Why the world’s fastest growing region is not smiling
Asian countries, including the Philippines, top economic growth charts today. But social inclusion lags both in countries that made a dash for growth decades ago, South Korea, Singapore and Japan, as well as the more recent sprinters, China, India and the Philippines. Scandinavian countries, on the other side, do well on social inclusion, which explains why they also lead the pack on measures of happiness – leaving East Asian countries behind, and South Asian nations even more so.
The extent of social inclusion is reflected in measures of happiness for countries. Scandinavian countries lead the world again on such a measure, according to the United Nations’ World Happiness Report 2018 for 156 countries.
The sunny disposition of Filipinos is rightly legendary, but the measures that make up the happiness index are far more varied than this. The happiest countries tend to have high values for well-being, which is measured by incomes among other things, a long and healthy life, social support, freedom, trust and generosity. Hard as it is to pin the concept of happiness down, many countries in Asia clearly don’t measure up to these attributes of happiness.
Income distribution is often used as a proxy to gauge social inclusion. Income disparities are generally low in economically successful Europe and Canada but not so in Asia. Indeed, a worrying trend is that income disparities have widened in the region since the early 1990s, particularly in its most populous countries: China and India.
There is one important qualification, however. A defining feature is that Asia, especially East Asia, saw much faster income growth and poverty reduction in recent decades than any other part of the world in recent decades. The high growth in the two most populous countries China and India has also meant that population-weighted differences in per capita incomes across countries in the region would have improved since the 1980s. This is good news, but the worsening distribution within countries is what underscores wellbeing and happiness at the country level.
Vast country differences in social inclusion make generalizations risky, but in the Philippines situation, investments in workers’ skills and in social protection merit particular attention.
Globalization has improved opportunities, but it is widening skills gaps in the Philippines and Southeast Asia – the difference between what employers need and what the labor force can deliver. This is a concern for countries in Southeast Asia that have large numbers of people on low incomes, because it increases their vulnerability. Smart investments are needed by governments and businesses to reduce skills gaps through technical and vocational training,
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