Were the first generation of NICs they followed an export driven model of development by focusing on developing their manufacturing industry which was criticised. They include the economies of Taiwan, South Korea, Hong Kong and Singapore.
Growth
Their growth was a result or common factors within each such as a high ethnic Chinese population which was very ‘business orientated’ Hong Kong 98%, Taiwan 75%, Singapore 85%. They has fairly authoritarian governmental systems allowing the government to drive plans though easily they were also favourable locations for TNCs during their formative years. The government focused on education making primary and secondary education compulsory and heavily invested in universities to allow foreign universities accessible to them creating an educated work force. The government also implemented security of land ownership to farm owners and job security though a ‘family’ like unit. Farmers were also encouraged to invest and expand and enabled the freeing up of rural workers for further industrialisation. Purchase of consumer goods was discouraged as the traditional import substitution model was still enforced encouraging high savings rates and investment.
Impacts
The impacts of this have been that many western transnational felt the need to compete with the competitive prices and as a result moved to markets where labour was cheaper in this respect they initially found export trade difficult (more so now with China being the new ‘workshop of the world’ competition is fierce).
All 4 ‘Tigers’ reached a developed status by any standards during the late 90’s as growth rates began to fall from double figures which has been maintained for years to averaging 8%. World GDP ranking were Hong Kong 22nd, South Korea 27th, Taiwan 32nd and Singapore 44th. The rapid development however, did not come without consequences as they had developed too fast, housing prices and stock became over-valued and somewhat contributed to the Asian economic crises caused by the stock market crash this in fold contributed to the global financial crisis in 1997. As development slowed living standards rose and cheap abundant labour was reduced as wages rose TNC’s found other more comparative markets Mattel for example originally located its toy manufacturing in Taiwan from Japan in 1959 however by 1968 it had relocated again to Chinas arguably the most competitive market in terms of cheap labour today.
China
Growth
Their growth was a result or common factors within each such as a high ethnic Chinese population which was very ‘business orientated’ Hong Kong 98%, Taiwan 75%, Singapore 85%. They has fairly authoritarian governmental systems allowing the government to drive plans though easily they were also favourable locations for TNCs during their formative years. The government focused on education making primary and secondary education compulsory and heavily invested in universities to allow foreign universities accessible to them creating an educated work force. The government also implemented security of land ownership to farm owners and job security though a ‘family’ like unit. Farmers were also encouraged to invest and expand and enabled the freeing up of rural workers for further industrialisation. Purchase of consumer goods was discouraged as the traditional import substitution model was still enforced encouraging high savings rates and investment.
Impacts
The impacts of this have been that many western transnational felt the need to compete with the competitive prices and as a result moved to markets where labour was cheaper in this respect they initially found export trade difficult (more so now with China being the new ‘workshop of the world’ competition is fierce).
All 4 ‘Tigers’ reached a developed status by any standards during the late 90’s as growth rates began to fall from double figures which has been maintained for years to averaging 8%. World GDP ranking were Hong Kong 22nd, South Korea 27th, Taiwan 32nd and Singapore 44th. The rapid development however, did not come without consequences as they had developed too fast, housing prices and stock became over-valued and somewhat contributed to the Asian economic crises caused by the stock market crash this in fold contributed to the global financial crisis in 1997. As development slowed living standards rose and cheap abundant labour was reduced as wages rose TNC’s found other more comparative markets Mattel for example originally located its toy manufacturing in Taiwan from Japan in 1959 however by 1968 it had relocated again to Chinas arguably the most competitive market in terms of cheap labour today.
China
The new ‘workshop of the world’ and a 3rd generation NIC
Growth
Growth
Its growth is a result of massive manufacturing investment and as a result has the largest number employed in both its secondary and tertiary sector in the world (not surprising given its 1 billion population+). Governmental social reforms of the 70’s and liberalisation of industry in the early 90’s opened China up to foreign investors and it became a valuable location for TNC’s due to its large labour force (costs 1/10th of Japan) especially skilled nearer to the coast due to the vast investment here and high productivity, as well as growing market potential as the average Chinese earns over $1000 annually (allot in China) and growing. Car manufacturers choose to locate here for this reason despite costs in the US being cheaper and now 1/10 Chinese owns a car compared with ½ Americans.
