Business Economics (BUSS 1005) Assignment Report - Spring 2019

This report examines the economic success of the Asian Tigers, specifically Hong Kong, Singapore, South Korea, and Taiwan, highlighting their exceptional economic growth and rapid industrialization between the 1960s and 1990s. The report delves into the concept of economic development versus economic growth, exploring how the Asian Tigers achieved high income economies. It analyzes the factors contributing to their sustainable growth, including initial conditions, demographic variables, government policies, geography, and natural resources. Additionally, the report explores the significance of free market economies, trade policies, and the role of protectionism through tariffs, quotas, and subsidies. The report provides data on demographics, rankings of economic freedom, and the impact of trade policies on the economy.

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

ECONOMICS
Answer 1
The economic development is much broader concept than the economic growth. The
economic development is the increase of real national income of the economic structure of
any country for a long period of time. On the other hand, economic growth refers to the
expansion of the gross domestic product of the country (Dayley 2018). The economic
development is related to both underdeveloped or developing countries of the world where
economic growth is the subset of economic development. The economic growth is the
macroeconomic phenomena that will be explaining the remarkable differences in the living
standard and income who live across countries.
The Asian dragons is the term used for Hong Kong, Taiwan, South Korea and
Singapore for maintaining exceptionally high growth rate in the economy. There had been a
rapid industrialization taking place between 1960s and 1990s. Presently, all the four
countries have developed into high income economies. These Asia Tigers were the first
newly industrialized countries since they had the high growth during the 1990s. The four
economies are presently well rich economies. It have been found out that all the four Asian
Tigers is known to have a highly educated as well as productive work force (Cherif and
Hasanov 2015). The economic development is related to both underdeveloped or developing
countries of the world where economic growth is the subset of economic development. The
economic growth is the macroeconomic phenomena that will be explaining the remarkable
differences in the living standard and income who live across countries. The potential for
development is very much related to the initial condition for the country which are known to
be specified by the conditional convergence theory.
Both the natural resource as well as the geographic condition of the countries are
known to affect the economic growth of the country. The factors which led to the fast and

ECONOMICS
sustainable growth of the Four Asian Tigers are the initial conditions, demographic variables,
policies of the government, geography as well as natural resources (Jia and Chao 2016.). It
has been also found out that the average growth rates of the Asian Tigers had been around 6
to 7 percent during the 1960s. which none of the developing countries have managed to reach
such rates. The openness to trade is one of the most important economic policy which is
known to affect the economic growth of any country. The Four Tigers during the period from
1960 to 1990 had been among the most open countries in the world.
The demographic variables relates to the comparison of the growth rate of the
working age population which relates to the growth rate of the total population. The rise in
the working age population is directly proportional to the economic growth. Referring to the
period of 1960-1990, it have been found out that East Asian Tigers had been characterized by
an increased growth rate of the workforce than the growth rate of the population which also
states that there is an increase in the growth rate of the gross domestic product per capita. The
case of Singapore states that the output growth rate and the growth rate of total factor
productivity have taken a different growth rate. According to (Dayley, 2018 ) the high rates
of the economic growth experienced by the Asian dragons mainly resulted from the
accumulation of physical capital and human capital. It was found out that the technology
played very little role in the economic growth of the tigers which took place mostly because
of capital deepening. Creation of the stable macroeconomic condition acted as the foundation
upon which the Asian miracle was built.
Table 1 Demographics
Countries
Area
Km2 Population
population
per
density
population
of capital
city
Hong
Kong 1104 7219700 6540 7219700

ECONOMICS
Singapore 710 5399200 7605 5399200
South
Korea 100210 50423955 503 10140000
Taiwan 36193 23386883 646 2688140
Answer 2
The free market economy is that economy which is governed by the forces of supply
and demand where there is no governmental influence. The free markets are known to be
characterized by the decentralized order of arrangements by which the individuals will be
making the economic decisions. There are many advantages of free market economy. One of
them is that the free market economy will be allowing for optimum allocation of the
resources. In case of free market economy, producers will also produce what the consumers
will want at a reasonable price.
The economic freedom is the people’s ability of the society for taking economic
actions. Economic freedom is known to bring greater prosperity in the economy. The
economic freedom index will be documenting the positive relationship between economic
freedom and variety of positive social and economic goals. The ideals of economic freedom
are known to be strongly associated with the healthier societies, greater per capita wealth,
cleaner environment as well as poverty elimination. The Four Asian Tigers, South Korea,
Taiwan, Singapore and Hong Kong are specially known for their highly free market as well
as developed economy. These four countries are also known as the Asian Dragon. According
to the Index of Economic Freedom of 2018, South Korea had a total gross domestic product
of US$1.5 trillion with per capita gross domestic product of more than $35,000 where the
growth rate was more than 3 percent. Hong Kong has a freedom for all the activities except
for the defence. The reports of World Bank shows that Hong Kong ranks exceptionally high
on measuring freedom where gross domestic product had been US$340 billion during 2017
where the growth was more than 3 percent. The two countries Hong Kong and Singapore

