NICs is the abbreviated form to describe the Newly-Industrialised Countries. These countries are predominantly located on the Asia Pacific rim. Although, many countries can qualify to be called newly industrialised countries, but generally speaking, the usage of NICs emerged from the dramatic Economic and Social transformation of the many countries/regions lying upon the periphery of Asia Pacific region.
The first batch of Asian tigers was Hong Kong, Singapore, Taiwan and South Korea. All were and are considered to be an economic miracle. The countries in the second batch that joined the club were Malaysia, Thailand, Indonesia and more recently the countries of the golden triangle have begun to knock at the doors of NICs. On a more fluid definition the countries that seek recognition as NICs are India, Brazil, South Africa, and Turkey.
Almost all the NICs of the North East Asia and Southeast Asia emerged as growing economies in the beginning of the decade of 1980s. The groundwork had been in preparation much earlier but the real implementation started in the middle of the 1980s.
The less economically developed countries that have undergone speedy, rapid and fast industrialisation, resulting in higher incomes, higher GDP growth rates, alongside the intervention of foreign direct investment, have now come to be recognised as NICs.
These countries of Asia Pacific rim can be classified as the economic miracle of the late Years of the 20th century.
A scrutiny of the strategy these countries adopted had many milestones of advantages for the free enterprise to flourish and also for entrepreneurship to grow. Capital formulation and accumulation wasn’t seen as a social evil but a necessity to keep the momentum of economic growth. The policies framed were sustainable and not totally irrevocable either, but there were also enough guarantees for these to be improved over time. The opening of these economies wasn’t like the opening of floodgates, but it was gradual—almost a step-by-step approach was adopted by the respective governments.
Amongst the several advantages on the plate, the significant ones were the availability of cheap, yet talented and skilled workers/professionals, the access to centuries old shipping lanes both in the Indian and Pacific Ocean; followed or supportive was the government intervention through adequate policy framework that dwelt more on promotion of exports and finally the freedom was enabled to access global markets.
Economic managers and planners in these countries focused upon seeking out overseas investments into their countries, that was substantially supported by adequate legal framework that allowed for both, free and controlled foreign exchange movements, carrying state guarantees for repatriation of capital and dividends over a time scale.
Significantly, one major element that stands out as the primary stimuli for economic growth of these countries is the support extended to the economy by the respective governments. The initiative wasn’t only to give impetus to industrial growth but to make and integrate that growth within the overall economic vision and planning.
The rising income levels within these countries gave enough reason for promotion and growth of intra-regional trade. The demand for example of Korean, Chinese and Taiwanese products in Indonesia was on the rise. For these NICs, almost a captive market was created and made accessible. The economies within the region almost became complimentary for each other. The demand for Sony TV sets in the Southeast Asia was being met by Sony through its Malaysian arm where a huge factory/assembly plant was built to cater for the growing demand. I have used TV as a product only to illustrate the point of view and not as being the only product available on the shelf.
The region began to attract investments from the developed economies. The demand for products/services from the NICs grew manifold in the west. The inconceivable began to happen—a Honda Accord car plying on the streets of Chicago, almost an economic blasphemy then! I recall attending a seminar in Hong Kong where the presenter, in a tone of complaint, remarked to the audience, “We spend millions and millions of US dollars in research and development (R&D) and come up with a product. You miniaturise the product and sell it for half the price, with no capital spent on research”. As an example, he said, compare an RCA TV set with Sony TV—the later is half the size and half in weight too!
Global economist do not recognise or more appropriately refuse to include People’s Republic of China as a newly industrialised country due to the sheer size of the economy. However, in my view, the economic transformation and growth of the Chinese economy was built upon the edifice of the regional dynamics than any influences from outside the region.
The emergence of People’s Republic of China as a factory of the world provided for the necessary impetus of growth for the various economies of the region. A case in point is the integration of the economy of Hong Kong with the Chinese Mainland. Both flourished out of mutual inter-dependence with their unique and different characteristics.
The Chinese had labour and low cost energy while Hong Kong had both: high-tech human capital and of course the financial capital (foreign currency to invest). Hong Kong became the gateway for the global markets to trade with China. Within the mid-decade of the 1980s to the early part of the 90s, the exports and re-exports from Hong Kong to China had crossed over US dollar half a trillion mark.
Over a period of time, not only was production being domiciled in the region but several multinational companies of the west began to set up units for outsourcing many of their manual intensive processes of their industry inside China. The factories in Hong Kong were rapidly moving over into the attractive special economic zone of Shenzhen and the southern provinces of Guangdong and Fujian.
In spite of having higher population, the region saw a massive improvement in the per capita income of its population. Today, the PCI of Malaysia is USD 12,000, Taiwan’s is USD 32,000, South Korea’s is USD 33,000 and of Indonesia it stands at USD 5,030. This has resulted in significant improvement in the living conditions/standards of the people residing in this region. By the end of the decade of the 90s, South Korea had already gained membership to the prestigious OECD group.
Leadership in all NICs was a tad authoritative, despite democratic dispensation; but to bring order out of chaos requires deft handling of both the authority and the freedom. The leadership qualities of Lee Kuan Yew (Singapore), Dr Mahatir (Malaysia) Deng Xiaoping (People’s Republic of China) and of Park Chung Hee (South Korea) stand out as a testimony to having clarity of economic vision and an Extremely resolute mindset of both the government and the bureaucracy to not let any forces intervene or impair the growth momentum.
Another feature common to NICs has been the very high index of human development, a fact recognised by the UN. This brings me to the importance of integrating education policy with the economic policy of a country. The two cannot be out of joint or out of step with each other. These must be complimentary and must fortify each other. A union of objectives of both is critical for future growth of a nation. These NICS went in for advanced implementation of a curriculum based on STEM and STEAM subjects.
Regrettably, we continue to mass produce an army of graduates with no skills. The imperative need therefore is to align education with the economic plan.
Having witnessed the transformation for over a decade of the region from the frontiers of Hong Kong, I gathered knowledge that no economy can move forward unless there is unanimity amongst the political forces in the country in relation to what economic policy is to be pursued and of its willingness to also pursue relentlessly without undoing or destabilising existing policies, by any new incoming political party/set up. Another striking element was of leadership.
Pakistan, with all its natural endowments, intelligent population and employable youth lacks or is deficient on too critical aspects, that is unanimity amongst the political forces regarding long-term economic policy and the will to pursue upon the agreed path. The need, unfortunately even in the 79thyear, since independence, is to move from being a “can do” to “a will do” nation. Leadership, alongside good governance is the answer and a panacea to our economic ills.
Copyright Business Recorder, 2025
The writer is Senior Banker & Freelance Contributor