ECONOMIC LESSONS FROM ASIAN TIGERS, JAPAN

 Economic lessons from asian tigers, japan,

1. ECONOMIC LESSONS FROM ASIAN TIGERS, JAPAN, EUROPE AND AMERICA.

2. ECONOMIC LESSONS FROM ASIAN TIGERS, JAPAN, EUROPE AND AMERICA.

3. The four Asian Tigers, Asian Dragons and Asian Miracles are various terms used to refer to the highly developed economies of 

1) Hong Kong 

2) South Korea 

3) Singapore 

4) Taiwan INTRODUCTION

ECONOMIC HISTORY OF ASIAN TIGERS

1. The Asian Tigers were notable for maintaining extremely high growth rates and rapid industrialization between the early 1960s and 1990s. By the 21st century, all four countries developed into advanced and high-income economies. 

2. Hong Kong and Singapore have become world-leading international financial centres, while South Korea and Taiwan are world leaders in manufacturing Information Technology Equipment. 

3. The ‘Tigers’ enjoyed decades of super growth mainly due to state industrial policies which supported exports to rich, industrialised nations. Also, the Asian Tiger governments imposed very low-interest rates for loans to specific export industries, making their economies experience high growth rates which were sustained for decades. 

4. There were major government investments in education, but the political systems were non-democratic and relatively authoritarian during the early years of development.

5. The Asian Tigers invested heavily in US bonds and they (Asian Tigers) had high public and private savings rates. 

6. There was however a period of liberalisation, but the first major setback experienced by the Asian Tigers’ economies was the Asian Financial Crisis. While Singapore and Taiwan were relatively unaffected, South Korea was affected by a major stock market crash caused by high levels of non-performing loans. Whereas, Hong-Kong underwent intense speculative attacks against its stock market and currency, leading to serious market interventions by the nation’s monetary authorities.

7. In spite of the financial crisis, the years after saw all four countries recovering strongly. South Korea, the worst hit of the ‘tigers’, has managed to triple its per capita GDP in dollar terms since 1997. 

8. Abundance of cheap labour.(High Population).

DEVELOPMENT STRATEGIES EMPLOYED BY THE ASIAN TIGERS The strategies adopted by the Asian Tigers to achieve growth and development are: 

1. Export-oriented policies and strong development policies: To achieve economic prosperity, the Asian Tigers utilized export-oriented policies which entails the speeding up of the industrialization process of a country by exporting goods for which the country has a comparative advantage over others. They also embarked on solid macroeconomic management. 

2. Investment in physical and human capital development: The Asian Tigers invested greatly in human and physical capital. In fact, in 1960, this far exceeded investment levels in other countries at similar levels of development. This consequently led to a rapid growth in per capita income levels.

3. Education: Education played a major role in the Asian Miracle. It allowed for high levels of literacy and cognitive skills in those countries. South Korea in particular, had achieved a secondary education enrolment rate of 88% by 1987. 

4. Creation of a stable macroeconomic environment: Sound management of the macro-economy was very key to the Asian Miracle. The Asian Tigers were able to manage, with a high level of success, their macroeconomic environment. Specifically, they managed their 

• Low budget deficits( when estimated government revenue is less than the proposed expenditure), 
• Almost non-existent external debt (Hong-kong, Singapore and Taiwan failed to borrow from abroad. South Korea, however, borrowed heavily but it was sustained by its high export levels.)
• exchange rates excellently to put their economies in sound states of health and prevent them from falling into recession or other destabilising conditions.

5. Exchange rates: The Asian Tigers actively managed their exchange rates(it is the rate at which the domestic currency is exchanged for the foreign currency) to avoid exchange rate appreciation. This allowed their exports to be relatively cheap and in high demand ( meaning if the cost of production is cheap, the price of the product will be cheap). 

6. The Culture of hard work and innovativeness: These were strongly imbibed by the Asian Tigers.

 

7. Campaign against corruption: Corruption is the bane of development. The Asian Tigers embarked on a massive campaign to stamp out corruption from their individual economies and made it successful by spelling out harsh punishments, especially for corruption-related criminal offences, irrespective of the social or financial status of the offenders.

LESSONS FOR THE NIGERIAN ECONOMY 

1. Nigeria’s export policy should focus on areas of comparative cost advantage. An example of such an area is agriculture which is a result of the arable nature of its land. Production and export of existing foreign exchange products (like cocoa and groundnut) should be encouraged with macroeconomic policies and more products should be researched and discovered.  

2. The Nigerian educational system should be reworked towards productivity.   This could be done through:

•        Educational policies reform
•          Curriculum reform

3. Financial and banking system that favours savings (e.g high interest on savings) and encourages business growth should be pursued. Government and private savings should be encouraged to improve future investment which is necessary for development.

 

4. Proper and effective management of resources should be embraced. Looting of the nation’s resources must be met with harsh punishments, and corruption addressed with zeal. No sacred cows should be allowed.

5. SMEs’ Promotion of a great number of domestic manufacturing industries making use of locally sourced materials should be set up or monetarily encouraged. This would reduce the rate of dependence on imported products. Imports should be generally discouraged to promote patronage of locally-made goods and rapid development of local manufacturing companies. This will improve employment and arrest balance of payment problems.

6. Proper management of the macro-economic environment especially the management of variables like public debts, deficit and exchange rate.