Four Little Tigers Case Study

Cheng Ka Chun 5631841
In the recent year, there are rapid economic growth in the a few Asian countries. Japan, ‘four little tiger’ (China, South Korea, Taiwan and Singapore), Indonesia, Malaysia and Thailand are involved in the East Asian Miracle. These countries follow the flying geese approach to learn from the past experience of other countries so as to achieve a sustained economic growth. South Korea is a good example that imitates Japan in terms of development in heavy industries like steel, shipbuilding, and automobiles (Jayanthakumaran, 2016). The four little tigers replicate the development of Japan and the other East Asian countries follow the four little tigers. This approach spreads the success of Japan to other Asian countries and
Since South Korea suffered from the Korean War, lots of infrastructures there were damaged, hyper inflation and distortion of economic reform policies. The Korea Transportation Ministry statistics revealed that about 600 thousand housing units, 46.9% of railroad, 1,656 roads of a total of 500km, and 1,453 bridges totaling 49km were destroyed during the war (Lee, 2001). These damages hindered the future economic development of South Korea due to the time needed to reconstruct these infrastructures to facilitate trading. Also, in order to support the war expenses, South Korean government decided to borrow money from the Bank of Korea through issuing new money. This action caused the hyper inflation in South Korea that money in circulation increased by 24 times between June 24, 1950 and July 31, 1953. As of December 31, 1953, the inflation rate again increased by 42 times (Lee, 2001). This hyper inflation encourages Korean to use foreign currencies instead of Korean Won. This increases the difficulties for Korean to trade with foreign countries in the future. Moreover, South Korea tried to recover from the Japanese rule and proposed some economic reform policies like proposing a farmland reform to create opportunities for industrial development to boost the economic development
Such a model heavily relied on a small number of firms picked by the state, where the state promotes domestic ownership of enterprises and protects them by using various means and encourages the formation of industrial cartels called chaebols (Jayanthakumaran, 2016). This system was developed and received the support of the government in the 1960s and 1970s when President Park Chung Hee selected a few companies to prosper and grow by granting them all kinds of preferential treatment (El Kahal, 2001). The development of chaebols then became the engine of growth for South Korea. Since there are differences between labor intensive industries and HCI, South Korea depended on foreign companies to achieve economic development. Chaebols helped South Korea to problems related to development of HCI with the support from government. Chaebols are similar to conglomerates that are large companies that operate in different sectors that allow the corporations to support their own businesses through the expansion in business area. Mentioned in the previous paragraphs, HCI needs more use of energy and increased demand for skilled labor, chaebols allow corporation to receive support from the government in the early stage and then develop their own energy supply and training to employees when chaebols are well developed. This helps the government to put more emphasis on the growing industries in stead of keep support