing shortages Education Lack of land and natural resources such as petroleum

HISTORY
1965 TO 1979

ECONOMIC GROWTH-industries, tax holidays, port utilization(entrepot), exports

EDUCATION-English(medium), practical not intellectual, one fifth budget

HOUSING- cheap affordable houses NATIONAL IDENTITY- foreign born, racial riots. National education, flag hoisting

LAW AND ORDER-longer working hours, lesser holidays PUBLIC SERVICE COMPANIES-nationalized. For example, SIA, SingTel

NATIONAL DEFENCE-national service, two and a half years

The 1980s to 1990s

Unemployment rate < 3% . Real GDP growth = 8%. Upgrading technology in its industries. Singapore Changi Airport opened => extension of entrepot trade and attracting investors through a convenient way to enter and leave the country.

The Housing Development Board continued to promote public housing.

Singapore upgraded its military.

Mass Rapid Transit (MRT) line was established. The education system's rigid structure was being criticized.

2000 to present

Crisis faced

SARS outbreak
threat of terrorism. recession

Counter-terrorism measures.
Reduction of National Service training requirements from two and a half years to two.

Primary education was made compulsory .This style of educational policy was still extremely competitive, and favored those that did well initially, and tended to ignore the suffering students, in the process of streaming.

Current scenario

Economic growth in the first quarter was 45.9% Economic growth in the second was 26% Benchmark stock index, the Straits Times Index, did well too Housing market prices rose by 38.1%

Unemployment rate has fallen to 2.2% (the lowest level in almost

two years).

It hasnt issued debt to fund deficit spending for over twenty years. It is ranked tenth in the world in terms of foreign exchange and gold reserves.

Singapore has a chance to overtake China as Asias fastest growing economy.

S O U T H K O R E A

LOCATION

Why is it a Tiger?
Market economy which ranks 14th in the world by nominal GDP 12th in the world by Purchasing Power Parity(PPP)
One of the G20 major economies

Member of OECD , Next Eleven

Low unemployment rate of 3.3%

6th largest exporter , 10th largest importer

Inflation rate (consumer prices): 2.8%

1960s to 1990s
Rapid industrialization

Adoption of outward looking strategy in early 1960s

Strategy promoted economic growth through labor intensive manufactured goods Government initiatives

Inflow of foreign capital was greatly encouraged

Achieved rapid growth in exports and subsequent increases in income

Exports
Shipbuilding
A leading producer of ships, during the 1970s and 1980s

Industry declined during mid 1980s

Expanded in the early 1990s again

The world's dominant shipbuilder with a 50.6% share of the global shipbuilding market (Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering

Mining
Abundance of tungsten and graphite
Coal, iron ore and molybdenum on a small scale

Contd
Construction
60 percent of the work undertaken by South Korean construction companies in the Middle East by 1981
The Dong Ah Construction Company signed a contract with Libya for Libya's Great Man-Made River Project (a US $5.3 billion contract, which, when all five phases were completed, was projected to cost US$27 billion) Samsung C&T Corporation, who had built noteworthy constructs such as Petronas Towers and Burj Khalifa

 Automobile

Contd

One of South Korea's major growth and export industries in the 1980s

By the late 1980s, the capacity had increased more than fivefold since 1984
Hyundai Kia Automotive Group is Korea's largest automaker High-tech industries in the 1990s and 2000s

Armaments
Important manufacturer of armaments, both for domestic use and for export Produces various core components of other countries' advanced military hardware(modern aircraft) Military equipments and technology as mainstream products of exportation to boost its international trade

Imports
US-South Korea Free Trade Agreement

Auto electrical products , beef, LNG, Oil, Minerals

Imports--$323.1 billion: crude oil, food, electronics and electronic equipment, machinery, transportation equipment, steel, organic chemicals, plastics , base metals and articles

Major importers to South Korea (2009)--China (16.8%), Japan (15.3%), U.S. (9.0%), Saudi Arabia (6.1%), Australia (4.6%).

Tourism
In 2007, South Korea had 6.4 million visitors making it the 36th most visited country in the world The number of tourists has grown due to the increased popularity of the Korean wave("hallyu").

