ASIA 2050

THE ASIAN CENTURY? THERE ARE NO GUARANTEES

Rajeev Anantaram

Business Standard, May 15, 2011

Asia cannot take its success for granted - weak institutional capabilities, ineffective governance and income inequalities could derail the continent’s dream run.

The themes that have dominated the discourse in development economics since the 1970s, namely, the role of institutions and human capital in driving sustained economic growth and the limitations of ‘trickle down’ effects in spreading the benefits of economic growth uniformly, were revisited earlier this month at the annual conference of the Asian Development Bank in Hanoi, Vietnam, which saw the release of the draft report, Asia 2050 — Realizing the Asian Century.

The report identifies six themes that would drive Asia’s growth in the forthcoming decades: technical progress, capital accumulation, demographics and the labour force, the emerging middle class, climate change mitigation and the competition for resources, and the communications revolution. The sobering takeaway from the report is that Asia cannot take its success for granted — one or more of the above themes, in the absence of well-calibrated policies, could well derail Asia’s dream run.

The more optimistic of the two forecasts in the report, called the Asian Century, is considered a virtual certainty in contemporary popular imagination. Under this scenario, Asia would have a cumulative GDP of $148 trillion, a per capita GDP of $38,500 (in purchasing power parity) and account for 51 per cent of global output. The less sanguine prediction, called the Middle Income Trap, places the corresponding figures at $61 trillion, $20,300 and 32 per cent respectively.

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