Last month, the Asian Development Bank (ADB) released a report in its annual meeting held in Vietnam entitled "Asia 2050 -- realising the Asian century." In a breath-taking sweep of economic trends and visions it describes two possible scenarios -- first an "Asian century," which is expected, and the other a "Middle income trap."
ADB prognosticates that Asia's rise this century would be led by seven countries. They are India, China, Indonesia, Japan, Korea, Malaysia and Thailand. In 2010, these seven economies had a total population of 3.1 billion (78% of Asia) and a GDP of $14.2 trillion. But by 2050, these seven economies alone will account for 45% of the global GDP.
Thus, under the Asian century scenario, Asia's GDP would rise to $148 trillion and account for 51% of the global output compared to the present 27% only. On the basis of Purchasing Power Parity (PPP), GDP per capita in Asia would also rise to $45,800, compared to the global average of $36,600.
Global economic activity would be shifting towards Asia and contribute to half of global trade and investment.
About 3 billion more Asians would enjoy a prosperous standard of living.
But on the other hand, some major economies of Asia could also fall into what ADB calls "the middle income trap." These countries would have slow growth and income levels will stagnate over the next 5 to 10 years. If this happens then Asia would account for only 30% or $61 trillion of global GDP in 2050.
In the "middle income trap" scenario, the countries so affected would be able to achieve annual per capita income levels between $4,000 and $12,000 on a PPP basis. These economies will not be able to move to higher income levels. ADB mentions the case of Brazil, which grew at 6% for 100 years then stalled for the next 50 years!
Japan, Korea and Taiwan are the few countries that have, however, escaped the trap. Unfortunately, Thailand is already enmeshed in it. Malaysia is likely to fall in the trap, if one removes the benefit it derives from the commodity price boom.
The big question is China. She has relied on her seemingly unlimited work force for growth. But now supply of labour there is almost static. So can China jump to the high income level of Korea and Taiwan? It is perceived that she can too, because of the sheer scale of the economy, her gargantuan savings and her ability to invest in as well as improve her educational performance.
China is likely to see 7% annual productivity growth in the next 10 years. But beyond that it is difficult to predict. Also it is not clear whether China will be able to distribute her income better.
Another big question in materialising the Asian century is South Asia, which includes India and Bangladesh. They are likely to bear the main burden of Asian out performance. In the next 40 years, that is, by 2050, South Asia will be the home to at least 45% of all Asians. Therefore, in the short and medium terms, due to high levels of youth dependency, there will be low levels of savings, investment and productivity growth.
But South Asia in the long run will reap a demographic dividend. The size of the dividend will depend on achieving improvements in education, women's participation in the workforce and in health. But today South
Asia remains behind South East Asia, Latin America, Middle East and even much of Africa.
India is almost at the bottom in terms of education. Pakistan is also at the bottom of the pile in women empowerment. Bangladesh has done better on both counts. But this is because it started with a much lower base when she became independent. Sri Lanka, which has done well on social indicators, has been thwarted by politics which weakened her ability to transform her economy.
Given this general state of affairs, is there any reason to hope that this century will be the Asian century?
There are plenty of reasons yet to feel optimistic. The Asian countries will however need to do the following. First, they need to craft better policies. Second, they need to quicken the pace of implementation of these policies. Third, it is imperative that more inter-state cooperation on these policies take place, especially those that relate to climate change effects and maritime safety. There has to be progress in reducing regional trade and investment barriers.
Asia must look at and go for more open international trading system which has served the region well in the past fifty years.
Now what about Bangladesh? She has not been included in the ADB seven countries that will drive Asian re-emergence by 2050. Can she not aspire to be in the same league as India and Indonesia?
The governor of Bangladesh Bank, in a scintillating seminar organised recently by the Dhaka Metropolitan Chamber, lamented that in spite of Bangladesh's steady, resilient growth led by a dynamic private sector we have not been considered. Our low cost labour, large and young population pool, growing exports and workers' remittances, low external debts and favourable sovereign ratings, have not attracted ADB. Our improving social development indicators have also not impressed it.
In 2010, Bangladesh was the country with the 21st fastest growing GDP in the world. We were also the 7th largest remittance recipient country, the 70th largest exporter, the 68th largest importer and one of the world's top 30 destinations for IT outsourcing.
Bangladesh is also strategically located as a potential hub of regional trade. Roads, bridges, ports are being built for facilitating transit routes for regional and sub-regional trade. Regional energy grids are also being developed for energy security. Another credible development in Bangladesh is that country-wide microcredit movements have broadened financial inclusions.
Bangladesh has also been consciously developing several growth visions. We have a set of growth targets
under Vision 2021, a Vision for 2030 and now with ADB a vision idea for 2050.
These visions are unleashing creative talent among our population for innovation in agriculture, manufacturing and services. The strategy is to bring inclusive social and economic growth. It will promote innovation of globally competitive new products, services and production techniques.