Seoul is the principal tourist destination

Seorak-san national park, the historic city of Gyeongju and semitropical Jeju Island

Incheon International Airport, rated the best airport worldwide

Foreign relations
Relations with more than 170 countries and a broad network of trading relationships
Korea and Japan coordinate closely on numerous issues Founding member of the Asia-Pacific Economic Cooperation (APEC) forum 1953 U.S.-R.O.K. Mutual Defense Treaty Korea-U.S. Free Trade Agreement (KORUS FTA) on February 2, 2006 Hosted international events such as the 1988 - Summer Olympics 2002 - World Cup Soccer Tournament (co-hosted with Japan) 2002 - Second Ministerial Conference of the Community of Democracies. 2010 - R.O.K.-Japan-China Trilateral Summit , G-20 Seoul Summit

1990s and the Asian FinancialCrisis

Stable and strong growth in both private consumption and GDP, for the first half of the 1990s Asian Financial Crisis hit in 1997 The Korean Won started to heavily depreciate in October 1997 Non-performing loans at many of Korea's merchant banks Korean Chaebol Daewoo dismantled by the government in 1999 due to debt problems American company General Motors( motors division) , Indian Tata Group ( trucks and heavy vehicles division) In December 1999, president Kim declared the currency crisis over

Post crisis
Moved away from the centrally planned, government-directed investment model toward a more market-oriented one Bounced back from the 1997-98 Asian financial crisis with assistance from the International Monetary Fund (IMF) Extensive financial reforms that restored stability to markets growth rates of 10% in 1999 and 9% in 2000 Slowing global economy and falling exports slowed growth to 3.3% in 2001 Consumer stimulus measures that led to 7.0% growth in 2002 Consumer overspending and rising household debt slowed growth to near 3% again in 2003

Contd
Economic performance in 2004 improved to 4.6% due to an increase in exports and remained at or above 4% in 2005, 2006, and 2007 Slowed to 2.3% in 2008 and just 0.2% in 2009 due to the global financial and economic crisis in the third quarter of 2008 Economic growth rate boosted through deregulation, tax reform, increased FDI, labor reform, and free trade agreements (FTAs) with major markets Economy responded well to a robust fiscal stimulus package and low interest rates in 2010

HONG KONG

SMALL STEPS MAKE A BIG LEAP

UNDER BRITISH COLONIZATION: 1897-1997

Sudden boost in foreign direct investment in the 1940s

1949-PRC ( Peoples Republic of China) comes into being

Foray into textiles.development of highways, shipping,

subways , high- tech products, electronics in 1960-70s.

Hugh investments in education-enhancement of human capital Shift from manufacturing to services sector. Emphasis on export economystrong strategic partnerships

with PRC.

REINTEGRATION WITH CHINA 1997-present

One country ,two systems Hong Kong firms began to move

their labor-intensive activities to the mainland to take advantage of cheaper labor. Increase in trade, tourism, food grain imports. Greater inflow of foreign investment in both regions. Hong Kong- SAR( Special Administrative Region)

WHAT MAKES/MADE HONG KONG AN ASIAN TIGER??

Economy

Role of the Government

Partnerships with PRC Room for savings

Fiscal policy
Strategic Location Technological progress Investments in education Strong public services Transportation and communication GDP growth and stock markets.

 Ninth most traded currency in the world The Hong Kong Stock Exchange is the 6th largest in the world,

with a market capitalization of about US$2.97 trillion. GDP per capita at purchasing power parity is the 7th highest globally GDP (purchasing power parity) GDP - real growth rate $313.3 GDP - per capita (PPP)
billion , 6.8% , $45,900

Unemployment rate

4.3% (2010 est.) 5.4% (2009 est.)

$305 billion , -2.7% , $43,200

$325.8 billion , 2.3 % , $44,600

 Exports : $388.6 billion

commodities :electrical machinery and appliances, textiles, apparel, footwear, watches and clocks, toys, plastics, precious stones, printed material partners :China 52.7%, US 11%, Japan 4.2% EU 11.2%

Imports : $431.4 billion

commodities: raw materials and semi-manufactures, consumer goods, capital goods, foodstuffs, fuel (most is reexported) partners :China 45.1%, Japan 9.6%, Taiwan 7.6%, Singapore 4.8%, US 4.7%

GDP - composition by sector agriculture: 0.1% industry: 7.6% services: 92.3% (2010 est.)