Asia is the best example that exists today of the ‘filter down theory’ as it can be seen to have highly developed nations such as Japan, first generation NICs second generation NICs which include Malaysia, the Philippines and Indonesia as well as 3rd generation NICs and the current ‘economic powerhouses’ of the global economy China and India.
Key industries in China have focused on development of important sectors of the economy such as consumer goods chemical productions and petroleum. China is now the number one exporter of nitrogen based fertilisers in the world. The motor car industry is another ‘key development industry’ as it has the potential to draw many TNCs to China to supply components (components based industry). Exporters grew from 150,000 in 1975 to 9 million+ in 2007, with revenues increasing along with growth. Many partnerships have been made with foreign companies which help to boost domestic industry such as Hyundai which has taken a majority share in a factory in southern China for export, and Nissan which released its first ‘China car’ in 2003. China relies heavily on the research and development of these transnational’s therefore domestic partnerships is all the more important.
Along with investment in specific industries there has developed regional concentrations of development zones such as the special economic nuclei at Zonguncan north east of Beijing. Here TNC giant such as Nokia, IMB and Motorola are based as well as large Chinese companies such as SIAC. There were 23000 Japanese companies located in China in 2003 the number of which has inevitably risen since. As well as 5 special economic zones there exist 15 open cities and 32 centres for regional development predominantly in the eastern coastal areas however some have branched into the central west. With government incentives.
Along with this development comes the need to for improved infrastructure and resources. Between 1995 and 2002 the amount of expressway in China has increased from 3000km to 20000km (and larger now), a new link from Beijing to Shanghai was constructed in the same year cutting journey time from 20 to 12 hours.
China is a huge user of natural resources in the 1990’s it was an exporter of oil and now looks to be a net importer on both oil and coal to fuel 70% of its manufacturing industry (majority of the rest is fuelled by Hep).
As a result of this in 2003 China became the world largest receiver of FDI taking over the USA at 52.3 billion dollars (2002), growth rates have also remained strong at around 9% and previously up to double figures in the 90’s. Chinas economy has also expanded 9 fold over the past 25 years and indicator of the exponential growth of the country.
Asia is the best example that exists today of the ‘filter down theory’ as it can be seen to have highly developed nations such as Japan, first generation NICs second generation NICs which include Malaysia, the Philippines and Indonesia as well as 3rd generation NICs and the current ‘economic powerhouses’ of the global economy China and India.
Key industries in China have focused on development of important sectors of the economy such as consumer goods chemical productions and petroleum. China is now the number one exporter of nitrogen based fertilisers in the world. The motor car industry is another ‘key development industry’ as it has the potential to draw many TNCs to China to supply components (components based industry). Exporters grew from 150,000 in 1975 to 9 million+ in 2007, with revenues increasing along with growth. Many partnerships have been made with foreign companies which help to boost domestic industry such as Hyundai which has taken a majority share in a factory in southern China for export, and Nissan which released its first ‘China car’ in 2003. China relies heavily on the research and development of these transnational’s therefore domestic partnerships is all the more important.
Along with investment in specific industries there has developed regional concentrations of development zones such as the special economic nuclei at Zonguncan north east of Beijing. Here TNC giant such as Nokia, IMB and Motorola are based as well as large Chinese companies such as SIAC. There were 23000 Japanese companies located in China in 2003 the number of which has inevitably risen since. As well as 5 special economic zones there exist 15 open cities and 32 centres for regional development predominantly in the eastern coastal areas however some have branched into the central west. With government incentives.
Along with this development comes the need to for improved infrastructure and resources. Between 1995 and 2002 the amount of expressway in China has increased from 3000km to 20000km (and larger now), a new link from Beijing to Shanghai was constructed in the same year cutting journey time from 20 to 12 hours.
China is a huge user of natural resources in the 1990’s it was an exporter of oil and now looks to be a net importer on both oil and coal to fuel 70% of its manufacturing industry (majority of the rest is fuelled by Hep).
As a result of this in 2003 China became the world largest receiver of FDI taking over the USA at 52.3 billion dollars (2002), growth rates have also remained strong at around 9% and previously up to double figures in the 90’s. Chinas economy has also expanded 9 fold over the past 25 years and indicator of the exponential growth of the country.
