Tiger Economies

Tiger Economies

Tiger Economies

 

Since the end of the Cold War in the 1990s and 2000s, certain Asian countries (the so-called “Tigers”) have emerged as competitors to Europe and the United States as great economic powers.

 

Learning Objectives

  • Identify the reasons for the emergence of the “Tiger” economies.
  • Examine the political, economic, and social issues facing these rising Asian nations.
  • Analyze the differences between North Korea and these “Tiger” economies.

 

Key Terms / Key Concepts

bamboo network: a term used to conceptualize connections between certain businesses operated by overseas Chinese in Southeast Asia 

Four Asian Tigers: a collective name used to refer to the economies of Hong Kong, Singapore, South Korea, and Taiwan, which underwent rapid industrialization and maintained exceptionally high growth rates between the early 1960s and 1990s

G7: a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States (These countries are the seven major advanced economies as reported by the International Monetary Fund and represent more than 64% of the net global wealth—$263 trillion.)

socialist oriented market economy: the economic model employed by the People’s Republic of China, which is based on the dominance of the state-owned sector and an open-market economy and has its origins in the Chinese economic reforms introduced under Deng Xiaoping

Tiger Cub Economies: a collective term used to refer to the economies of Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the five dominant countries in Southeast Asia; a group so named because they follow the same export-driven model of economic development pursued by the Four Asian Tigers

Yasukuni Shrine: a Shinto shrine that memorializes Japanese armed forces members killed in wartime constructed during the Meiji period to house the remains of those who died for Japan 

 

The Rising Economies of East Asia

 

The economy of East Asia is one of the most successful regional economies of the world. The changes that turned the area into the economic power began with the Meiji Restoration in the late 19th century when Japan rapidly transformed into the only industrial power outside Europe and the United States. Japan’s early industrial economy reached its height during World War II and its eventual defeat in the war slowed down economic development for a relatively short period of time. Japan’s economy recovered already in the 1950s and by the 1980s, the country was the world’s second largest economy.

Other East Asian countries followed with their own reforms and resulting “economic miracles”; today, East Asia is home of some of the world’s largest and most prosperous economies, including Mainland China, Hong Kong, Macau, Taiwan, Japan, and South Korea. Major growth factors have ranged from favorable political and legal environments for industry and commerce, through abundant natural resources, to plentiful supplies of relatively low-cost, skilled, and adaptable labor. Local populations have rapidly adjusted to the requirements of new technologies and scientific discoveries, while also demonstrating exceptional work ethics. The region’s economic success has led the World Bank to dub it an East Asian Renaissance.

Although technically not seen as part of the East Asian Renaissance, India, associated more closely with the South Asian region, has become an equally thriving and critical Asian member of the global economy in the last several decades.

 

Japan

 

In the three decades of economic development following 1960, Japan ignored defense spending in favor of economic growth, thus allowing for a rapid economic growth referred to as the Japanese post-war economic miracle. With average growth rates of 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s, Japan was able to establish and maintain itself as the world’s second largest economy from 1978 until 2010, when it was surpassed by the People’s Republic of China.

The economy of Japan is the third largest in the world by nominal GDP, the fourth-largest by purchasing power parity (PPP), and the world’s second largest developed economy. Japan is thus a member of the G7. Due to a volatile currency exchange rate, Japan’s GDP as measured in dollars fluctuates widely. Accounting for these fluctuations, Japan is estimated to have a GDP per capita of around $38,490.

Japan is the world’s third largest automobile manufacturing country, has the largest electronics goods industry, and is often ranked among the world’s most innovative countries leading several measures of global patent filings. Facing increasing competition from China and South Korea, manufacturing in Japan today focuses primarily on high-tech and precision goods, such as optical instruments, hybrid vehicles, and robotics. Japan is the world’s largest creditor nation. It generally runs an annual trade surplus and has a considerable net international investment surplus. In 2015, 54 of the Fortune Global 500 companies were based in Japan.

The Japanese economy faces considerable challenges posed by a dramatically declining population. Statistics showed an official decline for the first time in 2015, while projections suggest that it will continue to fall from 127 million down to below 100 million by the middle of the 21st century. A mountainous, volcanic island country, Japan has inadequate natural resources to support its growing economy and large population. Therefore, Japan exports goods, which are highly valued across the world. Japan exports engineering-oriented, research, and development-led industrial products and imports raw materials and oil. Japan is among the top-three importers for agricultural products in the world next to the European Union and United States in total volume for covering of its own domestic agricultural consumption.

