Can Lesotho learn any lessons from the “Asian Tigers” and their “Cubs” (young tigers)? Dr Maluke Letete, a Lecturer in the Department of Economics at the National University of Lesotho (NUL) thinks it can. However, you may wonder, who are the “Asian Tigers”? These are the high-growth economies of Hong Kong, Singapore, South Korea and Taiwan. According to one writer, “As recently as the early 1960s South Korea, Taiwan, Singapore and Hong Kong (the “Asian Tigers”) were considered to be a part of the third world.” Yet the four “Tigers” consistently maintained high levels of economic growth ever since the 1960s, partly due to huge concentration on exports and rapid industrialization.
Later, these economies joined the ranks of the world’s richest nations. Yet, according to the same writer, “the Tigers still stand as rare examples of states which have successfully “developed” in a manner no one could have predicted 50 years ago – and at a considerably faster rate than any of our current efforts at third-world development seem to be proceeding.” Then he asked, “Are there lessons to be learnt from the rapid economic growth of the Tigers, from the 1960s through to the 1990s, and do these have a practical application in contemporary development?” Dr Letete is determined to provide an answer to this question, which is specifically tailored to Lesotho.
In his work entitled “Building a Powerful Legacy of Development: Why Investing in Science and Technology Makes Economic Sense for Lesotho,” Dr Letete suggests Lesotho needs to follow precisely the same model followed by the “Tigers”. According to Dr Letete, the Asian Tigers did not wait and hope for an economic development, they made sure it happened. “The Asain Tigers knew precisely what they wanted to achieve and took concrete actions to achieve it,” He said. “Take South Korea, for instance, it developed a technology policy, promoted Local Research and Development capabilities and established Chaebol conglomerate which are global multinationals owning numerous international enterprises.
They further identified and targeted export oriented strategic industries and provided them with subsidies and privileges. As if that was not enough, a number of Banks (Korea Development Bank, Industrial Bank of Korea, the Koommin Bank, and Korea Long term Credit Bank) provided funds to firms and research institutes for Technology Development.” All these efforts, catapulted South Korean economic miracle into what the locals proudly call “Miracle on the Han River.” Indeed, it was a miracle. The South Korean economy expanded from approximately 30 billion to approaching a trillion dollars between 1960 and 2007!
During the same period, Singapore was not to be outdone! “In this case, the government took a highly interventionist approach,” Dr Letete said. “It aimed to increase competitiveness by increasing value addition and raising technology levels. Its technology acquisition policy was directed at acquiring and subsequently upgrading the most modern technologies in highly internalized manner.” What were the results? The economy of Singapore is seen as the most open in the world. It is the 7th least corrupt country and the most pro-business, with low tax rates. It also has the third highest per-capita GDP in the world. Similar things can be said about the Economies of Taiwan and Hong Kong. In all, Hong Kong and Singapore lead the world as financial centers. In contrast, Taiwan and South Korea lead in manufacturing information technologies.
So what permeates the success of all the Asian Tigers? In this regard, Dr Letete preferred to quote another scholar by the name Lee, “Among various aspects of capabilities, emphasis should be on technological capabilities because without these, sustained growth is impossible. In this era of open market competition, private companies cannot sustain growth if they rely on cheap products; they need to be able to move up the value chain added goods based on continued upgrading and improvement and technological innovation. Furthermore private companies whenever possible need to be locally controlled, not foreign controlled subsidies of the MNCs.” According to Dr Letete, this is exactly what the “Tigers” did, and this is the path Lesotho can trail.
He continued that Lesotho cannot afford to adopt a hands-off “wait and see” approach. Rather, the country should encourage direct promotion of clustering in the sector in which the country has a competitive advantage. It should also develop technology capabilities to imitate, innovate and adopt the already existing technologies for enhanced productivity and product diversification. The country should further pursue significant Research and Development both within and outside enterprises targeted at specific industries. And the best way to do all these, he said, will be to financially support Research and Innovations in our public research institutions such as the National University of Lesotho (NUL) and to promote new business start-ups.
What Dr Letete suggests is not out of boundaries. In fact Scholars agree that the so-called Asian “Cub” Economies which are Indonesia, Malaysia, the Philippines, and Thailand are becoming Newly Industrialized Economies precisely because they are imitating the policies of their Asian “Tiger” friends. Can Lesotho learn any lessons from the “Tigers” and their “cubs”?
This blog post was originally written by NUL Research and Innovations