ABSTRACT
The slowing down of world trade in the 1970s meant a substantial shock for the highly trade-dependent East Asian NIEs. Furthermore, world recessions added to protectionist pressures in industrial countries. As trade restrictions on labour-intensive products proliferated, there were secondary reductions in the export volumes of the East Asian NIEs. In addition to the decline in export volume, the events of the 1970s had other adverse effects on these nations. Being net importers of oil, Hong Kong, Korea, Singapore and Taiwan faced much larger import bills as a result of two sharp rises in oil price. The decline in export volume and high import bills meant a substantial loss of resources for the trade-dependent East Asian NIEs. Estimates by Balassa (1980) and Naya and James (1986) show that the impacts of external shocks – measured by ‘additional’ current account deficit as a percentage GNP – were larger in the more open smaller economies of Hong Kong and Singapore (Table 11.1). Their estimates also show that Singapore and Korea were more vulnerable to terms of trade shocks, particularly oil price increases. As can be seen from Table 11.2, the terms of trade effects accounted for almost all of Singapore’s external shocks during 1974–82. Taiwan was affected roughly equally by both oil price increases and declines in export demand. Hong Kong displayed more vulnerability to changes in export volume. The size of external shocks (% GNP)
|
External shocks/GNP (%) |
||
|---|---|---|
|
Economy |
1974–8 |
1974–82 |
|
Hong Kong |
− |
−26.7 |
|
Korea |
−6.9 |
−13.3 |
|
Singapore |
−23.3 |
−46.3 |
|
Taiwan |
−6.5 |
−12.7 |
|
Terms of trade effect |
Export volume effect |
|||
|---|---|---|---|---|
|
Economy |
1974–8 |
1974–82 |
1974–8 |
1972–82 |
|
Hong Kong |
– |
35.6 |
– |
64.4 |
|
Korea |
74.5 |
83.2 |
25.5 |
16.8 |
|
Singapore |
71.8 |
98.1 |
28.2 |
1.9 |
|
Taiwan |
41.0 |
43.8 |
59.0 |
56.2 |