 

Japan in the World

 

Since the late 1990s, the U.S.-Japan relationship has improved and strengthened. The major cause of friction in the relationship, trade disputes, became less problematic as China displaced Japan as the greatest perceived economic threat to the United States. Meanwhile, although in the immediate post-Cold War period the security alliance suffered from a lack of a defined threat, the emergence of North Korea as a belligerent rogue state and China’s economic and military expansion provided a purpose to strengthen the relationship. While the foreign policy of the administration of President George W. Bush put a strain on some of the United States’ international relations, the alliance with Japan became stronger, as evidenced by the Deployment of Japanese troops to Iraq and the joint development of anti-missile defense systems.

 

The Okinawa Controversy

 

Okinawa is the site of major American military bases that have caused problems, as Japanese and Okinawans have protested their presence for decades. In secret negotiations that began in 1969, Washington sought unrestricted use of its bases for possible conventional combat operations in Korea, Taiwan, and South Vietnam, as well as the emergency re-entry and transit rights of nuclear weapons. However, anti-nuclear sentiment was strong in Japan and the government wanted the United States to remove all nuclear weapons from Okinawa. In the end, the United States and Japan agreed to maintain bases that would allow the continuation of American deterrent capabilities in East Asia. When the Ryukyu Islands, including Okinawa, reverted to Japanese control in 1972, the United States retained the right to station forces on these islands. A dispute that had boiled since 1996 regarding a base with 18,000 U.S. Marines was temporarily resolved in late 2013. Agreement was reached to move the Marine Corps Air Station Futenma to a less-densely populated area of Okinawa.

 

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U.S. military bases in Japan. US military bases in Japan, maintained by the U.S. government as a way to mark the U.S. presence in the Pacific, continue to provoke protests among the Japanese.

 

As of 2014, the United States still had 50,000 troops in Japan and the headquarters of the U.S. 7th Fleet, including more than 10,000 Marines. Also in 2014, it was revealed the United States was deploying two unarmed Global Hawk long-distance surveillance drones to Japan with the expectation they would engage in surveillance missions over China and North Korea.

 

Japan and Reckoning with History

 

In recent decades, Japan has faced increased pressure from its East Asian neighbors to be more accountable for its past actions. Despite numerous apologies for Japan’s war crimes from Japanese government representatives since World War II, repeated comments of Japanese politicians questioning the crimes, the problematic degree of formality of apologies, and retractions or contradictions by statements or actions of Japan have exposed the country’s refusal to reckon with its difficult past. Japanese war crimes occurred in many Asian and Pacific countries during the period of Japanese imperialism, primarily during the Second Sino-Japanese War, which eventually merged into World War II. Some were committed by military personnel from the Empire of Japan in the late 19th century, although most took place from the first part of the Shōwa Era, the name given to the reign of Emperor Hirohito, until the surrender of the Empire of Japan in 1945.

Some historians and governments hold Japanese military forces, the Imperial Japanese Army, the Imperial Japanese Navy, and the Imperial Japanese family, especially under Emperor Hirohito, responsible for the deaths of millions of civilians and prisoners of war through massacre, human experimentation, starvation, and forced labor either directly perpetrated or condoned by the Japanese military and government. Estimates range from 3 to 14 million victims. Airmen of the Imperial Japanese Army Air Service and Imperial Japanese Navy Air Service were not included as war criminals because there was no positive or specific customary international humanitarian law that prohibited the unlawful conduct of aerial warfare either before or during World War II. However, the Imperial Japanese Army Air Service took part in chemical and biological attacks on enemy nationals during the Second Sino-Japanese War and World War II, and the use of such weapons in warfare was generally prohibited by international agreements signed by Japan, including the Hague Conventions (1899 and 1907), which banned the use of “poison or poisoned weapons” in warfare.

 

Japan's Problematic Reckoning

 

Since the 1950s, senior Japanese Government officials have issued numerous apologies for the country’s war crimes. Japan’s Ministry of Foreign Affairs states that the country acknowledges its role in causing “tremendous damage and suffering” during World War II, especially in regard to the Nanking Massacre in which Japanese soldiers killed a large number of non-combatants and engaged in looting and rape. But unlike Germany, for example, Japan has not fully recognized the scale of its war-time atrocities, and its approach to dealing with the difficult past has caused controversy around the world. Japanese nationalist politicians engaged in efforts to whitewash the actions of the Empire of Japan during World War II. While they were not entirely successful, some Japanese history textbooks offer only brief references to various war crimes.

