Tiger Economy

What Is a Tiger Economy?

A tiger economy is a term used to describe several booming economies, particularly in Southeast Asia. The Asian tiger economies typically include Singapore, Hong Kong, South Korea, and Taiwan.

The Asian tigers are high-growth economies that have transitioned from predominately agrarian societies of the 1960s to industrialized nations. The economic growth in each of the countries is usually export-led but with sophisticated financial and trading markets. Singapore and Hong Kong, for example, are home to two of the major financial markets in the world. Sometimes China is mentioned as an Asian tiger but has separated itself from the pack to become one of the largest economies of the world.

In addition to the Asian tigers, the "Asian cub" economies are a second group that experienced rapid growth over the last several years. The Asian cubs include Indonesia, Malaysia, Thailand, Vietnam, and the Philippines.

Understanding Tiger Economies

With the injection of large amounts of foreign investment, the Asian tiger economies grew substantially between the late 1980s and early- to mid-1990s. The nations experienced a financial crisis in 1997 and 1998, which, in part, stemmed from huge debt-servicing expenses and inequitable distribution of wealth. The majority of these nations’ wealth remained in the control of an elite few.

Since the late 1990s, the tiger economies have recovered relatively well and are major exporters of goods such as technology and electronics. The influence of the Asian tiger economies is likely to increase in the years to come.

Many of the Asian tigers are considered to be emerging economies. These are economies that generally do not have the level of market efficiency and strict standards in accounting and securities regulation as many advanced economies (such as the United States, Europe, and Japan). However, emerging markets do typically have a strong financial infrastructure, including banks, a stock exchange, and a unified currency.

For example, the Asian tiger economies have import restrictions to help promote the development of local industries and boost export-led GDP growth. Gross domestic product (GDP) is a measure of all the goods and services produced in an economy. However, Singapore and Hong Kong have begun to normalize trade by allowing an increase in the free trade of goods and services.

The Asian Tigers

The Asian tigers share many characteristics, including an emphasis on exports, an educated population, and a growing standard of living.

Hong Kong

Although it's a special administrative region (SAR) in China, Hong Kong has relative autonomy and has emerged as a major financial hub in the region. The Hong Kong Stock Exchange is consistently ranked among the top ten largest stock markets in the world.

South Korea

South Korea is a modern economy that has developed into one of the most prosperous Asian economies with its production and exports of robotics, electronics, and software. South Korea is also home to Hyundai Motor Company and exports over $40 billion in vehicles each year.

Singapore

Although Singapore has one of the smallest populations–with just over 5 million people–the tiger has delivered consistent growth over the years. Singapore has transitioned into a financial center, in particular, hosting a large foreign exchange trading market. Singapore exports electronic circuit boards, petroleum products, and turbojets.

Taiwan has emerged as a prominent exporter. The country has 23 million people and is the home of the manufacturer of some of Apple's most notable products. The Asian tiger also sells and exports computers, electrical machinery, plastics, medical devices, and mineral fuels.

Other Tiger Economies

Originally referring to the Asian tigers, the phrase "tiger economy" has since been used to describe any small country that is perceived to be punching above its economic weight. These include the "Gulf tiger" (Dubai), the "Baltic Tigers" (Latvia, Lithuania, and Estonia), or the Celtic tiger (Ireland). In Africa, countries with rapid development are sometimes referred to as "lion economies."

Asian Tiger Economies and the G-8

Emerging economies often stand in contrast with the Group of Eight or G-8 highly industrialized nations, including France, Germany, Italy, the United Kingdom, Japan, the United States, Canada, and Russia. This elite circle holds an annual meeting to focus on global issues that include economic growth, energy, and terrorism.

While the Asian tigers have not historically been included among the G-8, several of them are expected to overtake more developed countries in the short term. For example, South Korea is now the tenth-largest economy, with a higher 2020 GDP than Russia. Developing nations such as China and India are already among the largest and fastest-growing economies, potentially posing a substantial shift in the global balance of economic power.

Tiger Economies and U.S. Foreign Policy

Two of the four Asian tigers are officially part of China, and many mainland provinces have experienced tiger-like economic booms. To counter Beijing's growing dominance in the Pacific, President Obama made the decision to “pivot to Asia” throughout his two terms in office (2009-2017). President Biden has hinted at resuming the Obama policy in Asia and may rejoin the Trans-Pacific Partnership.

According to this policy, the United States would have significantly more military resources in the region but could also potentially benefit from facilitating foreign direct investments. This aims to make it easier for U.S. companies to conduct business with a range of producers, suppliers, and manufacturers in East Asia, including the tiger economies. Long-standing financial hubs like Singapore and major Chinese cities could also benefit from greater access to U.S. markets.