Newly Industrialised Countries

Location of Newly Industrialised Countries

There are a number of countries around the world that can be accurately described as Newly Industrialised Countries (NIC's). They all share the same characteristics, and one of the best examples is South Korea.

South Korea is one of the countries in south-east Asia described as being part of the Tiger Economies. The others are Taiwan, Singapore and Hong Kong. NIC's share the characteristics of being:

•An increasing exporter to the world market, usually by copying existing products and then re-producing them for a much cheaper price.

•Rapid growth in the manufacturing sector, which results in far more exports and a rapidly rising GDP.

How have NIC’s been able to develop so rapidly?

• Considerable natural resources e.g. tin and rubber in Malaysia.

• Large low cost, hard working labour supply.

• Government policy geared towards attracting foreign investment in order to introduce high tech industries.

• Transnational corporations attracted by proximity of Chinese market and also lack of trade union activity, reliable power supply, efficient infrastructure, and relaxed pollution and employment laws.

• Local people were encouraged by government policies to save part of their earnings – this generated considerable capital and enabled people to invest in their own economy.

There are three stages to the development of an NIC, from its traditional society to a developed world society. These are shown on the diagram and described below. The time frame for the whole process can be as little as 30 years.

TRADITIONAL SOCIETY

•Most industry is labour intensive, concentrating on small cottage-style traditional industries, using local raw materials.

•Examples could include food processing or textile manufacture.

•Often, the majority of people are still in the primary sector, doing things such as farming.

•There is little technology and most people have very little money.

•Most products are imported from abroad, meaning that the country is relying on other for many of its needs.

IMPORT SUBSTITUTION INDUSTRY

•The country decides to promote its own industries.

•New companies copy products from well-known companies, and then make them for a far cheaper price.

•The country operates a strict regime of trade tariffs and high taxes for any similar products being imported into the country.

•This is aimed at protecting their own companies whilst they grow.

•Example industries are car manufacture, computer manufacture and the manufacture of other electrical goods, such as hi-fi's.

EXPORT ORIENTATED INDUSTRY

•Once the new companies have become established in their own country they are unleashed upon the world market.

•These industries are now capital intensive, using high technology and aimed at making a big profit.

•The GDP of the country starts to rocket, often growing at well over 5% per year, which is an amazing rate.

•The country is now described as being an NIC.

What are the disadvantages of rapid growth?

• Exploitation of labour, especially women and children.

• Growth of illegal immigrants who take dirty, dangerous jobs which offer little legal protection.

• Environmental damage (deforestation, land degradation, pollution).

• Heavy dependence on foreign investment means that the economy is vulnerable to shifts in the global economy, therefore suffers badly during times of recession.

The Advantages of Asia for industrial

location

Cheap labour: Wages are low by world standards. Asian workers are reliable and work hard for long hours, often in factories that would not meet all of the health and safety standards of those in MEDCs.

Transport: All countries in the region have access to the main shipping lanes. The use of containers has reduced the cost of transporting manufactured goods by sea.

Market: Although many factories were set up to export their products, home markets within the Asian countries are increasing as people become more prosperous.

Government: Although many governments discourage the import of manufactured goods, they encourage the import of capital and technology to establish factories and provide employment.