What it means
These four economies followed a broadly similar path. They invested heavily in education, encouraged high savings, built export industries and attracted foreign capital.
Each started by making simple manufactured goods such as textiles and toys, then moved up to electronics, shipbuilding, finance and technology. Economists often point to a mix of factors.
High rates of saving and investment funded factories and infrastructure, a well-educated workforce raised productivity, and a focus on selling to world markets forced local firms to become efficient. Governments played an active role in some cases, through industrial policy and support for key sectors, while others, such as Hong Kong, were closer to free markets.
The group matters to finance professionals for several reasons. It is a reference point when analysts discuss how emerging markets might develop, and it is often compared with later high-growth countries.
It also illustrates risks, because the region was hit hard by the Asian financial crisis of the late 1990s, when currency pegs and short-term foreign borrowing created vulnerabilities. Today the four are generally classed as high-income economies, and some are major financial or technology centres.
Singapore and Hong Kong are leading financial hubs, South Korea is home to large manufacturing and electronics groups, and Taiwan is central to the semiconductor supply chain. The label Tigers is therefore historic, and these economies are no longer regarded as emerging in the same way.
Comparisons need care. The lessons of the Tigers do not automatically transfer to other countries, because they grew in a particular period of global trade, with different technology and different starting conditions.
Analysts treat the model as a useful illustration and not a guaranteed blueprint.
In practice
Real-world examples.
Example
A fund manager building an emerging-market portfolio studies the Four Asian Tigers to see which factors led to lasting growth. She notes the role of education, exports and savings. She uses these factors as a checklist when analysing a new country.
Example
A consulting firm advises a government that wants to follow an export-led strategy. It uses the Tigers as a case study of how a country can move from textiles to electronics. It also highlights the risks of relying on short-term foreign borrowing.
Example
A multinational company sets up a regional headquarters in Singapore. The finance team chooses the location because of its strong banking system, legal framework and access to Asian markets. The decision reflects the transformation of the economy since the Tiger era.
Formula
Calculation
Future value of an economy = Current size x (1 + g)^n, where g is the annual growth rate and n is the number of years
Suppose an economy with output of $100 billion grows at 8% a year, a pace similar to the fastest years of the Tigers. The rule of 72 gives a doubling time of about 72 / 8 = 9 years.
Checking by compounding, 100 x 1.08^9 = 100 x 1.999 = about $199.9 billion, so the economy has doubled in nine years. After 18 years, it would have quadrupled to about $400 billion, which shows why sustained fast growth transforms living standards.Case study
Seen in the real world.
Meridian Capital is a fictional investment firm that was considering whether to invest in a fast-growing country, Country Alpha, that had begun to build export factories. The analyst, Wei, was asked to compare it with the Four Asian Tigers at a similar stage.
He found that Country Alpha saved a smaller share of national income than the Tigers had in their early years, and that its school enrolment was lower. He also found that its debt was largely in foreign currency, which resembled the vulnerability of the late 1990s.
In this illustrative example, the firm decided to invest only a small amount and to focus on companies with low foreign debt. Wei concluded that the Tigers were a useful guide to what to look for, but that each country had to be judged on its own facts.
Watch out
Common mistakes.
- Assuming the Tigers are still emerging markets, when they are now classed as high-income economies.
- Believing that their growth came from a single policy that any country can copy, when it combined many factors and favourable timing.
- Including China or Japan in the group, even though they are not part of the four.
Questions
People also ask.
Which countries are the Four Asian Tigers?
They are Hong Kong, Singapore, South Korea and Taiwan.
Why were they called Tigers?
The name came from their fast, powerful growth and from the way they were seen as leaders in the region.
What happened to them in the Asian financial crisis?
Several were hit by currency falls and capital outflows in the late 1990s, although most recovered fairly quickly and went on to rebuild their growth.
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