Finance:Newly industrialized country

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Short description: Socioeconomic classification

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 that of other developing countries; and where the social consequences of industrialization, such as urbanization, are reorganizing society.

Definition

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.

Characteristics of newly industrialized countries

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

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 roughly come to a match with developed countries as those of Western Europe as well 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

The table below presents the list of countries consistently considered NICs by different authors and experts.[6][7][8][9] Turkey and South Africa were classified among the world's 34 developed countries (DCs) by the CIA World Factbook in 2008.[1] Turkey became 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 . The members of the G20 include Brazil, China, India, Indonesia, Mexico, South Africa and Turkey.

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

Country Region GDP (nominal) (Millions of USD, 2023 IMF)[10] GDP per capita (nominal)
(USD, 2023 IMF)[10] 		GDP (PPP) (Millions of current Int$, 2023 IMF)[10] GDP per capita (PPP)
(current Int$, 2023 IMF)[10] 		Income inequality (GINI) 2011–19[11][12][13] Human Development Index (HDI, 2021)[14] Real GDP growth rate as of 2022[15]
 South Africa Africa 380,906 6,485 990,030 16,091 64 (2018) 0.713 (high) 1.1
 Brazil Latin America 2,126,809 10,412 4,020,381 18,686 44.9 (2019) 0.754 (high) 1.0
 Mexico 1,811,468 12,674 3,125,902 23,820 41.8 (2019) 0.758 (high) 1.2
 China Asia-Pacific 17,700,899 13,721 33,014,998 23,382 38.5 (2016) 0.768 (high) 4.4
 India 3,732,224 2,612 13,12,443 10,475 35.3 (2018) 0.633 (medium) 6.4
 Philippines 435,675 3,905 1,289,281 11,420 42.3 (2019) 0.699 (medium) 5.7
 Malaysia 430,895 13,382 1,230,823 36,847 41.1 (2019) 0.803 (very high) 4.4
 Indonesia 1,417,387 5,108 4,398,729 15,855 38.2 (2018) 0.705 (high) 5.0
 Thailand 512,193 8,182 1,591,402 22,675 34.9 (2019) 0.800 (very high) 3.7
 Turkey Eurasia 1,340,689 15,368 3,805,673 43,887 41.9 (2019) 0.838 (very high) 3.0

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. Nominal GDP per capita typically is an indicator for living standards in a given country as well.[16]

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

Authors set lists of countries accordingly to different methods of economic analysis. Sometimes a work ascribes NIC status to a country that other authors do not consider a NIC. This is the case of countries such as Argentina , Egypt, Sri Lanka[17] and Russia .[6]

Criticism

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

While South Africa is considered wealthy on a wealth-per-capita basis, economic inequality is persistent and extreme poverty remains high in the country.[18]South Africa is a NIC with 34% of population unemployed and poor.

Mexico's economic growth is hampered in some areas by an ongoing drug war.[19]

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

Groupings

References

  1. ↑ 1.0 1.1 "Appendix B :: International Organizations and Groups". The World Factbook. Central Intelligence Agency. https://www.cia.gov/library/publications/the-world-factbook/appendix/appendix-b.html. 
  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. ↑ 3.0 3.1 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". IMF Working Paper (International Monetary Fund). https://www.imf.org/external/pubs/ft/wp/2016/wp16207.pdf. Retrieved 28 September 2020. 
  5. ↑ "Japan Newly Industrialized Economies". January 1994. http://www.photius.com/countries/japan/government/japan_government_newly_industrialized~447.html. 
  6. ↑ 6.0 6.1 Paweł Bożyk (2006). "Newly Industrialized Countries". Globalization and the Transformation of Foreign Economic Policy. Ashgate Publishing, Ltd. p. 164. ISBN 0-7546-4638-6. https://books.google.com/books?id=iuHsIuez5qoC. 
  7. ↑ 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. ↑ 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. ↑ N. Gregory Mankiw (2007). Principles of Economics (4th ed.). ISBN 978-0-324-22472-6. 
  10. ↑ 10.0 10.1 10.2 10.3 "World Economic Outlook Database, April 2023". International Monetary Fund. April 2023. https://www.imf.org/en/Publications/WEO/weo-database/2023/April/weo-report?c=223,924,534,536,548,273,566,199,578,186,&s=NGDPD,PPPGDP,NGDPDPC,PPPPC,&sy=2021&ey=2028&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1. 
  11. ↑ "GINI Index Data Table". World Bank. http://data.worldbank.org/indicator/SI.POV.GINI. 
  12. ↑ Note: The higher the figure, the higher the inequality.
  13. ↑ "World Economic Outlook Database, April 2022". International Monetary Fund. 20 April 2022. https://www.imf.org/en/Publications/WEO/weo-database/2022/April/weo-report?c=223,924,534,536,548,273,566,199,578,186,&s=NGDPD,PPPGDP,NGDPDPC,PPPPC,&sy=2022&ey=2022&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1. 
  14. ↑ "Human Development Report 2021". United Nations Development Programme. https://hdr.undp.org/system/files/documents/global-report-document/hdr2021-22pdf_1.pdf. 
  15. ↑ "World Economic Outlook Database, April 2023". IMF. https://www.imf.org/en/Publications/WEO/weo-database/2023/April/weo-report?c=223,924,534,536,548,273,566,199,578,186,&s=NGDPD,PPPGDP,NGDPDPC,PPPPC,&sy=2021&ey=2028&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1. 
  16. ↑ "How Do We Measure Standard of Living?". 14 February 2003. https://www.bostonfed.org/education/ledger/ledger03/winter/measure.pdf. 
  17. ↑ John Broman (1996). Popular Development: Rethinking the Theory and Practice of Development. Wiley-Blackwell. p. 81. ISBN 1-557-86316-4. 
  18. ↑ Sedghi, Ami; Anderson, Mark (31 July 2015). "Africa wealth report 2015: rich get richer even as poverty and inequality deepen" (in en-GB). https://www.theguardian.com/global-development/datablog/2015/jul/31/africa-wealth-report-2015-rich-get-richer-poverty-grows-and-inequality-deepens-new-world-wealth. 
  19. ↑ "Drug Trafficking, Violence and Mexico's Economic Future". University of Pennsylvania. 26 January 2011. http://knowledge.wharton.upenn.edu/article.cfm?articleid=2695. 



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