What is a Tiger Economy?

A tiger economy is a term used to describe a national economy that experiences a period of unanticipated and rapid growth. As a result of that increase in economic growth, the general standard of living within that country also undergoes drastic changes that allow the population to enjoy a higher living standard. While the term was originally coined to describe a phenomenon that took place amount several nations in the Southeast Asia, a tiger economy has since been applied to any special economic zone that undergoes rapid economic growth anywhere around the world.

When first used, the tiger economy described an economic phenomenon that was occurring in the nations of Thailand, Taiwan, Singapore, Hong Kong, South Korea, and Japan. Those nations were enjoying a dramatic upswing in economy, since they enjoyed a profitable balance of trade. With investment capital flowing into the nations and an increase in export activity, those nations were in turn able to also increase import activity, allowing consumers to enjoy goods and services not produced within those nations. The end result was an emerging market economy that was strong, vibrant, and ultimately benefited just about everyone involved in the spurt of economic growth.

Since the latter part of the 20th century, a tiger economy has come to identify any national or group of national economies that experience this type of rapid growth and subsequent increase in the standard of living for their citizens. Often, nicknames are also applied to the specific grouping of nations that undergo this type of prosperity. For example, When the Republic of Ireland experienced this type of growth during the decade of the 1990’s, the nation was referred to as the Celtic Tiger. In the case of the tiger economy that developed in Japan, Taiwan and other nations in the southeastern area of Asia, they were collectively referred to as the East Asian Tigers.

One of the potential pitfalls of a tiger economy is that the phenomenon may not be sustainable over the long term. Many of the nations that experienced this type of economic growth during the last twenty years of the 20th century also underwent economic downturns after the rapid prosperity leveled off after seven to ten years. In many cases, countries that experience a tiger economy manage to overcome the subsequent downturn and emerge with economies that is stable, although somewhat less spectacular than during the glory years. Typically, financial experts are able to determine what events and decisions led to undermining the rapid growth and take steps to minimize those factors in the future, a measure that increases the chances of the country’s economy remaining stable during subsequent shifts in the worldwide economy.