ECONOMICS
known to have protected their property rights and the freedom of trade and for that reason
they are very close to the Laissez faire.
Asian Tigers
Ranking
of
economi
c
freedom
index
Singapore 89.4
Hong Kong 90.2
South Korea 72.3
Taiwan 77.3
Japan 72.1
Source: Heritage.org. (2019).
The rankings of index of economic freedom states that countries ranking within 80-
100 are known to be the free and countries ranking from 70 to 79.9 are termed to be mostly
free.
The economic freedom of Hong Kong which is 90.2 suggest that this is the world’s
freest economy. The overall score for trade freedom increased where there is increase in the
monetary freedom and government integrity Heritage.org. (2019).. Hong Kong is also known
to exceptionally competitive financial as well as business in the Asia – Pacific region. The
business freedom is known to be well protected within the efficient regulatory framework.
The freedom business of Hong Kong ranks 96.4
The 89.4 freedom score of Singapore makes it the second freest economy in the year
2018. Singapore mostly owes its success because of remarkably open as well as corruption
free business environment, legal framework which is transparent in nature and prudent
monetary and fiscal policies Heritage.org. (2019). . The combined value of the imports and
exports equals to 322.4 percent of the gross domestic product. Singapore is one of the least

ECONOMICS
corrupted country in the world. The country also enforces the contracts and protects property
rights quite effectively.
The economic freedom score of 77.3 states that Taiwan is the 10h freest economy in
the index of 2019. The country has experienced improvements in labour, monetary freedom.
Taiwan ranks 5th in the Asia Pacific. Taiwan mostly relies in the economic relationship with
china. The score of trade freedom of Taiwan is 87 which states that the combined value of
exports as well as imports which is equal to more than 100 percent (Heritage.org. 2019).. The
average rate of tariff is nearly 1.5 percent. The overall freedom for conducting business is
relatively more protected under the transparent regulatory environment. The judiciary system
of Taiwan is also free of any kind of political interference.
The economic freedom score of South Korea is 72.3 which makes South Korea the 29th freest
in the Index of 2019. The overall score however has decreased from the previous years.
Trade freedom is known to rank 80.4 in 2019 which sates that combined value of exports and
imports is equal to 80.8 percent of the gross domestic product. The average applied tariff is
known to be 5 percent (Heritage.org.2019). The competitive regulatory framework is known
to facilitate the entrepreneurial activity. The business formation as well as operating rules are
known to be relatively efficient in nature.
Answer 3
The trade policy is referred to the regulations and agreements which is known to
control to control the imports and exports to the foreign countries. The trade policy is also
termed as the commercial policy is the policy of the government who is known to govern the
international trade. The trade policies re also known to determine the market size for the
firm’s output and therefore strongly influences the domestic investment and foreign
investment.

ECONOMICS
Trade protectionism
The trade protectionism is the practice of following protectionist trade policies which
allows the government to promote the domestic product which will help in boosting the
domestic production of the goods (Curran and Eckhardt 2018). This can be achieved by
imposition of tax or by limiting the foreign goods and services in the market. The objective of
the trade protectionism is protecting the economic interest of nation. The policy of trade
protectionism is known to allow the government of a country for promoting the domestic
producers that will boost the domestic production of services and goods by imposition of
taxes or by limiting the foreign goods and services in the market. The protectionism will also
be boosting the domestic production of services as well as goods by imposing taxes and limit
the foreign goods and services in the market.
There are various types of protectionism which includes tariffs, quotas, subsidies,
antidumping policies, standardization and many more.
Tariffs: when the taxes are imposed on the imports it is termed as the tariffs. The tariffs can
help in increasing the e of imported goods in the domestic market that will be reducing the
demand for them( Curran and Eckhardt 2018). Tariffs can also be specific in nature where
there can be fixed tax rate or sometimes there can be fee for each unit of the product which is
brought into the nation. There is also presence of ad valorem tariffs which are known to set
as proportion of the value of the products that are been imported.
Quotas: quotas can be stated as the direct restrictions on the amount of goods and
commodities that should be permitted in order to import into a nation. The import quota is
usually enforced by issuing the import license to a certain group of individuals. The quotas
are therefore termed as the restrictions on the volume of imports for a particular goods and
services over a period of time. Therefore, quotas can be also stated as the non-tariff trade

ECONOMICS
barrier (Patunru and Rahardja 2015). The constraint in the supply will result in the rise in the
price of the imported goods which also decreases the demand of the domestic market. There
is also presence of voluntary export restraint that’s is known to act as trade quota.
Subsidies: the subsidies are the government payments to the domestic producers which is
known to come in the form of cash payments, tax breaks along with low to no interest loans.
They can be termed as the negative taxes.
Standardization: the government of any nation might need all the foreign products to adhere
to certain guidelines. The standardization measures tend to decrease the foreign products in
the market.
The countries are known to use various strategies for protecting their trade. One of the
ways for protecting trade is by enacting tariffs ad tax imports.
Protecting the jobs and industries
One of the main objectives of trade protections is to provide employment to the
people by protecting the economic interest of the nation (Patunru and Rahardja 2015). The
trade protectionism also helps in creating jobs for the domestic workers. The protection
through quotas, subsidies or quotas allows the domestic companies for hiring locally.
However, this particular benefit will be ending when other countries will be retaliate, when
they will impose their own protectionism. This also states that without any kind of trade
protectionism, the nation can lose its long established industries as well as industries. This
will result in the job loss that will increase unemployment and also decrease the gross
domestic product of the nation.

