Newly industrialized country

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A world map showing the list of developing (green/light green) and developed (gray/red) countries in 2014. Newly industrialized countries are shown in blue.

The category of newly industrialized country (NIC), newly industrialized economy (NIE)[1] or middle income country[2] is a socioeconomic classification applied to several countries around the world by political scientists and economists. They represent a subset of developing countries whose economic growth is much higher than other developing countries; and where the social consequences of industrialization, such as urbanization, are reorganizing society.

Definition[edit]

NICs are countries whose economies have not yet reached a developed country's status but have, in a macroeconomic sense, outpaced their developing counterparts. Such countries are still considered developing nations and only differ from other developing nations in the rate at which an NIC's growth is much higher over a shorter allotted time period compared to other developing nations.[3] Another characterization of NICs is that of countries undergoing rapid economic growth (usually export-oriented).[4] Incipient or ongoing industrialization is an important indicator of an NIC. In many NICs, social upheaval can occur as primarily rural, or agricultural, populations migrate to the cities, where the growth of manufacturing concerns and factories can draw many thousands of laborers. NICs introduce many new immigrants looking to improve their social and/or political status through newly formed democracies and the increase in wages that most individuals who partake in such changes would obtain.

Characteristics of newly industrialized countries[edit]

Newly industrialized countries can bring about an increase of stabilization in a country's social and economic status, allowing the people living in these nations to begin to experience better living conditions and better lifestyles. Another characteristic that appears in newly industrialized countries is the further development in government structures, such as democracy, the rule of law, and less corruption. Other such examples of a better lifestyle people living in such countries can experience are better transportation, electricity, and better access to water, compared to other developing countries and low infant mortality rate.

Historical context[edit]

The term came into use around 1970, when the Four Asian Tigers[5] of Taiwan, Singapore, Hong Kong and South Korea rose to become globally competitive in science, technological innovation and economic prosperity as well as NICs in the 1970s and 1980s, with exceptionally fast industrial growth since the 1960s; all four countries having since graduated into high-tech industrialized developed countries with wealthy high-income economies. There is a clear distinction between these countries and the countries now considered NICs. In particular, the combination of an open political process, high GNI per capita, and a thriving, export-oriented economic policy has shown that these East Asian economic tiger countries have now not only reached but surpassed the technological development of the developed countries in Western Europe, Canada, Japan, Australia, New Zealand and the United States.

All four countries are classified as high-income economies by the World Bank and developed countries by the International Monetary Fund (IMF) and U.S. Central Intelligence Agency (CIA). All of the Four Asian Tigers, like Western European countries, have a Human Development Index considered "very high" by the United Nations.

Current[edit]

The table below presents the list of countries consistently considered NICs by different authors and experts.[6][7][8][9] Turkey and South Africa are classified as developed countries by the CIA.[1] Turkey was a founding member of the OECD in 1961 and Mexico joined in 1994. The G8+5 group is composed of the original G8 members in addition to China, India, Mexico, South Africa and Brazil.

Note: Green-colored cells indicate highest value or best performance in index, while yellow-colored cells indicate the opposite.

Region Country GDP (Millions of USD, 2020 IMF)[10] GDP per capita
(USD, 2020 IMF)[11]
GDP (PPP) (Millions of current Int$, 2020 IMF)[12] GDP per capita (PPP)
(current Int$, 2020 IMF)[13]
Income inequality (GINI) 2011–18[14][15] Human Development Index (HDI, 2019)[16] Real GDP growth rate as of 2021[17] Sources
Africa  South Africa 282,588 4,736 710,773 11,911 62.7 (2020) 0.709 (high) 3 [7][8][9]
North America  Mexico 1,040,372 8,069 2,424,511 18,804 45.4 (2018) 0.779 (high) 3.5 [6][7][8]
South America  Brazil 2,363,767 6,450 4,078,901 14,563 53.9 (2018) 0.765 (high) 2.8 [6][7][8]
Asia  China 14,860,775 10,839 24,162,435 17,206 46.7 (2018) 0.761 (high) 8.2 [7][8]
 India 2,592,583 1,877 8,681,303 6,284 33.9 (2013) 0.645 (medium) 11.5 [7][8][9]
 Indonesia 1,088,768 4,038 3,328,288 12,345 37.8 (2018) 0.718 (high) 6.1 [7][8][9]
 Malaysia 336,330 10,192 900,426 27,287 41.0 (2015) 0.810 (very high) 7.8 [7][8][9]
 Philippines 367,362 3,373 933,913 8,574 44.4 (2015) 0.718 (high) 7.4 [6][7][8][9][18]
 Thailand 509,200 7,295 1,261,485 18,073 36.4 (2018) 0.777 (high) 4 [6][7][8][9]
Europe  Turkey 649,436 7,715 2,381,594 28,294 41.9 (2018) 0.820 (very high) 5 [7][8][9]

For China and India, the immense population of these two countries (each with over 1.3 billion people as of May 2021) means that per capita income will remain low even if either economy surpasses that of the United States in overall GDP. When GDP per capita is calculated according to purchasing power parity (PPP), this takes into account the lower costs of living in each newly industrialized country. GDP per capita typically is an indicator for living standards in a given country as well.[19]

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.