So with less triumphalism and more focus on repairing fault-lines in their economies, Asians can still hope to grab the 21st century as their century. Watch out world, the Asians are coming!
Source: http://www.thedailystar.net
ADB prognosticates that Asia's rise this century would be led by seven countries. They are India, China, Indonesia, Japan, Korea, Malaysia and Thailand. In 2010, these seven economies had a total population of 3.1 billion (78% of Asia) and a GDP of $14.2 trillion. But by 2050, these seven economies alone will account for 45% of the global GDP.
Thus, under the Asian century scenario, Asia's GDP would rise to $148 trillion and account for 51% of the global output compared to the present 27% only. On the basis of Purchasing Power Parity (PPP), GDP per capita in Asia would also rise to $45,800, compared to the global average of $36,600.
Global economic activity would be shifting towards Asia and contribute to half of global trade and investment.
About 3 billion more Asians would enjoy a prosperous standard of living.
But on the other hand, some major economies of Asia could also fall into what ADB calls "the middle income trap." These countries would have slow growth and income levels will stagnate over the next 5 to 10 years. If this happens then Asia would account for only 30% or $61 trillion of global GDP in 2050.
In the "middle income trap" scenario, the countries so affected would be able to achieve annual per capita income levels between $4,000 and $12,000 on a PPP basis. These economies will not be able to move to higher income levels. ADB mentions the case of Brazil, which grew at 6% for 100 years then stalled for the next 50 years!
Japan, Korea and Taiwan are the few countries that have, however, escaped the trap. Unfortunately, Thailand is already enmeshed in it. Malaysia is likely to fall in the trap, if one removes the benefit it derives from the commodity price boom.
The big question is China. She has relied on her seemingly unlimited work force for growth. But now supply of labour there is almost static. So can China jump to the high income level of Korea and Taiwan? It is perceived that she can too, because of the sheer scale of the economy, her gargantuan savings and her ability to invest in as well as improve her educational performance.
China is likely to see 7% annual productivity growth in the next 10 years. But beyond that it is difficult to predict. Also it is not clear whether China will be able to distribute her income better.
Another big question in materialising the Asian century is South Asia, which includes India and Bangladesh. They are likely to bear the main burden of Asian out performance. In the next 40 years, that is, by 2050, South Asia will be the home to at least 45% of all Asians. Therefore, in the short and medium terms, due to high levels of youth dependency, there will be low levels of savings, investment and productivity growth.
But South Asia in the long run will reap a demographic dividend. The size of the dividend will depend on achieving improvements in education, women's participation in the workforce and in health. But today South
Asia remains behind South East Asia, Latin America, Middle East and even much of Africa.
India is almost at the bottom in terms of education. Pakistan is also at the bottom of the pile in women empowerment. Bangladesh has done better on both counts. But this is because it started with a much lower base when she became independent. Sri Lanka, which has done well on social indicators, has been thwarted by politics which weakened her ability to transform her economy.
Given this general state of affairs, is there any reason to hope that this century will be the Asian century?
There are plenty of reasons yet to feel optimistic. The Asian countries will however need to do the following. First, they need to craft better policies. Second, they need to quicken the pace of implementation of these policies. Third, it is imperative that more inter-state cooperation on these policies take place, especially those that relate to climate change effects and maritime safety. There has to be progress in reducing regional trade and investment barriers.
Asia must look at and go for more open international trading system which has served the region well in the past fifty years.
Now what about Bangladesh? She has not been included in the ADB seven countries that will drive Asian re-emergence by 2050. Can she not aspire to be in the same league as India and Indonesia?
The governor of Bangladesh Bank, in a scintillating seminar organised recently by the Dhaka Metropolitan Chamber, lamented that in spite of Bangladesh's steady, resilient growth led by a dynamic private sector we have not been considered. Our low cost labour, large and young population pool, growing exports and workers' remittances, low external debts and favourable sovereign ratings, have not attracted ADB. Our improving social development indicators have also not impressed it.
In 2010, Bangladesh was the country with the 21st fastest growing GDP in the world. We were also the 7th largest remittance recipient country, the 70th largest exporter, the 68th largest importer and one of the world's top 30 destinations for IT outsourcing.
Bangladesh is also strategically located as a potential hub of regional trade. Roads, bridges, ports are being built for facilitating transit routes for regional and sub-regional trade. Regional energy grids are also being developed for energy security. Another credible development in Bangladesh is that country-wide microcredit movements have broadened financial inclusions.
Bangladesh has also been consciously developing several growth visions. We have a set of growth targets
under Vision 2021, a Vision for 2030 and now with ADB a vision idea for 2050.
These visions are unleashing creative talent among our population for innovation in agriculture, manufacturing and services. The strategy is to bring inclusive social and economic growth. It will promote innovation of globally competitive new products, services and production techniques.
So with less triumphalism and more focus on repairing fault-lines in their economies, Asians can still hope to grab the 21st century as their century. Watch out world, the Asians are coming!
Source: http://www.thedailystar.net
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