East Asia dev’t incomplete, needs update to changing times
World Bank report
The World Bank said East Asian countries’ development has been largely incomplete these past decades and to ensure future advancement, emerging economies should be able to capitalize on its human capital and sound economic governance policies to ensure sustained growth and development.
In a statement, it said the report, “A Resurgent East Asia, Navigating a Changing World” posited that “tremendous progress” in the region is hardly guaranteed and that the development model dubbed “East Asian Miracle” will have to “adapt to changing technologies, slowing trade growth, and changing country circumstances, if progress is to be sustained.”
“Developing East Asia has been the most successful region over the last quarter century. Since 2000, its GDP has risen more than three-fold, lifting over a billion people out of poverty. Despite this progress, countries in the region still have significant gaps in labor productivity, human capital, and living standards compared to high-income countries,” said Victoria Kwakwa, World Bank Vice President for East Asia and the Pacific. “This new study is about recognizing that what has worked so well so far may not be sufficient going forward, as countries in the region seek to transition from middle-income to high-income status.”
East Asian countries which include the Philippines, are considered today as a mix of high- and middle-income economies representing about onethird of global economy or GDP.
About 90 percent of East Asia’s population are in middle-income countries – Cambodia, China, Indonesia, Lao PDR, Malaysia, Mongolia, Myanmar, Thailand, Vietnam and the Philippines. Most of these countries are working to upgrade their economies to high-income status.
“A combination of policies that fostered outward-oriented, laborintensive growth, while strengthening basic human capital and providing sound economic governance, has delivered rapid and sustained growth and has been instrumental in moving hundreds of millions of people in East Asia out of poverty and into economic security,” said Sudhir Shetty, World Bank Chief Economist for East Asia and the Pacific. “But building on those gains may prove particularly challenging in the face of rapid changes in the world and in the region. Policy makers will need to adapt elements of the traditional East Asian development model to effectively meet these emerging challenges.”
The World Bank said the reality is that “change is happening and ignoring it is not an option” and the report concludes that – “unless policy makers in the region act decisively, they run the risk of missing opportunities to sustain East Asia’s remarkable development performance.”
The report, in the meantime, identified some policy priorities that East Asian countries have to contend with. These are in:
•Promoting economic competitiveness. In addition to continuing to strengthen the business and regulatory environments, emerging priorities include service sector reforms, deepening trade agreements, broader innovation policies, and improved access to finance, especially for smalland medium-sized enterprises.
•Building skills. Beyond their current focus on basic human capital, it will be increasingly important to support development of advanced skills, including socio-emotional skills and digital literacy.
•Fostering inclusion. In addition to traditional social protection programs, programs to transition vulnerable workers to new job opportunities and to ensure affordable access to digital technologies will be needed.
•Strengthening state institutions. Countries will need to increase state effectiveness through enhanced citizen voice and participation, increased transparency, and greater government accountability.
•Financing the transition to highincome status. Governments will need to find ways to finance these more ambitious policy agendas for achieving high-income status by increasing domestic revenue mobilization.