Asia’s Future

Economic inequality, energy shortages, rising food prices and regional security remain the greatest risks for Asian development.

Children in New York kindergartens studying Chinese, Indian Bollywood stars walking down the red carpet in Berlin, ‘made in Taiwan’ on clothes in Oslo – the economic rise of Asia during the past decades is brightly visible all around the globe. One wonders, though, how long this will last.

For this reason the March newsletter of Asian Trends Monitoring asked a number of experts about their opinion on the greatest risks for economic growth of the Asian-Pacific region in the upcoming decade. The responses revealed quite a sobering view on the future. Together with issues of energy shortage, rising food prices and regional security, growing social and economic inequality is seen as one of the greatest challenges to the development of the region.

One of the most dangerous consequences of the widening income gap besides political stability as well as national and regional security is the increase in poverty: “more poor and more trouble for the poor”, as Rolf Tanner, former Head of Political and Sustainability Risk Management of Swiss Reinsurance Company, puts it in his article in the newsletter.

Nowadays Asia is home of the largest share of the world’s poor: nearly one billion people live there on less than US$2 per day. In Bangladesh, Laos, India and Indonesia this applies to the majority of the population. But one mustn’t forget that the past decades of growth have lifted many Asians out of poverty. In fact, the UN’s Millennium Development Goal (MDG) to reduce global poverty by half by 2015 will actually be achieved mainly due to the outstanding economic performance of China and India.

That’s pretty good news – particularly given that the UN won’t meet many of its MDGs. But there remains at least one big problem: eradicating poverty among the next 30 percent of the population in Asia will be much more difficult than it was for the first 30 percent. And the present situation too remains extremely fragile: rising food prices, for example, have driven around 44 million people in developing countries into poverty since June 2010.

Economic growth will certainly remain an important approach in the fight against poverty as will a wide range of bottom-up and top-down approaches. Tanner estimates that in the Asian-Pacific region micro-finance, particularly micro-insurance, will also play an ever increasing role. Micro-finance is geared towards those 2.6 billion people living on this planet on US$1 to US$3 per day, and the majority of them is based in Asia.

In addition, Tanner sees great potential for banking services via mobile phones, or mobile banking. In many parts of Africa, such services have been established very successfully. Given that Asia and Africa have similar access rates to mobile phones this practice could serve as a good example. Indeed, a study by the World Bank shows that adding 10 mobile phones per 100 people in developing countries can increase GDP by 0.8 percent.

Technology is one way forward, migration is another. For many Asians, pursuing work abroad, primarily in the Middle East and Europe, has often paved a way out of poverty. At the same time, remittances have become an essential source of revenue for those staying behind. Again, improvements in technology, such as mobile banking, facilitate this development.

Migratory patterns in Asia might further be affected by changes in the demographic structure. Within the next decade due to these changes Northeast Asia will suffer a labour shortage, while in South and parts of Southeast Asia excess labour will still be available. In the near future we might see, therefore, a growing intra-continental migration. Northeast Asia might become an alternative to the traditional destinations of Asian labour migrants. This, however, depends heavily on the immigration and employment policies of countries like Japan and South Korea.

Migration and mobility pose, of course, future challenges for the region. Jacques Jeugmans from the Asian Development Bank argues that among other things, they can affect people’s health and the health systems. According to him, people’s mobility and trade as well as the increased risk of infectious diseases such as SARS and H5N1 belong to the five greatest health threats that Asia faces in the next decade. In Cambodia, for example, over 40 percent of all deaths are caused by communicable diseases according to a recent WHO statistic. Many of those, however, are preventable if people can benefit from increased awareness, good sanitation, environmental quality and vaccine programmes. Once again, the poor are particularly affected as they have only limited access to facilities and treatment.

As Jeugmans indicates, people’s idea of what public health is and how it can be fostered needs to change. In that, they have to recognize that health is a regional and global issue. No government or state alone can today protect its population against pandemic diseases. Therefore, regional cooperation and information exchange is of vital importance.

Yet, such regional approach needs to go beyond the treatment of contagious diseases and must be applied to health security in general. Toxic waste or air and water pollution mostly don’t respect national boarders. And security concerns regarding global products such as medicines, counterfeit drugs and food are no purely national issue either.