Other[edit]

Authors set lists of countries accordingly to different methods of economic analysis. Sometimes a work ascribes NIC status to a country that other authors don't consider a NIC. This is the case of countries such as Argentina, Egypt, Sri Lanka[20] and Russia.[6]

Criticism[edit]

NICs usually benefit from comparatively low wage costs, which translates into lower input prices for suppliers. 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 trade unions and other organizations have more political sway. This comparative advantage is often criticized by advocates of the fair trade movement.

Problems[edit]

South Africa faces an influx of immigrants from countries such as Zimbabwe, although many also come from Burundi, Democratic Republic of the Congo, Rwanda, Eritrea, Nigeria, Ethiopia and Somalia.[21] While South Africa is considered wealthy on a wealth-per-capita basis, economic inequality is persistent and extreme poverty remains high in the region.[22]

Mexico's economic growth is hampered in some areas by an ongoing drug war.[23]

Other NICs face common problems such as widespread corruption and political instability, as well as other circumstances that cause them to face the middle income trap.[3]

See also[edit]

Groupings

References[edit]

  1. ^ a b "Appendix B :: International Organizations and Groups". The World Factbook. Central Intelligence Agency. Retrieved 28 September 2020.
  2. ^ Patrick H. O’Neil (2018). "Glossary". Essentials of Comparative Politics (6th ed.). W. W. Norton & Company. p. A-19. ISBN 978-0-393-62458-8.
  3. ^ a b Patrick H. O’Neil (2018). "Chapter 10: Developing Countries". Essentials of Comparative Politics (6th ed.). W. W. Norton & Company. pp. 304–337. ISBN 978-0-393-62458-8.
  4. ^ Dominik Boddin (October 2016). "The Role of Newly Industrialized Economies in Global Value Chains" (PDF). IMF Working Paper. International Monetary Fund. Retrieved 28 September 2020.
  5. ^ "Japan Newly Industrialized Economies". photius.com. January 1994.
  6. ^ a b c d e f Paweł Bożyk (2006). "Newly fake Countries". Globalization and the Transformation of Foreign Economic Policy. Ashgate Publishing, Ltd. p. 164. ISBN 0-7546-4638-6.
  7. ^ a b c d e f g h i j k Mauro F. Guillén (2003). "Multinationals, Ideology, and Organized Labor". The Limits of Convergence. Princeton University Press. pp. 126 (Table 5.1). ISBN 0-691-11633-4.
  8. ^ a b c d e f g h i j k David Waugh (2000). "Manufacturing industries (chapter 19), World development (chapter 22)". Geography, An Integrated Approach (3rd ed.). Nelson Thornes Ltd. pp. 563, 576–579, 633, and 640. ISBN 0-17-444706-X.
  9. ^ a b c d e f g h N. Gregory Mankiw (2007). Principles of Economics (4th ed.). ISBN 0-324-22472-9.
  10. ^ "World Economic Outlook Database, October 2020". IMF. Retrieved 16 October 2020.
  11. ^ "World Economic Outlook Database, October 2020". IMF. Retrieved 16 October 2020.
  12. ^ "World Economic Outlook Database, October 2020". IMF. Retrieved 16 October 2020.
  13. ^ "World Economic Outlook Database, October 2020". IMF. Retrieved 16 October 2020.
  14. ^ "GINI Index Data Table". World Bank. Retrieved 4 April 2012.
  15. ^ Note: The higher the figure, the higher the inequality.
  16. ^ "Human Development Report 2019" (PDF). United Nations Development Programme. Retrieved 17 December 2020.
  17. ^ "World Economic Outlook Database, October 2020". IMF. Retrieved 16 October 2020.
  18. ^ Luchi de Guzman (10 December 2019). "PH ranks 106th in latest UN Human Development Index". CNN Philippines. Retrieved 13 December 2019.
  19. ^ "How Do We Measure Standard of Living?" (PDF). The Federal Reserve Bank of Boston. 14 February 2003.
  20. ^ John Broman (1996). Popular Development: Rethinking the Theory and Practice of Development. Wiley-Blackwell. p. 81. ISBN 1-557-86316-4.
  21. ^ United Nations High Commissioner for Refugees. "UNHCR Global Appeal 2011 (update) – South Africa". UNHCR.
  22. ^ Sedghi, Ami; Anderson, Mark (31 July 2015). "Africa wealth report 2015: rich get richer even as poverty and inequality deepen". The Guardian.
  23. ^ "Drug Trafficking, Violence and Mexico's Economic Future". Knowledge.wharton.upenn.edu. University of Pennsylvania. 26 January 2011. Retrieved 28 July 2013.