Asia 2050: Realising the Asian Century |

Asia 2050: Realising the Asian Century

20111018_Rajat_M_Nag_05w170On 18 October 2011, Mr. Rajat M. Nag, Managing Director General of the Asian Development Bank delivered a lunchtime talk at the LKY School. Rajat highlighted the ADB’s newly launched publication, Asia 2050: Realising the Asian Century, which formed the topic of his lecture. The publication argues that while it is realistic to expect Asia to realise the promises of what has been described as “the Asian Century”, this will not be achieved without some challenges.

Rajat started off on an optimistic note, reminding the audience that Asia has achieved much progress in just a few decades. Japan after the Second World War, the newly industrializing economies, China, and more recently India are part of the growth story. Prosperity in Asia has increased and people now live longer. That said, two-thirds of the world’s poor still live in Asia; 2 billion people in Asia still live on $2 per day; and 83 million underweight children are born in Asia. The Asian growth story is best encapsulated by the image of glitzy high-rises sitting alongside slums. Rajat then posed the question: what is the possibility of Asia joining the ranks of affluent nations?

In the new publication, the ADB presents two scenarios of Asia’s growth. The first is one where Asia could account for 52 per cent of global GDP, raise per-capita income by six times, and alleviate up to 3 billion people from poverty. The second contrasting scenario is that of an Asia mired in a “middle-income trap” and displaying slow growth. 

In realizing the Asian dream, Rajat said Asia had to confront four fundamental challenges: inclusive growth; the middle-income trap; climate change; and corruption. 

When economies grow, inequalities also grow, as popularly represented by the Kuznets curve. While sharing the growth pie equally is not possible, the inclusive growth process needs to ensure that everyone participates and benefits from it. “A rising tide lifts all boats, but if some boats have leaky hulls, they will drown,” Rajat said. Secondly, it is important to grow through a continuous process of innovation and increased productivity to avoid the middle-income trap. Once in this trap, a country gets squeezed between the low-cost-advantage countries on the one hand and countries with high-tech capability on the other. The imperative is to invest in higher education, entrepreneurship, and overall cultural change. Thirdly, home to 60 per cent of the world’s population, Asia stands to lose the most from climate change. Asian governments were galled when presented with the need for them to cut down on greenhouse gas emissions and they countered this with the low per-capita emissions argument. However, nine out of 10 cities which will be submerged under water due to climate change are in Asia. A climate change modelling exercise done at the London School of Economics and Oxford University has shown that the effects of climate change cannot be moderated unless developing countries also cut emissions along with the developed countries. Asia has to play a statesmanship like role on this issue. Finally poor governance and corruption can undo Asia’s growth story. There is no dearth of laws and legal frameworks in Asia, but the courts are unreliable and take a long time to process violations. It doesn’t matter what the political system is so long as it provides good governance, Rajat said.

Rajat also touched on other challenges which will arise out of changing demographics (an ageing population), growing urbanisation and potential conflicts between countries. He summed up his talk by reiterating the ADB’s belief that though these challenges are not insurmountable, good leadership was critical. “The Asian Century is plausible, but not pre-ordained,” he said.

 

By Sidhartha Vermani, a Master of Public Administration student at the LKY School.

 
Synopsis:

Asia’s rise as an economic force over the past 40 years is one of the most successful stories of development in modern times. By the middle of this century, Asia could account for half of global output, trade and investment, while also enjoying widespread affluence. Though the realisation of this promising outcome is conceivable, Asia’s rise is by no means preordained. As the Asian Development Bank (ADB) highlights in its newly-launched publication “Asia 2050: Realizing the Asian Century”, the region must overcome myriad challenges if Asians are to take their place among the ranks of the affluent in Europe and North America. The talk will discuss how the region must first deal with a number of longer-term challenges, including poor governance and weak institutional capacity, growing income disparities within and between countries, competition for natural resources, global warming and climate change. The talk will also look into the risks facing Asia’s fast-growing economies and consider whether countries like the People's Republic of China, India, Viet Nam, and Indonesia can continue on the current trajectory, or fall victim to the “middle-income trap” of slow growth and stagnation.

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Speaker(s):

Mr. Rajat M. Nag, Managing Director General, Asian Development Bank

Date:
Tuesday, 18 October 2011
Time:
12.15 p.m. - 1.30 p.m.
Venue:

Seminar Room 2-1
Level 2, Manasseh Meyer
Lee Kuan Yew School of Public Policy
469C Bukit Timah Road
Singapore 259772

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