Asia 2050: Realizing The Asian Century Report Warns Of Middle-Income Trap

Three billion Asians could enjoy living standards similar to those in Europe today, and the region could account for over half of the global output by 2050, says a new Asian Development Bank report.

AsianScientist (Aug. 4, 2011) – An additional 3 billion Asians could enjoy living standards similar to those in Europe today, and the region could account for over half of the global output by 2050, says a new Asian Development Bank (ADB) report.

This potentially promising future for the region is sometimes referred to as the “Asian Century”.

This rapid growth would be driven by the Asia-7: consisting of the People’s Republic of China, India, Indonesia, Malaysia, Japan, Republic of Korea, and Thailand. Together, the Asia-7 would account for over 85 percent of Asia’s incremental growth between 2010 to 2050.

According to the report, Asia 2050 – Realizing the Asian Century, if Asia continues on its recent trajectory, by 2050 its per capita income could rise sixfold in purchasing power parity (PPP) terms to reach Europe’s levels today.

By nearly doubling its share of global gross domestic product (GDP) to 52 percent by 2050, Asia would also regain the dominant economic position it held some 300 years ago before the industrial revolution.

Source: Asian Development Bank/Asia 2050 report.

 
Middle-income trap

However, besides its rosy predictions, the report also challenges the perception that Asia’s rapid rise is inevitable. For example, fast-growing economies like the People’s Republic of China, India, Vietnam, and Indonesia could fall victim to the “middle-income trap”.

Unable to compete with low-income, low-wage economies in manufactured exports and with advanced economies in high-skill innovations, these countries may not be able to make a timely transition from resource-driven growth, with low-cost labor and capital, to productivity-driven growth.

At the book’s launch in Tokyo, ADB President Haruhiko Kuroda stressed that regional cooperation and integration are central to Asian prosperity and stability.

Asia’s governments must also tackle growing inequalities, as well as demonstrate greater transparency, predictability, accountability, and enforceability in their decision-making. It will also face new responsibilities in managing the global commons, such as free trade, climate change mitigation, and financial stability.

Kuroda urged Asia’s leaders to take bold, innovative action to address environmental challenges and the rising tide of urbanization.

“How we handle vital resources such as water and food will determine whether we stay on the path of economic growth and development, or stumble into conflicts of scarcity,” said Mr. Kuroda.

“Asia must take radical steps now toward investing in innovation and clean technology. This will ensure that our quest for prosperity for all does not end in environmental gridlock.”

Aimed at senior policy makers, top business leaders, and key opinion makers within Asia, the study offers a long-term perspective of the Asia region as a whole instead of short- to medium-term perspectives of selected countries, sub regions or issues.

The executive summary can be downloaded at: Asia 2050 Executive Summary Report (PDF).

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Source: ADB.
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