Figures:
Impact
Chinas exponential growth has not come without consequences for example it has vastly increased global competition making it hard for western markets to export goods without locating their labour in cheap markets to make costs effective (23000 Japanese TNCs in China, Matsushita has invested $558 million in 3 joint ventures in China, received $63 billion in investment total largest of any LEDC)) However for poorer nations the cheaper exports benefit as they can afford to invest in cheaper products such as machinery to undergo industrialisation such as mechanisation of farming. The demand for raw materials from NICs in general including China creates a market for poor producers enabling them to increase their exports to foreign markets, and their economy to expand as a result. However it has caused negative effects as for example many US and Mexican TNCs located in Mexico have moved to China in search of cheaper labour. This has caused a decline in GDP and investment in Mexico with workers particularly the secondary industry becoming jobless. Therefore Chinas growth has allowed poor consumers to benefit but had negative impacts on those employed in teh secondary industry. - Drives globalisation.
China’s growth also requires vast amounts of resources and energy. In 2003 it used 55% of the world cement and relies heavily on fossil fuels to supply 70% of its manufacturing industry. As a result it has created an imbalance in energy distribution throughout the country. The north east for example has more natural resources at its disposal but much less industrial activity compared to teh south east of teh country. There is also a water shortage in teh south which is combated by the construction of teh world largest water transport system which transports water solely by decreasing the gradient of the immense concrete pipes that carry it. World’s 2nd largest consumer of copper and steel after the USA.2003 the supply f electricity was 5% slower than demand – electricity shortages in teh south. Increased pollution from traffic with investment in infrastructure and improved personal mobility.
The concentration of industry in the coastal regions, particularly the south east has created a development gap. Almost 90% of Chinas exports travel though it sea ports and as a result some areas have received very little as a result of Chinas ‘economic boom’ such as Sichuan which was devastated by an earthquake in 2008 in the Ya’an region. China still has a vast rural population who have comparatively less than those in the cities which is why it is still classified as an LEDC.
However Chinas growth has increased the power it hold in the global economy, as many TNCs are based in China say if Chinas market were to crash the markets of western countries would undoubtedly suffer alongside it. China (as well as other NICs such as India) have challenged the power they hold in the negotiating rounds of teh WTO and have lobbied for better voting rights.
A barrier to development?
Population growth not set to decline till 2040 despite one child policy (comparison to India’s large young population, as well s energy issues and future emergence of new markets.
India
- Economic potential and GDP increase - 2002 accounted for <5% of global trade but ¼ of trade expansion.
- 5th largest global trader (higher now) and took over USA and Japan in exports to each other.
- China manufactures 50% world shoes, 55% world’s computers and 60 worlds’ bicycles.
- Chinas position in world trade was signified when in 2001 it was granted membership to the WTO, as a result tariffs on imported cars dropped to around 25%
- By 2006 $63illion in investments had been received – the highest of any LEDC.
- 2 Goldman Sachs economists predict that the BRIC economies will overtake those of the G8 by 240 and be equal with them by 2025.
Impact
Chinas exponential growth has not come without consequences for example it has vastly increased global competition making it hard for western markets to export goods without locating their labour in cheap markets to make costs effective (23000 Japanese TNCs in China, Matsushita has invested $558 million in 3 joint ventures in China, received $63 billion in investment total largest of any LEDC)) However for poorer nations the cheaper exports benefit as they can afford to invest in cheaper products such as machinery to undergo industrialisation such as mechanisation of farming. The demand for raw materials from NICs in general including China creates a market for poor producers enabling them to increase their exports to foreign markets, and their economy to expand as a result. However it has caused negative effects as for example many US and Mexican TNCs located in Mexico have moved to China in search of cheaper labour. This has caused a decline in GDP and investment in Mexico with workers particularly the secondary industry becoming jobless. Therefore Chinas growth has allowed poor consumers to benefit but had negative impacts on those employed in teh secondary industry. - Drives globalisation.
China’s growth also requires vast amounts of resources and energy. In 2003 it used 55% of the world cement and relies heavily on fossil fuels to supply 70% of its manufacturing industry. As a result it has created an imbalance in energy distribution throughout the country. The north east for example has more natural resources at its disposal but much less industrial activity compared to teh south east of teh country. There is also a water shortage in teh south which is combated by the construction of teh world largest water transport system which transports water solely by decreasing the gradient of the immense concrete pipes that carry it. World’s 2nd largest consumer of copper and steel after the USA.2003 the supply f electricity was 5% slower than demand – electricity shortages in teh south. Increased pollution from traffic with investment in infrastructure and improved personal mobility.