TAIWAN

 developed capitalist economy

19th largest in the world in GDP Real growth in GDP has averaged about 8%

during the past three decades foreign reserves are the world's fourth largest service sector makes up 73% of the economy

 Uncertainty about the US commitment

Shift from subsidized import-substitution in

the 1950s to export-led growth Development of foreign trade and exports helped absorb excess labor

Industry
Information Technology
TSMC and UMC Small and Medium-sized Enterprises (SME) "e-Taiwan USD 1.83 billion
improve the information and communications infrastructure in Taiwan in five major areas: government, life, business, transport, and broadband increase the number of broadband users on the island to 6 million

 software market grew by 7.1% to reach a value of US$4 billion

digital content production industry grew by

15% in 2009, reaching US$14.03 billion electronics sector is Taiwan's most important industrial export sector Textiles are declining due to labor shortages, increasing overhead costs, land prices, and environmental protection

Agriculture and Energy

Agricultural production accounted for 35.8% of the GDP in 1951
Agriculture comprises about 2.6% of Taiwan's

GDP presently USD 1 billion Lack of natural resources Imported energy totaled USD 11.52 billion in 2002, accounting for 4.1% of its GDP

Foreign Trade
Engine of Taiwan's rapid growth during the past 40 years
economy remains export-oriented

United States is Taiwan's third largest trading partner

11.4% of Taiwanese exports and supplying

10.0% of its imports China has recently become Taiwan's largest import and export partner

Financial Crisis
economy faced a downturn in 2009
heavy reliance on exports which in turn made

it vulnerable to world markets government launched a US$5.6 billion economic stimulus package provided financial incentives for businesses, and introduced tax breaks

 Heightened exposure to world markets will only become a true lever of economic development in the presence of institutions

able to mitigate market failures and manage the competitive challenges and domestic dislocations produced by openness (Park 2002).

Science and industrial parks

Hsinchu Science Park
Industrial Technology Research Institute

(ITRI) Linhai Industrial Park South Taiwan Science Park Central Taiwan Science Park

Future
growth has become much more modest since the late 1990s rise of China must abandon workforce intensive industries Recent developments include moving up the food chain in brand building and design LCD manufacturing and LED lights are two newer sectors biotechnology sector, the creation of fluorescent pet fish and a research-useful fluorescent pig

The ASIAN FINANCIAL CRISIS was a period of financial recession beginning in July 1997 and raised the fears of worldwide economic meltdown due to financial contagion.
Foreign debt-to-GDP ratios rose from 100% to 167% in 199396, then shot up beyond 180% during the worst of the crisis. Indonesia, South Korea and Thailand were the countries most affected by the crisis. Hong Kong were also hurt by the slump. The People's Republic of China, India, Taiwan, Singapore were less affected.

The crisis started in Thailand with the financial collapse of the Thai baht caused by the decision of the Thai government to float the baht, cutting its peg to the USD.

Problems in Thailands economy1.overvalued real estate markets, 2.weak and poorly supervised banking sectors, and 3.substantial short-term borrowing(portfolio investment) 4. Market doubts were compounded by a lack of transparency

Maturity mismatch--borrowing short and investing (lending) long. Currency mismatch--revenue and cost (liability) in different Currencies. *Insolvency caused directly or indirectly by declines in the exchange rates. Moral hazard on the parts of both lenders and borrowers *Past bailouts of developed country lenders encourage moral hazard on the part of lenders. *Implicit guarantee of banks and enterprises too big to fail by governments encourage moral hazard

Direct investment is better than portfolio

The economic downfall started when the HANBO group was found bankrupt and the Korean government was found to be deeply corrupted. They began reexamining their banking practices and started calling in short-term loans, thereby "creating a vicious circle of Liquidity . This, in turn created a "domino effect" as more companies failed HOW DID THEY SURVIVE THEIR SUDDEN ECONOMIC DOWNFALL? 1. To avoid withdrawal of private lending , the interest rate was kept 4% above US treasury bills.

HONG KONG survived the Asian Crisis due to its FISCAL POLICY 1. Saving of the budget surplus

2.Fixed exchange rate.

Singapores resilience in the face of the large and adverse economic shocks triggered by the Asian financial crisis can be traced to the four foundations it has laid over the years. These are:

(1) the maintenance of strong economic fundamentals, including a healthy banking sector, (2) the adoption of a managed exchange rate system,(MAS,NEER) (3) The establishment of an adjustable wage

The IMF created a series of bailouts ("rescue packages") to restore Asian currency.
BUT THE SUPPORT WAS CONDITIONAL.. It demanded drastic economic reforms influenced by neoliberal economic principles called a "structural adjustment package" (SAP). SAP included1. government spending to reduce deficits 2. allow insolvent banks and financial

The effects of the SAPs were mixed and their impact controversial. The contradictory nature of these policies, arguing that in a recession, the traditional Keynesian response was to 1.increase government spending, 2. prop up major companies, and 3.lower interest rates. The path of "fast track capitalism was

The East Asian economies are unlikely to have another crisis in foreseeable future 1.The current account gaps have disappeared. 2. Short-term foreign capital (portfolio investment) has reduced. 3. External debts have declined.

