Formerly an economics and humanities student at UCLA, Oe Kaori is now an intern for the United Nations.
The Decline of Japan, Korea, and China
Asia's once-fast-growing Asian tigers—Japan, Korea, and China—are lagging behind, with falling exports and a slump in their economies. Malaysia, Thailand, the Philippines, and Indonesia have all developed and are growing steadily, but are often referred to as the Tiger States because they have grown faster than the region's other major economies in recent years. But according to a new report by the International Monetary Fund, the economies of Indonesia, Malaysia, and Thailand—once the world's fastest-growing economies—appear to be in reverse.
The main export markets, which have only recently been overtaken by the EU as a whole, are Hong Kong and Taiwan. Singapore's economy grew by less than 4% in 1996, slowed to 5.6% in 1996 and then to 3.5% by 2000. GDP fell at an annualized rate of 1.7% and fell to more than 50% of annualized rate in 2003, a decline of more than 50% over the last 10 years. The average annual growth rate of all export markets in the Asia-Pacific region has fallen by more than 50% annually since 1996.
Will Asian Economics Thrive or Take a Nosedive?
The difficulties of the "Asian tiger" now suggest that the problems in Japan, Singapore, Taiwan, Hong Kong, and China will also worsen. Other Asian countries struggling with overcapacity could tip Japan back into recession, contributing to the self-reinforcing nature of emerging Asian deflation. Prospects for a resumption of rapid economic growth in Asia-Pacific countries such as Japan and Singapore have been dampened by the slow pace of economic recovery in the US and Europe and the slowdown in Chinese growth.
The exceptions are Japan, Korea, and Taiwan, but they cannot be blamed for competition from China, because their export declines are due to a combination of factors such as the aforementioned slowdown in Chinese economic growth and the decline in exports to the US and Europe. The projected decline in exports of goods and services to developing ASEAN countries this year also appears to be largely due to export revenues generated by Taiwan, Korea, and India through the export of good services and technological expertise.
Taiwan wants to reduce its economic ties with China, but this will be difficult, because China is the center of Asia's economic gravity. China's and other large economies in Asia-Pacific have contracted in recent years, which should better slow down the growth of other countries in East Asia and South Asia, particularly China.
In 1989, Japan was called upon to invest heavily in high-tech industries such as electronics, electronics manufacturing, and computer technology, particularly in Asian tiger states such as China. Like their neighbor Japan, the Asian tigers began a strategy of building cheap export factories employing the same low-wage workers who could undercut First World products. As for the Asian tigers, many used to think that Chinese growth would be self-sustaining—with Chinese GDP surpassing Japan's in 2010. This was exemplified by the Great Recession, which slowed China's economic growth, even as its enormous economy helped pull the Middle Kingdom largely unscathed from the global economic crisis.
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The Facts on Asia's Exports
Following Japan's example of export-led growth, other emerging economies, such as South Korea and China, began to develop in earnest. The Asian model of economic growth, which had become the dominant model for the US and other First World economies in the 1960s and 1970s, helped to support rapid export growth, particularly in that region.
Other East Asian countries followed suit with reforms of their own, which resulted in an economic miracle. Today, East Asia is home to some of the world's largest and wealthiest economies, including Japan, South Korea, and China. The "Asian tigers," a term used to describe developing countries in Asia, continued to grow despite Japan's struggles. Four Asian Tigers is a reference to the four major Asian economies: China, Japan, Korea and Vietnam.
Japan's development program in the 1960s and 1970s became one of the most successful programs of its time. Four Asian tigers are the result of rapid industrialization and the maintenance of a strong trade balance with the United States, Japan, South Korea, and Vietnam.
The bursting of the Asian bubble economy has only increased the flow of money from Japan to Southeast Asia. The Japanese economy had been recovering since the 1950s and was the world's second-largest economy in 1980.
Increased import demand from China has benefited the more advanced economies, but not the less developed ASEAN economies. The biggest and most obvious economic blow was tourism, because Asia's other economies are likely to be much worse off than before the SARS epidemic.
- Are the glorious days over for the Tiger economies?
- China's Global Influence: A Survey through the Lens of International Trade
- Long-awaited 'Asian century' might not ever come
- Trouble Tigers: Asia needs a new engine of growth
- Tiger Economy
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2020 Oe Kaori