Asia’s recent economic success may not be enough to match the influence of Western nations in the global economy, according to the former Asian Development Bank (ADB) president.
In an Asian Development Blog, Takehiko Nakao, who has stepped down as president of the Manila-based multilateral development institution, said Asia needs to strengthen institutions and take on more responsibility in global affairs.
Nakao said shifting the influence of Western countries over the past five centuries to Asia also means increasing the region’s contributions to the development of science and technology.
“I hope that a larger role played by Asia will lead to a more inclusive, integrated, and prosperous global community,” Nakao said.
Asia’s economic success, Nakao said, did not come easy for the region. He said in 1960, per-capita gross domestic product (GDP) of the region was only $330.
At that time, Nakao said, the ADB’s primary concern was feeding a large and growing population in the region.
But efforts to address development constraints, he said, were put in place, particularly in open trade and investment regimes that allowed many countries in the region to benefit from the “demographic dividend” and ride various technological waves.
The region’s success allowed Asia to see a 15-fold increase in GDP per capita to $4,903 in 2018. The growth was faster than global GDP per capita which only tripled over the same period.
“While there were variations across countries on policy mix and timing, with occasional setbacks and reversals, successful Asian economies pursued policies needed for sustained growth and prioritized poverty reduction and inclusiveness,” Nakao said.
Further, Nakao said, many Asian countries implemented “target industrial policies” through the use of tariffs, subsidies, preferential credit and tax perks.
Earlier, Nakao told reporters that under the Asian Century scenario by 2050, Asia will account for 52 percent of global GDP. Currently, the region only accounts for 32 percent of the global economy.
Nakao said, however, that in ADB’s developing member-countries (DMCs) alone, at a threshold of $3.2 per day using 2011 purchasing power parity (PPP), there are still 1.1 billion poor people accounting for 57.2 percent of the poor in developing countries globally.
Nakao’s presentation during the briefing showed that Asia’s GDP reached $26 trillion in 2017’s PPP. With a population of 4.16 billion, this translated to a per-capita GDP of $6,272.
Under the Asian Century scenario, the GDP of the region would reach $174 trillion. With a projected population of 4.76 billion, this would translate to a per-capita GDP of $36,665.
The share of Asia in global GDP has started increasing in the 1980s. ADB data showed that the peak of Asia’s share in global GDP was in the 1700s when it accounted for nearly 60 percent of global GDP.
However, this share has declined sharply in the 1870s when the region’s share in global GDP was only below 40 percent. By 1913, the share declined to below 30 percent and, in the 1950s and 1970s, reached below 20 percent.
Since the 1980s, Asia’s share in global growth has steadily increased from below 20 percent, a little over 20 percent in 1995 to nearly 30 percent in 2010. This trend is expected to continue to above 30 percent by 2020; 40 percent by 2030; above 40 percent by 2040; and over 50 percent by 2050.
The recent gain in economic growth, particularly starting in 1990, has helped Asia lift millions out of poverty. Using the international poverty threshold of $1.9 per day in 2011, there are now only 264 million poor Asians living in DMCs.
However, a higher poverty threshold, which can reflect the current situation of many DMCs, showed a different picture. The World Bank recently said adjusting the threshold would paint a better picture of how many people are still poor.
Nakao said poverty in 1990, at a threshold of $3.2 per day in 2011 PPP, there were still 2.274 billion Asians living in DMCs that were considered poor. But this has declined to 2.241 billion in 1999; 1.942 billion in 2005; 1.495 billion in 2011; 1.267 billion in 2013; and 1.1 billion in 2015.
Image credits: AP/Bullit Marquez, File