Critics have questioned the degree and formality of apologies and noted the issue of retractions and contradictory actions by Japan. An illustrative example is the issue of the so-called comfort women, women and girls who were forced into sexual slavery by the Imperial Japanese Army in occupied territories before and during World War II. In 1951, the South Korean government demanded $364 million in compensation for Koreans forced into labor and military service during Japanese occupation. In the final agreement reached in the 1965 treaty, Japan provided an $800 million aid and low-interest loan package over 10 years. However, the money was for the Korean government, not individuals.

Three Korean women filed suit in Japan in 1991, around the time of the 50th anniversary of the Pearl Harbor attack, demanding compensation for forced prostitution. In 1992, documents were found in the library of Japan’s Self-Defense Agency that indicated that the Japanese military played a large role in operating what were euphemistically called “comfort stations”. The Japanese Government admitted that the Japanese Army forced tens of thousands of Korean women to have sex with Japanese soldiers during World War II. On January 14, 1992, Japanese Chief Government Spokesman Koichi Kato issued an official apology. Three days later, at a dinner given by South Korean President Roh Tae Woo, Prime Minister Kiichi Miyazawa apologized to his host and the following day in a speech before South Korea’s National Assembly.

In 1994, the Japanese government set up the public-private Asian Women’s Fund (AWF) to distribute additional compensation to South Korea, the Philippines, Taiwan, the Netherlands, and Indonesia. A number of former comfort women (61 Korean, 13 Taiwanese, 211 Filipino, and 79 Dutch) were given a signed apology from Prime Minister Tomiichi Murayama. Many former Korean comfort women rejected the compensations on principle. Although the AWF was set up by the Japanese government, its funds came not from the government but from private donations, hence the compensation was not “official.” In 1998, the Japanese court ruled that the Japanese government must compensate the women and awarded them $2,300 (equivalent to $3,380 in 2016) each.

On March 1, 2007, Prime Minister Shinzō Abe stated that there was no evidence that the Japanese government had kept sex slaves, even though the Japanese government already admitted the use of coercion in 1993. On February 20, 2014, Chief Cabinet Secretary Yoshihide Suga said that the Japanese government may reconsider the study and the apology. However, Prime Minister Abe clarified on March 14, 2014, that he had no intention of renouncing or altering it. On December 28, 2015, Abe and South Korean President Park Geun-hye reached a formal agreement to settle the dispute. However, the Korean comfort women and the majority of the Korean population regarded the resolution as unsatisfying. The Korean comfort women stated that they were not protesting for money and that their goals for the formal and public apology from Abe and the Japanese government and the correction of Japanese history textbooks had not been met. In 2019 due to lack of public support, the South Korean government dissolved this agreement.

 

photo of women and children
Chinese and Malayan girls forcibly taken from Penang by the Japanese to work as “comfort girls” for the troops. Author: Sergeant A.E. Lemon, No 9 Army Film & Photographic Unit. The first “comfort station” was established in the Japanese concession in Shanghai in 1932. Earlier comfort women were Japanese prostitutes who volunteered for such service. However, as Japan continued military expansion, the military found itself short of Japanese volunteers and turned to the local population to coerce women into serving in these stations or abducted them. Many women responded to calls for work as factory workers or nurses and did not know that they were being pressed into sexual slavery.

 

Japan and Its Neighbors

 

The People’s Republic of China joined other Asian countries—such as South Korea, North Korea, and Singapore—in criticizing Japanese history textbooks that whitewash Japanese war crimes in World War II. Although Prime Minister Junichiro Koizumi openly declared “deep remorse” over Japan’s wartime crimes in 2005 (the latest in a series of apologies spanning several decades), many Chinese observers regard the apology as insufficient and not backed up by sincere action because of the lack of change to Japan’s representation of history.

The PRC and Japan also continue to debate over the actual number of people killed in the Nanking Massacre. The PRC claims that at least 300,000 civilians were murdered while Japan claims 40,000 – 200,000. While a majority of Japanese believe in the existence of the massacre, a Japanese-produced documentary film released just prior to the 60th anniversary of the massacre, titled The Truth about Nanjing, denies that any such atrocities took place. These disputes have stirred up enmity against Japan from the global Chinese community, including Taiwan.

