The Asia and Pacific is an exciting region of multiculturalism, color, solace and diversity where enduring ancient tradition merges with sophistication and understate simplicity. To understand Asian development is to look first to this stunning tapestry of contrasting countries and acknowledge the specific challenges of this puzzle. Differently from other compact regions as Africa and Latin America, Asia spreads along a dispersed geography: gigantic continental countries such as China and Russia or India`s immense peninsula; tropical and exotic countries of South East Asia; silk road ancestral heritage of South Asia; spiritual refuges as Butan with its Happiness Index, the eclectic sophistication of Singapore or remote disperse islands of the Pacific all melt into an unique identity. It is this diversity that makes the region so interesting but also multiplies the challenges to development policy makers. The first step is to assure a differentiated approach trickling down region, country and context to allow ownership of policies but also to guarantee results and impact at the local level.
Asia, far from dull, is a continent full of intrigue, has witnessed dramatic shifts in economic performance, from the Asian miracle to later financial crisis meltdown, albeit the cautious optimism prevalent in the region today, Asia remains a dynamic and unpredictable political economic environment. Defined as the world’s most vibrant region, it simultaneously combines rivalries and confrontation with increased economic cooperation and community building.
Asia continues to be the fastest-growing region in the world and the main engine of the world`s economy, contributing more than 60% of the global growth (3/4 come from China and India). Economic prospects remain buoyant sustained by strong external demand and a growth expansion of 6% in 2019 with controlled inflation around 2.9%.
In terms of Human Development the region`s staggering growth performance and macroeconomic stability of the last two decades has translated into impressive human development and poverty reduction. According to UN ESCAM report between 1990 and 2015 the proportion of the region’s population living on less than $1.25 per day fell from 53 to less than 12 percent. The dramatic income poverty reduction is however accompanied by some multidimensional poverty outcomes. For example access to safe drinking water was guaranteed in halve the proportion of the population in more than two-thirds of countries. Primary school coverage became almost universal and all levels of education benefited from gender parity.
However albeit the progress some areas still need attention: the rates of under-five and infant mortality fell short of the required two-thirds reduction; 75 million children have nutritional health issues mainly of stunting and around 1.2 billion people in rural areas, and 480 million in urban areas, still lacked access to basic sanitation. As the SDGs agenda admits for the first time in history the real possibility of eradicating poverty the analysis shifts now to: extreme and chronic poverty; monitoring of transitory poverty and poor people just below the poverty lines; targeting pocket of poverty in remote areas and issues of discrimination and inclusion of the remaining 570 million people still living on less than $1.25 per day. To fulfill enduring and complete eradication of poverty it is fundamental to build sharp statistical systems that can monitor progress in poverty with more technology based and surgical methods.
However despite the robust forecasts there are some risks as recent trade protectionist measures can undermine the export led model of growth. The risk of retreat from global integration and the jeopardizing of political consensus on market-friendly reforms namely through steps taken by USA in 2018 as the imposition of global safeguards tariffs on imported washing machines and solar cells, the new tariffs on steel and aluminum or the announcement of 301 section on China`s intellectual property that acted as tariffs valued in 50 billion USD with corresponding retaliation from China may have a considerable impact in Asia greatly dependent of trade.In addition the USA to curb fiscal stimulus may need to raise interest rates faster than expected which can lead to capital outflow in most dollarized economies namely of Southeast Asia. In terms of macroeconomics the region suffers the risks of capital liberalization and integration of exports in global markets and this is an intrinsic vulnerability of Asian economies that demand sharp policies and close financial supervision.
There are new trends that demand attention. The ongoing structural transformation of most economies will have the impact of new technologies to enhance productivity that will displace jobs and generate new types of better-paid jobs, however this transition demands coordinated actions on training of under-skilled workers and labour protection and regulation. Additionally demographics such as aging population urges for solutions of social protection. On the other side demographic change in Asia and the Pacific is happening at a rate the world has never witnessed before. An explosion in the working age population and a fall in birth rates have happened in only 30 years while it took a century in Europe so there is an opportunity as well as a challenge to absorb this new labour force.
Additionally Asia is also embracing the digitalization revolution that will need new labour strategies including those related to the future of work and declining productivity gains so policies of training and integration of low skilled labour market will be crucial.
Another crucial trend are the challenges of urbanization as most economies transit from subsistence agriculture, rural-urban migration are massive so there are great pressures to cities in terms of water access, sanitation, energy supply, housing construction and waste management. So making the cities more livable is a crucial priority.
Additionally Asia is the most hit region by disasters putting the climate change mitigation strategies at the top of the agenda along with sustainable and green solutions that will be overarching priorities in the development agenda.
The ambitious sustainable development agenda setting new SDGs with 169 targets have simultaneously exposed aid financial vulnerabilities, for example in the context of the Financing for Development it was estimated that the region has a financial gap in infrastructure of around 1,7 trillion USD annually and of 250 trillion up to 2030 so business as usual will not be possible and the development agenda has to be more dynamic finding innovative ways of catalyzing and mobilizing funds to achieve the SDGs agenda.
Most of the investment priorities for the future will be based on improved connectivity and transportation to allow the circulation of people and goods, access to markets but also rural-urban migration, so most of the solutions for diversity may well be in Regional Integration such as Economic Zones and Corridors but also on knowledge and best practices from South-South Cooperation as the region comprises three BRICs: Russia, India and China.
Slowly from the dawn of new millennium the new gravitational centre has gradually shifted to Asia a continent full of adventure, tradition and economic dynamism that has the potential to build leadership and provide local based development experiences in several strategic areas: resilience strategies in climate change and disaster prevention; on transitioning economies and structural economic transformation and diversification; on green growth and sustainable solutions but also on the impact of technologies, digitalization and robotic on economic structures.
The Asian continent, this stunting tapestry of exotic countries, enigmatic traditions and cultures, dramatic landscapes and exciting history is a dragon that will never be tamed, but now as the circular spiral centers gravity in this amazing continent, let`s see how it will be managed.