4. Foreign exchange reserves has risen in absolute terms.

INDIA AND THE ASIAN TIGERS

India & The Asian Tigers

Indias Trade with the Asian Tigers Common features of the Tigers

Lessons for India

Entigerment for India?

Trade
Asian Financial crisis of 1997 Indias Look-East Policy

Indias membership with the ASEAN of which four of the six East Asian Tigers are a part.

India became a Dialogue partner of ASEAN in 1992 and Summit level partner in 2002 Factor Endowment Theory Agricultural export from India and technology from the Tigers

Indias total trade With World Year (US $millions) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 37549.10 38019.73 45517.90 54999.72 68571.85 72663.43 76583.23 75590.17 86558.16 94203.71 95524.22 114356.76 142089.38 194973.09

Hong Kong total trade with India

Percentage share in Indias total trade % 1.933% 2.314% 3.194% 3.274% 3.227% 3.005% 2.939% 3.082% 3.827% 3.688% 3.250% 3.142% 3.348% 2.780%

Korea Republic total trade with India (US $millions) 555.31 498.36 769.93 961.59 1275 1403.25 1471.1 1701.57 1751.36 1338.2 1617.56 2171.14 3596.49 4548.57

Percentage share in Indias total trade % 1.479% 1.311% 1.691% 1.748% 1.859% 1.931% 1.921% 2.251% 2.023% 1.421% 1.693% 1.899% 2.531% 2.333%

Taiwan total trade with India (US $millions) 493.43 374.72 456.35 533.78 640.32 848.21 877.38 675.25 732.46 896.97 922.12 1243.69 1302.29 1709.88

Percentage share in Indias total trade % 1.314% 0.986% 1.003% 0.971% 0.934% 1.167% 1.146% 0.893% 0.846% 0.952% 0.965% 1.088% 0.917% 0.877%

Singapore total trade with India

Percentage share in Indias total trade % 1.861% 3.020% 3.026% 3.037% 2.943% 2.811% 2.585% 2.515% 2.549% 2.439% 2.390% 2.503% 2.965% 3.410%

(US $millions) 725.77 879.88 1453.76 1800.62 2212.74 2183.56 2250.86 2329.38 3312.45 3474.50 3104.46 3592.99 4757.75 5419.72

(US $millions) 698.76 1148.18 1377.27 1670.45 2018.13 2042.50 1979.98 1901.18 2206.09 2298.09 2283.19 2862.02 4213.09 6649.27

Common Characteristics of The Tigers

Focus on exports to richer industrialized nations

Singling out education as a means of improving productivity.

Sustained rate of double digit growth for decades Non democratic and nearly authoritarian political systems

during the early years Undervalued currencies High level of U.S Treasury bond holdings High Savings Rate High degree of Economic freedom

Lessons for India

Organic Development by emphasis on sectors

with competitive advantage Investment in Education Doing away with political bottlenecks Striving for reducing fiscal deficit Promotion of tourism Promote spirit of patriotism Improving savings rate Encouraging FDIs over FIIs Development and efficient utilization of ports

India, the new Asian Tiger?

Abundance of natural resources
Large pool of educated workforce Huge markets Language, cultural and educational facilities Research and Development Opportunities Skilled Management Personnel

Back in the early '90s, Fortune wrote a lengthy cover story on the Asian miracle without even once mentioning India even tangentially. Today, somebody has started a magazine called Asian Century -- and it talks about everything from Bangalore's software professionals to Indian shopping malls.

Singapore
Indias largest trading and investment partner in ASEAN Bilateral FTAs Indian PMs visit to Singapore in 2002 to set up Joint

Study Group (JSG) Comprehensive Economic Cooperation Agreement of 2005 Infrastructure, Real estate, Logistics, Communication Developmental and Planning projects in roads, ports, airports, power and telecom. Singapore keen on healthcare, education & training, retail and automotive sectors in India AAA rated Singapore is Indias advantage

BACK

South Korea
FTA ensures Bilateral trading relations
Prospective Korean partnerships with Small &

Medium Enterprises (SMEs) Korea removed 93% duties on industrial and agricultural exports to India and India removed 85% Automobile components, heavy engineering, electronics and electrical appliances
BACK

Hong Kong
Initiated talks on FTA
Plans to enter into a Double Taxation

Avoidance Agreement (DTAA) to promote bilateral trade and investments

BACK