Geo-economics

India now seems to have more success at courting the ASEAN than Australia. That could be because the emerging South Asian economic giant needs economic linkages with Southeast Asia more urgently.

Australia, along with New Zealand, has been trying to be part of the East and Southeast Asian ring of growth. The two countries staunchly supported APEC. They eagerly bought into the Trans-Pacific Partnership (TPP) that the US envisaged but which Donald Trump disowned.

The two South Pacific economies are still upbeat about the TPP as a means for establishing free trade partnerships with the dynamic East Asian economies. The prospects for such partnerships, while eminently tenable, are slow in unfolding.

The two South Pacific economies, taken together, simply do not have the gravitas of a China or an India.

China and India, the two most populous countries in the world, are now also the fastest growing. They are the two great engines of global economic growth. Southeast Asia is now poised to be the third engine of rapid economic expansion.

China’s growth has, of course, been remarkable. It has been going on for decades since the stifling policies of the Mao era were progressively dismantled.

Beijing is seeking to sustain its growth by establishing closer linkages with nearby economies. It has pushed investments to Southeast Asia and launched an ambitious New Silk Road infrastructure program that cuts through the former Soviet Asiatic republics north of India and Africa, through Sri Lanka, on India’s south.

Surely, India feels stymied by Beijing’s ambitious initiatives. The relationship between China and India has never been good. It ranged from hostile to cool. This is the reason why India might fear being isolated by China’s ambitious economic diplomacy.

Since India began dismantling its old nationalist and protectionist policies, especially with the rise of the pro-market coalition led by Prime Minister Modi, its economy showed great potential for growth. Those old policies kept the economy of the subcontinent stagnant for decades.

India’s newfound dynamism could make up for lost time. Its economic development harnesses the power of new technologies and the enlargement of economic freedom for its people.

India could not rely on its immediate neighbors to support its growth. She shares her northern borders with Pakistan, Nepal and Bangladesh. None of them seem ready to reconcile with the realities of modern market driven economies.

The ASEAN countries, on the other hand, are well into economic reforms and regional integration that could make it a large consumer market in just a few years. The emerging Southeast Asian regional economy holds many opportunities for cooperation with India.

It will no doubt be a beneficial relationship for both the emerging South Asian economic power and the regional powerhouse economies of Southeast Asia. This is why there is so much enthusiasm to push the partnership further.

In courting the ASEAN, however, India will be stepping into what Beijing might consider its sphere of influence. China has always had an acute and jealous sense of territoriality.

On the part of the ASEAN economies, however, Indian courtship of the region is a way to balance off Beijing’s already pervasive influence. Already, ASEAN leaders are talking about inviting Indian forces to help clear the strategic Malacca Straits of pirates and terrorists.

India’s large conglomerates, over the past decade, acquired several European companies to enlarge the country’s manufacturing footprint. They will surely benefit from access to ASEAN’s rapidly expanding regional market.

The ASEAN countries, for their part, would surely benefit from investment and technology flows coming from the subcontinent. India and the Philippines are the two major competitors for business process outsourcing enterprises. We have much to learn from each other’s experiences.

In a word, a more comprehensive India-ASEAN partnership will produce an incomparable synergy capable of influencing the evolution of the global economy. The business opportunities such a comprehensive partnership might open up is incalculable at this early stage.

The just concluded India-ASEAN summit meeting marks the start of something truly promising.

Gravity

The next few years will see an even more dramatic centering of the global economy in Asia.

India has 1.3 billion people. China has even more than that. The crescent of dynamic economies from Northeast Asia, to Southeast Asia and finally to South Asia now accounts for over 40 percent of the global economy.

Since the same economies outpace the rest of the world in economic expansion, it is easy to see the Asian growth crescent will be the center-of-gravity of the world economy in a few short years. ASEAN, with its comparatively younger population, finds itself right smack at the middle of that growth crescent.

The “geo-economics” of it all changes the business and economic algorithms for the region.

Unlike the growth patterns followed by the mature industrial economies, Asian growth is driven by information technology and the rapid adoption of automation. Disruptive changes in production and consumption patterns could happen very quickly.

Asia will lead global growth. But it will do so under a new economic environment defined by rapidly changing technologies. Businesses that are nimble will be rewarded. Those slow to adapt will be penalized.

The new patterns of economic growth will be trade intensive. This is the reason why the region’s statesmen – from Modi to Xi – have become the most ardent spokesmen for free trade.

Once the channels of trade are clogged, the growth potential could wane. This is the reason why, in this world of dynamic trading economies, there is no room for Donald Trump’s obsolete economic nationalism.