 

photo of pile of corpses
Bodies of victims along Qinhuai River out of Nanjing’s west gate during Nanking Massacre. Derivative work of a photograph taken by Moriyasu Murase.

 

Although the Japanese government has admitted to the killing of a large number of non-combatants, looting, and other violence committed by the Imperial Japanese Army after the fall of Nanking, and Japanese veterans who served there have confirmed that a massacre took place, a small but vocal minority within both the Japanese government and society have argued that the death toll was military in nature and that no such crimes ever occurred.

Since the 1950s, many prominent politicians and officials in Japan have made statements on Japanese colonial rule in Korea, which created outrage and led to diplomatic scandals in Korean-Japanese relations. The statements have led to anti-Japanese sentiments among Koreans and a widespread perception that Japanese apologies for colonial rule have been insincere. Although diplomatic relations were established by a treaty in 1965, South Korea continues to request an apology and compensation for Korea under Japanese rule. In 2012, the South Korean government announced that Emperor Akihito must apologize for Japan’s colonial rule of the Korean Peninsula. Most Japanese prime ministers have issued apologies, including Prime Minister Obuchi in the Japan–South Korea Joint Declaration of 1998. While South Koreans welcomed the apologies at the time, many now view the statements as insincere because of continuous misunderstandings between the two nations.

In the early 1990s, Japan conducted lengthy negotiations with North Korea aimed at establishing diplomatic relations while maintaining its relations with Seoul. In September 1990, a Japanese political delegation led by former deputy Prime Minister Shin Kanemaru of the Liberal Democratic Party visited North Korea. Following private meetings between Kanemaru and North Korean leader Kim Il Sung, a joint declaration released on September 28 called for Japan to apologize and compensate North Korea for its period of colonial rule. Japan and North Korea agreed to begin talks aimed at the establishment of diplomatic relations.

In January 1991, Japan began normalization talks with Pyongyang with a formal apology for its 1910 – 45 colonial rule of the Korean Peninsula. The negotiations were aided by Tokyo’s support of a proposal for simultaneous entry into the United Nations by North Korea and South Korea. The issues of international inspection of North Korean nuclear facilities and the nature and amount of Japanese compensations, however, proved more difficult to negotiate. Prime Minister Junichirō Koizumi, in the Japan-DPRK Pyongyang Declaration of 2002, said: “I once again express my feelings of deep remorse and heartfelt apology, and also express the feelings of mourning for all victims, both at home and abroad, in the war.”

 

Yasukuni Shrine

 

Yasukuni Shrine is a Shinto shrine that memorializes Japanese armed forces members killed in wartime. It was constructed as a memorial during the Meiji period to house the remains of those who died for Japan. The shrine houses the remains of Hideki Tojo, Prime Minister and Army Minister of Japan between 1941 and 1944, and 13 other Class A war criminals. Yasukuni Shrine has been a subject of controversy, as it also a memorial for over a thousand Japanese and some Korean war criminals. The presence of these war criminals among the dead honored at Yasukuni Shrine means that visits to Yasukuni have been seen by Chinese and South Koreans as support for these war criminals of the wartime era.

Yasuhiro Nakasone and Ryutaro Hashimoto visited Yasukuni Shrine in 1986 and 1996 respectively, and both paid respects as Prime Minister of Japan, drawing intense opposition from Korea and China. Junichirō Koizumi visited the shrine and paid respects six times during his term as Prime Minister of Japan. These visits again drew strong condemnation and protests from Japan’s neighbors, mainly China and South Korea. As a result, the heads of the two countries refused to meet with Koizumi, and there were no mutual visits between Chinese and Japanese leaders after October 2001 and between South Korean and Japanese leaders after June 2005. The President of South Korea, Roh Moo-hyun, had suspended all summit talks between South Korea and Japan until 2008, when he resigned from office. Japanese prime minister, Shinzō Abe, has made several visits to the shrine, the most recent being in December 2013.

 

Four Asian Tigers

 

In addition to Japan, the other economic powers in East Asia include the “Four Asian Tigers.” the economies of Hong Kong, Singapore, South Korea, and Taiwan. These four countries underwent rapid industrialization and maintained exceptionally high growth rates (in excess of 7 percent a year) between the early 1960s (mid-1950s for Hong Kong) and 1990s. By the 21st century, all four had developed into advanced and high-income economies, specializing in areas of competitive advantage. For example, Hong Kong and Singapore have become world-leading international financial centers, whereas South Korea and Taiwan are world leaders in information technology manufacturing. Their economic success stories have served as role models for many developing countries, especially the Tiger Cub Economies.

