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Newly industrialized country

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Countries considered NICs as of 2007

The category of newly industrialized country (NIC) is a socioeconomic classification applied to several countries around the world by political scientists and economists.

NICs are countries whose economies have not yet reached first world status but have, in a macroeconomic sense, outpaced their developing counterparts. Another characterization of NICs is that of nations undergoing rapid economic growth (usually export-oriented). Incipient or ongoing industrialization is an important indicator of a NIC. In many NICs, social upheaval can occur as primarily rural, agricultural populations migrate to the cities, where the growth of manufacturing concerns and factories can draw many thousands of laborers.

NICs usually share some other common features, including:

  • Increased social freedoms and civil rights.
  • A switch from agricultural to industrial economies, especially in the manufacturing sector.
  • An increasingly open-market economy, allowing free trade with other nations in the world.
  • Large national corporations operating in several continents.
  • Strong capital investment from foreign countries.
  • Political leadership in their area of influence.

NICs often receive support from non-governmental organizations such as the WTO and other internal support bodies. However, as environmental, labor and social standards tend to be significantly weaker in NICs, many fair trade supporters have advocated standards for importing their products and criticized the outsourcing of jobs to NICs, especially the People's Republic of China and India.

Historical context

The term began to be used in the 1970s when the East Asian Tigers"[1] of Hong Kong , South Korea, Singapore and the Republic of China (Taiwan) rose to global prominence with rapid industrial growth since the 1960s, most now having evolved beyond this status. There is a distinction between these countries and the nations now considered to be NICs. In particular, the combination of an open political process, high per capita GDP income and a thriving, export-oriented economic policy has shown that these countries have now reached the ranks of developed countries. All of them possess a Human Development Index over 0.9, equal to the average of EU countries. Finally, South Korea joined the OECD in 1996.

Current NIC countries

The following table presents the list of countries consistently considered NICs in each continent by different authors and experts [2][3][4][5].

Some authors still consider the first generation list of countries (South Korea, Taiwan, Singapore, Hong Kong[6]) as NICs, and some others argue they are now developed countries. Turkey and South Africa are classified as developed countries by the CIA[7] and Turkey is a founding member of the OECD since 1961. Mexico joined the OECD in 1994 and is also a member of the G8+5, along with China, India, Brazil and South Africa. Pakistan and Iran may soon also be included in this list.

Continent Country GDP
(Millions of USD) 		GDP
per capita (USD) 		Income equality (GINI) Human
Development
Index (HDI) 		List of countries by GDP (real) growth rate List of countries by GDP (real) growth rate per capita
Africa  South Africa [3][4][5] 587,500 5,384 57.8 0.674 (medium) 4.50 4.92
North America  Mexico [2][3][4][5] 1,108,281 8,066 47.3 0.829 (high) 4.50 3.30
South America  Brazil [2][3][4][5] 1,566,253 5,716 54 0.800 (high) 2.80 2.04
Asia  China [3][4][5] 8,814,860 2,001 44.7 0.777 (medium) 11.10 9.95
 India [3][4][5] 3,779,044 796 32.5 0.619 (medium) 9.70 7.02
 Malaysia [3][4][5] 313,800 5,718 49.2 0.811 (high) 5.40 3.65
 Philippines [2][3][4][5] 508,546 1,815 46.1 0.771 (medium) 7.50 7.40
 Thailand [2][3][4][5] 557,378 3,136 42 0.781 (medium) 4.40 3.93
Europe  Turkey [3][4][5] 708,053 5,407 38 0.775 (medium) 5.20 4.10

NOTES:
1. GDP (PPP) (2005 data), and GDP (current prices) per capita (2006 data)[8] figures correspond to the IMF.
2. GINI Coefficient as in the 2006 United Nations survey. The higher the figure, the higher the inequality.
3. Human Development Index (HDI) as in the 2007 United Nations report [1].

However, China and India are special cases: the immense population of these two nations (each with over one billion people as of November 2006) means that per capita income will remain low even if either economy surpasses that of the United States of America. However, keeping PPP in mind, the Chinese and Indian populations will enjoy significantly reduced costs of living, as basic commodities tend to be less expensive in both nations.

Additionally the group composed of Brazil, China, India, Mexico and South Africa meet annually with the G8 countries to discuss financial topics and climate change, due to their economic importance in today's global market and environmental impact, in a group known as G8+5.[9]

Other NIC countries

Each author set a list of countries accordingly to the methods or type of economic analysis. This sometimes results in a country being mentioned as NIC in a particular work, but that is rarely considered as such by the other authors. This is the case of nations such as Egypt, Indonesia, Russia and Jordan. [2]

In the case of Latin America, a two-tiered classification is oftentimes done. Mexico and Brazil are considered first-tier NICs, whereas Argentina, Chile and Colombia are considered second-tier NICs.[10]

Brief economic analysis

NICs usually benefit from comparatively low labor costs, which translates into lower input prices for suppliers. This shifts the labor supply curve downwards, resulting in a lower equilibrium wage and a reduced number of labor-hours per worker. As a result, it is often easier for producers in NICs to outperform and outproduce factories in developed countries, where the cost of living is higher, and labor unions and other organizations have more political sway.

This comparative advantage is often criticized by those advocates of the fair trade movement.

Issues

Economic freedom is not always associated with political freedom in nations such as the People's Republic of China, where Internet censorship, the suppression of religion (in particular new foreign religions, such as Evangelism), and other abuses of civil rights are common. The case is diametrically opposite in the case of the other Asian giant, India, which has been a liberal democracy throughout its post-colonial history. Other NICs vary between these two opposing examples. The Chinese government has responded to these accusations by arguing that China's increasing standard of living has provided a utilitarian social benefit that outweighs the detrimental effect of individual violations.

India faces different types of issues compared to China. While China's economy has greatly benefited due to foreign investment by wealthy neighbors such as South Korea, Japan and Taiwan and Singapore, six of the nine nations neighboring India are classified as Least Developed Countries. As a consequence, every year thousands of people, especially from Bangladesh, Nepal and Burma, illegally immigrate into India causing tremendous strain on its economy. South Africa faces an influx of immigrants from countries such as Zimbabwe.

Countries such as Brazil, Philippines, Thailand and Turkey have a relatively low per capita income, compared to their national GDP and their current size of population.

References

  1. ^ Japan and the Newly Industrialized Economies
  2. ^ a b c d e f Paweł Bożyk (2006). "Newly Industrialized Countries". Globalization and the Transformation of Foreign Economic Policy. Ashgate Publishing, Ltd. p. 164. ISBN 0-75-464638-6.
  3. ^ a b c d e f g h i j Mauro F. Guillén (2003). "Multinationals, Ideology, and Organized Labor". The Limits of Convergence. Princeton University Press. pp. 126 (Table 5.1). ISBN 0-69-111633-4.
  4. ^ a b c d e f g h i j David Waugh (3rd edition 2000). "Manufacturing industries (chapter 19), World development (chapter 22)". Geography, An Integrated Approach. Nelson Thornes Ltd. pp. 563, 576–579, 633, and 640. ISBN 0-17-444706-X. {{cite book}}: Check date values in: |year= (help)
  5. ^ a b c d e f g h i j N. Gregory Mankiw (4th Edition 2007). Principles of Economics. ISBN 0-32-422472-9. {{cite book}}: Check date values in: |year= (help)
  6. ^ Crystal Reference Encilopedia
  7. ^ CIA World Factbook
  8. ^ International Monetary Fund, GDP per capita (current prices)
  9. ^ G8 Structure and activities
  10. ^ Structural Change and Trade in Brazil and the Newly Industrializing Latin American Economies

See also

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