ECONOMICS
Protection of infant industry
Another motive of the infant industry is to save the infant industry. The trade barriers
will also help in protecting the sunrise industries which are also the infant industries. Trade
protectionism will provide new firms the chance for developing and become globally
competitive in nature. The domestic firms will then be protected from the competition and
also benefits from the economies of scale. The idea of infant industry states that the new
manufacturers have a lot of difficulty in competing against the well established companies in
developed countries Patunru and Rahardja 2015). The new industries in the developing
nations might not have the financial resources and technology and physical equipment for
competing against older and experienced firms. The government intervention of the infant
industry comes in the form of tariffs and subsidies.
Increases government revenue
As a result of tariff, the government will experience increase in revenue. The
increased revenue will come from imports when they enter into the domestic market. A tariff
is known to be imposed by a country on the goods and services imported from anther
country. The governments are known to impose tariffs in order to increase revenue. By
making the foreign produced goods expensive in nature, it will make domestic goods seemed
very attractive in nature.
National security
Thee national security argument for protectionism states that the national security should be
accepted in case of free trade. In case of emergency the Navigation Acts prohibits for
importing the foreign ships. The national security is used for trade protectionist policies since
the industries involved includes companies related to defence, high tech firms and the food

ECONOMICS
producers (Georgiadis and Gräb 2016). The national security argument states that industries
related to advanced electronic, aerospace as well as semi conductors are very important
components of the national defence policy. It should also be noted that relying on nation’s
defence at the time of war will also seriously affect the well being of the nation. When the
manufacturing of the defence items is protected from the foreign competition, the trade
protectionism is essential for the nation’s existence.

ECONOMICS
Reference list
1. Linkie, M., Martyr, D., Harihar, A., Mardiah, S., Hodgetts, T., Risdianto, D.,
Subchaan, M. and Macdonald, D., 2018. Asia's economic growth and its impact on
Indonesia's tigers. Biological Conservation, 219, pp.105-109.
2. Dayley, R., 2018. Southeast Asia in the new international era. Routledge.]
3. Clifford, M.L., 2016. Troubled tiger: Businessmen, bureaucrats and generals in
South Korea. Routledge.
4. Lenkei, B., Mustafa, G. and Vecchi, M., 2018. Growth in emerging economies: Is
there a role for education?. Economic Modelling, 73, pp.240-253.
5. Sun, Y., Chao, T.Y., Woo, J. and Au, D.W., 2017. An institutional perspective of
“Glocalization” in two Asian tigers: The “Structure− Agent− Strategy” of building an
age-friendly city. Habitat International, 59, pp.101-109.
6. Fong, J.H., 2017. Extending Demographic Windows of Opportunity: Evidence from
Asia. Asia-Pacific Journal of Risk and Insurance, 11(1).
7. Cherif, R. and Hasanov, F., 2015. The leap of the tiger: How Malaysia can escape the
middle-income trap (No. 15-131). International Monetary Fund.
8. Barker, T. and Üngör, M., 2019. Vietnam: The Next Asian Tiger?. The North
American Journal of Economics and Finance, 47, pp.96-118.
9. Pieterse, J.N., Embong, A.R. and Tham, S.Y. eds., 2017. Changing Constellations of
Southeast Asia: From Northeast Asia to China. Routledge.
10. Heritage.org. (2019). Country Rankings: World & Global Economy Rankings on
Economic Freedom. [online] Available at: https://www.heritage.org/index/ranking
[Accessed 23 May 2019].
11. Jia, J. and Chao, Y., 2016. Growth strategy and TFP growth: comparing China and
four Asian tigers. Economic and Political Studies, 4(2), pp.156-170.

ECONOMICS
12. Arora, R.U. and Ratnasiri, S., 2015. Recent growth experiences of Asian tigers: where
does India stand?. International Journal of Social Economics, 42(2), pp.143-162.
13. Maliszewski, W. and Zhang, M.L., 2015. China’s Growth: Can Goldilocks Outgrow
Bears? (No. 15-113). International Monetary Fund.
14. Hirata, H. and Otsu, K., 2016. Accounting for the economic relationship between
Japan and the Asian Tigers. Journal of the Japanese and International Economies, 41,
pp.57-68.
15. Patunru, A.A. and Rahardja, S., 2015. Trade protectionism in Indonesia: Bad times
and bad policy.
16. Georgiadis, G. and Gräb, J., 2016. Growth, real exchange rates and trade
protectionism since the financial crisis. Review of International Economics, 24(5),
pp.1050-1080.
17. Curran, L. and Eckhardt, J., 2018. Strategic responses of trade-dependent firms to
rising trade protectionism. In Würzburg International Business Forum International
Business Conference 2018 (p. 93).