Export policies have been the de facto reason for the rise of the Four Asian Tiger economies. The approach taken has been different among the four nations. Hong Kong and Singapore introduced trade regimes that were neoliberal in nature and encouraged free trade, while South Korea and Taiwan adopted mixed regimes that accommodated their own export industries. In Hong Kong and Singapore, due to small domestic markets, domestic prices were linked to international prices. South Korea and Taiwan introduced export incentives for the traded-goods sector. The governments of Singapore, South Korea, and Taiwan also worked to promote specific exporting industries, which were termed as an export push strategy. All these policies helped these four nations to achieve a growth averaging 7.5% each year for three decades and as such they achieved developed country status.

A controversial World Bank report (see The East Asian Miracle 1993) credited neoliberal policies with the responsibility for the boom, including maintenance of export-led regimes, low taxes, and minimal welfare states. Some state intervention has been also admitted to be a factor. However, many have argued that industrial policy had a much greater influence than the World Bank report suggested. The World Bank report itself acknowledged benefits from policies of the repression of the financial sector, such as state-imposed below-market interest rates for loans to specific exporting industries. Other important aspects include major government investments in education, non-democratic and relatively authoritarian political systems during the early years of development, high levels of U.S. bond holdings, and high public and private savings rates.

 

South Korea

 

In the first half of the 1990s, in already democratic South Korea, the economy continued a stable and strong growth. Things changed quickly in 1997 with the Asian Financial Crisis. By 1997, the IMF had approved a USD $21 billion loan, that would be part of a USD $58.4 billion bailout plan. By January 1998, the government had shut down a third of Korea’s merchant banks. Actions by the South Korean government and debt swaps by international lenders contained the country’s financial problems. Much of South Korea’s recovery from the Asian Financial Crisis can be attributed to labor adjustments (i.e. a dynamic and productive labor market with flexible wage rates) and alternative funding sources.

In the 2000s, Korea’s economy moved away from the centrally planned, government-directed investment model toward a more market-oriented one. These economic reforms helped it maintain one of Asia’s few expanding economies.

South Korea enjoys a high-income economy and massively invests in education, which has brought the country from mass illiteracy to becoming major international technological powerhouse. The country’s national economy benefits from a highly skilled workforce, and South Koreans are among the most educated societies in the world with one of the highest percentage of individuals holding a higher education degree. The South Korean economy continues to be heavily dependent on international trade and in 2014, the country was the 5th largest exporter and 7th largest importer in the world. The incredible economic development from the early 1960s to the late 1990s and becoming one of the fastest-growing developed countries in the 2000s has compelled South Koreans to refer to this growth as the Miracle on the Han River. South Korea was also one of the few developed countries that were able to avoid a recession during the global financial crisis of 2007 – 2008.

 

Tiger Cub Economies

 

The term Tiger Cub Economies collectively refers to the economies of Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, the five dominant countries in Southeast Asia. They are so named because they follow the same export-driven model of economic development pursued by the Four Asian Tigers. Four countries are included in HSBC’s (United Kingdom bank) list of top 50 economies in 2050, while Vietnam, Indonesia and the Philippines are included in Goldman Sachs’s (US investment bank) Next Eleven list of economies because of their rapid growth and large population. Out of these, Vietnam has been determined to become possibly the fastest growing of the world’s emerging economies by 2020. Similarly to China, the country’s socialist-oriented market economy is a developing planned economy and market economy. In the 21st century, Vietnam is in a period of being integrated into the global economy. It has become a leading agricultural exporter and served as an attractive destination for foreign investment in Southeast Asia.

 

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The Tiger Cub Economies (yellow) are five countries: Indonesia, Malaysia, Philippines, Thailand and Vietnam. Also shown are the Four Asian Tigers (red), source: Wikipedia.: The term “bamboo network” is used to conceptualize connections between certain businesses operated by overseas Chinese in Southeast Asia. It links the overseas Chinese community of Southeast Asia (Malaysia, Indonesia, Thailand, Vietnam, the Philippines, and Singapore) with the economies of Greater China (mainland China, Hong Kong, Macau, and Taiwan). Overseas Chinese companies have a prominent role in the private sector of Southeast Asia and are usually managed as family businesses with a centralized bureaucracy.

 

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, Vietnam, 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.

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