The concentration of industry in the coastal regions, particularly the south east has created a development gap. Almost 90% of Chinas exports travel though it sea ports and as a result some areas have received very little as a result of Chinas ‘economic boom’ such as Sichuan which was devastated by an earthquake in 2008 in the Ya’an region. China still has a vast rural population who have comparatively less than those in the cities which is why it is still classified as an LEDC.
However Chinas growth has increased the power it hold in the global economy, as many TNCs are based in China say if Chinas market were to crash the markets of western countries would undoubtedly suffer alongside it. China (as well as other NICs such as India) have challenged the power they hold in the negotiating rounds of teh WTO and have lobbied for better voting rights.
A barrier to development?
Population growth not set to decline till 2040 despite one child policy (comparison to India’s large young population, as well s energy issues and future emergence of new markets.
India
Growth
India’s growth has been the result of massive investment in its tertiary industry sector and growing quaternary sector. Its investment sector although 8 times smaller than China contributes to mainly its service sector in comparison with China which has many sectors of development. India has focused on services including outsourcing and off shoring (carrying out a service business function in a country other than where it is produced). This includes call centres and financial services which for example is used by American express and British airways as well as Royal and Sun alliance which moved call centre jobs to India in 2004.
India has many beneficial factors which draw TNCs to its shores such as a stable democratic governmental system for 50 years, investment friendly government policies, the world’s 3rd largest English speaking human resource and 2nd largest ‘brain bank as well as a growing market potential shown by the increase in purchase of consumer goods in recent years. Unlike China its population still hold potential a large sector of it demographic is young people.
Bangalore is India’s technology nuclei and a centre for off shoring and outsourcing services. Bangalore technology park is 140000km^2 with a further 6 in the larger surrounding area. It has the most advanced telecommunication infrastructure in the world.
Similar to Chinas India’s power is growing, any TNC wishing to locate must form a joint venture with a local Indian company such as McDonalds which partnered with local restaurant chain in northern India producing an Indian burger which catered for teh local market – glocalisation. India has also demanded that western countries take a fair share of responsibilities regarding climate change.
Impact
The movement of finical services overseas has seen a loss in jobs in services and manufacturing for which India is also known. This has caused a loss of jobs in western nationals and well as more recently the location of research and development in India whose quaternary sector is growing, although this may not impact MEDCs till much further down the line as many companies choose to locate in MEDCs because of the security they offer.
India’s growth has been the result of massive investment in its tertiary industry sector and growing quaternary sector. Its investment sector although 8 times smaller than China contributes to mainly its service sector in comparison with China which has many sectors of development. India has focused on services including outsourcing and off shoring (carrying out a service business function in a country other than where it is produced). This includes call centres and financial services which for example is used by American express and British airways as well as Royal and Sun alliance which moved call centre jobs to India in 2004.
India has many beneficial factors which draw TNCs to its shores such as a stable democratic governmental system for 50 years, investment friendly government policies, the world’s 3rd largest English speaking human resource and 2nd largest ‘brain bank as well as a growing market potential shown by the increase in purchase of consumer goods in recent years. Unlike China its population still hold potential a large sector of it demographic is young people.
Bangalore is India’s technology nuclei and a centre for off shoring and outsourcing services. Bangalore technology park is 140000km^2 with a further 6 in the larger surrounding area. It has the most advanced telecommunication infrastructure in the world.
Similar to Chinas India’s power is growing, any TNC wishing to locate must form a joint venture with a local Indian company such as McDonalds which partnered with local restaurant chain in northern India producing an Indian burger which catered for teh local market – glocalisation. India has also demanded that western countries take a fair share of responsibilities regarding climate change.
Impact
The movement of finical services overseas has seen a loss in jobs in services and manufacturing for which India is also known. This has caused a loss of jobs in western nationals and well as more recently the location of research and development in India whose quaternary sector is growing, although this may not impact MEDCs till much further down the line as many companies choose to locate in MEDCs because of the security they offer.
