ADB President Takehiko Nakao (middle) during the launch of the ‘Asia’s Journey to Prosperity: Policy, Market and Technology Over 50 Years’ publication on January 15, 2020 with (from left) ADB Chief Economist Yasuyuki Sawada, ADB Senior Economic Advisor Juzhong Zhuang, Philippines’ NEDA Undersecretary Adoracion Navarro, ADB Vice-President Deborah Stokes, ADB ERCD Director Rana Hasan and Senior Advisor to ADB President Niny Khor
Sound economic policies and strong institutions have transformed Asia and the Pacific over the past five decades into a centre of global dynamism, according to a new book from the Asian Development Bank (ADB).
The book—‘Asia’s Journey to Prosperity: Policy, Market and Technology Over 50 Years’—explains the reasons for Asia’s economic success, while cautioning against complacency.
Developing Asia’s share of global gross domestic product (GDP) rose from 4 percent in 1960 to 24 percent in 2018. Including Australia, Japan and New Zealand, the share increased from 13 percent to 34 percent. During the same period, developing Asia’s per capita GDP grew 15-fold (in constant 2010 United States dollars), from US $ 330 to US $ 4,903, boosting incomes and lifting hundreds of millions out of poverty.
“In 1966, when ADB was established, developing economies in the Asia and Pacific region were very poor. There was pessimism about prospects for industrialisation and broad development. But the region’s performance over the past 50 years has surpassed expectations by any measure—be it economic growth, structural transformation, poverty reduction or improvement in health and education,” said ADB President Takehiko Nakao.
The book emphasises that there is no such thing as a unique “Asian Consensus” in the region’s journey to prosperity. Rather, the policies pursued in Asia can be explained by standard economic theories, not so different from those prescribed by the “Washington Consensus” set of policies. Economic transformation in the region came about in much the same ways as in many developed economies. What was important was that many Asian countries took a pragmatic approach. They implemented import liberalisation, opening up of foreign direct investment, financial sector deregulation and capital account liberalisation in a sequential way and based on meeting certain conditions.
In the past half century, many Asian countries enjoyed a “demographic dividend” and benefited from rapid technological progress, globalisation and the generally open trade and investment regimes of developed countries. However, even with favourable demographic and external conditions, the process of economic growth is not automatic.
Asia’s post-war economic success owed much to creating effective policies and strong institutions. It was supported by governments’ pragmatism in making policy choices, decisiveness in introducing reforms and an ability to learn from their own and other’s achievements and mistakes. In many countries, a clear vision for the future, which is often championed by forward-looking leaders and shared across a wide spectrum of social groups, contributed to broad-based growth and made a difference, especially when backed by a competent bureaucracy.
Over time, Asian economies adopted open trade and investment policies; facilitated agricultural modernisation and industrial transformation; supported technological progress; invested in education and health; mobilised the high level of domestic savings for productive investments; promoted infrastructure development; pursued sound macroeconomic policies and implemented policies for poverty reduction and inclusiveness.
The book notes that Asia should not be complacent and that it is too early to describe the 21st century as the “Asian Century”. Developing Asia still faces pockets of persistent poverty, increasing income inequality, large gender gaps, environmental degradation and climate change. Millions still lack adequate access to health, education, electricity and safe drinking water.
Nakao also pointed out that it will take more time for Asia to become as influential as the West has been over the last five centuries. Asia must continue to make efforts to strengthen its institutions, contribute to the development of science and technology, assume more responsibilities in tackling global issues and articulate its own ideas.
The book was produced by a diverse ADB team, led by the management group of the Economic Research and Regional Cooperation Department and the President himself, over three years. It provides a broad historical overview of rapid transformation in all ADB’s 46 developing economies, beyond the newly industrialised economies and several Southeast Asian countries discussed by the well-known 1993 World Bank publication, The East Asian Miracle. It considers a longer time horizon from the immediate post-war period to the present, capturing the transition from centrally planned systems to market-oriented economies. In writing, the team tried to make the book as interesting as possible by including anecdotes, data and country examples.
The book consists of 15 chapters: (i) an overview of 50 years of development; (ii) the roles of markets and the state; (iii) industrial transformation; (iv) land reform and green revolution; (v) technological progress; (vi) education, health and demographics; (vii) investment and saving; (viii) infrastructure (energy, transport, water and telecommunication); (ix) trade and foreign direct investment; (x) macroeconomic policies; (xi) poverty reduction and income equality; (xii) gender and development; (xiii) environmental sustainability and climate change; (xiv) multilateral and bilateral development finance and (xv) regional cooperation. Several chapters benefit from contributions by staff engaged in ADB operations.
ADB is committed to achieving a prosperous, inclusive, resilient and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
(Courtesy Asian Development Bank)