Newly Industrialized Country (NIC) Definition
A Newly Industrialized Country (NIC) refers to a group of nations that fall between developing and advanced developed countries. The primary goal of NICs is to stimulate economic growth and advance the development of their economies. Therefore, these countries are often called “advanced developing” countries.
NICs gained prominence in the late 20th century as certain nations shifted from primarily agricultural economies to those driven by manufacturing or the service sector. This transition significantly influenced global economic growth patterns. In recent years, several Asian nations have emerged as prominent examples of NICs, showcasing rapid industrialization and economic advancement.
Table of contents
- Newly Industrialized Country (NIC) consists of nations that have witnessed a shift from agricultural to manufacturing or service sector.
- They aim to earn revenue through foreign investments and exports. The government also encourages development and schemes to boost economic growth.
- The origin of this concept arose between the 1970s and 1980s. Initially, Asian Tigers consisting of South Korea, Hong Kong, Taiwan, and Singapore were a part of it.
- The NICs include India, Brazil, Mexico, Thailand, South Africa, Taiwan, Singapore, Turkey, and Hong Kong.
Newly Industrialized Country Explained
The newly industrialized country category consists of nations that have seen a vital transition from primary occupation to the tertiary sector. They aim to develop these nations into a more urbanized and industrialized economy. Since the 1970s, most nations have been a part of it. A few of them in the newly industrialized country list include Hong Kong, Singapore, South Korea, and Taiwan, collectively known as Asian Tigers. These nations predominantly excelled in industrialization and growth during the 1970-1980s.
As a result, these countries became highly competitive in technology and innovation, leading to a focus on boosting their GDP through exports. Additionally, workers were moved significantly from rural to urban areas to support industrial development. However, in the later stages, other nations also joined the cause.
Understanding the historical background is crucial to grasp the beginnings of this change. The roots of industrialization can be traced back to the Industrial Revolution, which many nations had already embraced. However, during the late 1700s and 1800s, British colonial rulers established colonies and exploited less developed countries, causing significant disparities. Consequently, resources were extracted from these nations, leaving them impoverished and hindering their overall growth.
Nonetheless, specific factors played a pivotal role in driving the growth of newly industrialized countries. Government intervention in the economy emerged as a crucial catalyst for economic development in NICs. Governments implemented policies encouraging business participation and amending existing regulations to facilitate growth and progress.
Let us look at the characteristics of newly industrialized country growth to comprehend the concept better:
- NICs usually have a shift from agriculture to the manufacturing sector, which becomes a significant contributor to their GDP.
- These nations receive huge capital investments via FDI (Foreign Direct Investments).
- There is a tremendous boost in the exports sector.
- NICs often recover significantly, transitioning from negative GDP growth rates to positive values.
- Governments in NICs play an active role in promoting production and innovation.
- Better civic amenities like good transportation, water, and electricity are provided to the public.
- The laws and regulations within the economy are improvised for the betterment of society.
Here are some examples of newly industrialized countries that can help illustrate the concept further:
Suppose “Everland” is a fictional country situated on the outskirts of Middle East Asia. After experiencing severe destruction during a war, Everland faced a sharp decline in its economic growth rate, accompanied by widespread poverty. Historically, Everland’s economy relied heavily on agriculture.
However, the government implemented steps to eradicate the issues within the economy. They incentivized the public to start their own business and earn from exports. As a result, there was external income generated for the firm. In the later stages, Everland’s government also launched schemes to attract foreign investors. As time progressed, there was a visible transformation in Everland’s economy.
This hypothetical example of Everland demonstrates the transformative journey of a NIC, transitioning from an agriculture-based economy to a more diversified and vibrant industrial and service-oriented sector.
Let’s examine Indonesia’s journey toward becoming a newly industrialized country. The Indonesian government has played a crucial role in spurring economic growth and fostering industrial development. One key factor contributing to Indonesia’s potential for industrialization is its abundant natural resources.
In the third quarter of 2022, the non-oil/non-gas manufacturing industry made a significant contribution of 16.10 percent to the country’s overall gross domestic product (GDP). These resources are a solid foundation for establishing and expanding industries, driving economic growth, and diversifying the economy.
NIC vs Third World vs Developed Nations
In analyzing the distinctions among newly industrialized countries (NICs), third-world nations, and developed economies or nations, it is essential to understand the unique characteristics that set them apart regarding economic development and socio-economic indicators.
|It refers to the nations that shift from agriculture to the service sector.
|The third world is a concept that describes nations that are neither part of the first or second world.
|Developed nations are countries that have stable growth with high per capita income.
|To develop into an urbanized economy.
|To focus on the developing countries, especially within the colonies based in Africa, Asia, and Latin America.
|To maintain a market where goods are readily available and traded, a high standard of living, and a high GDP rate.
|Brazil, Mexico, Thailand, South Africa, Taiwan, India, Singapore, Turkey, and Hong Kong.
|Countries that were not a part of either capitalist economy or the Soviet Union.
|In 2023, 36 nations were in North America, Europe, and Asia Pacific.
|The word originated during the Cold War.
Frequently Asked Questions (FAQs)
Various ways can cause a NIC to be interdependent. Some include trade relations, foreign direct investment (FDI), global supply chains, and technology transfer. For example, if the investors inject their investment into such nations, there are chances for NIC to exist.
Government policy plays a crucial role in developing newly industrialized countries (NICs). Through strategic planning, regulations, incentives, and investment in infrastructure, the government shapes the environment for industrial growth and attracts foreign direct investment.
The concept of newly industrialized countries (NICs) emerged in the 1970s, and identifying the first country to be considered a NIC may vary depending on different perspectives and criteria.
China is typically classified as a newly industrialized country (NIC) rather than a more economically developed country (MEDC) due to its ongoing development and specific areas where it still faces challenges. While China has made significant progress and is the world’s second-largest economy, it continues to work on various aspects of development.
This has been a guide to Newly Industrialized Country (NIC) and its definition. We explain its characteristics, examples, and comparison with developed nations. You can learn more about it from the following articles –