{"id":94857,"date":"2019-11-06T12:13:49","date_gmt":"2019-11-06T19:13:49","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=94857"},"modified":"2019-11-06T12:13:49","modified_gmt":"2019-11-06T19:13:49","slug":"asia-reemerges-as-the-dominant-economic-power-in-the-world","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2019\/11\/06\/asia-reemerges-as-the-dominant-economic-power-in-the-world\/","title":{"rendered":"Asia Reemerges as the Dominant Economic Power in the World"},"content":{"rendered":"

By Dr Palitha Kohona\u00a0 <\/strong>Courtesy Asian Tribune <\/strong><\/em><\/span><\/h2>\n\n\n

Asia, after having been accorded the dubious distinction of being the poorest continent in the 1960s, has within a very short space of time, transformed itself into the economic powerhouse of the world and is achieving prosperity at a dizzying pace. This rapid rise has caught the West off balance and many analysts find the transition difficult to accommodate in their existing frames of reference, not to mention the political class and the media.<\/strong><\/p>\n\n\n\n

The\nmuch flaunted and oft prescribed liberal democratic political structures and\nopen economies and free trade have not been faithfully replicated by the\nmajority of countries of resurgent Asia as they strive to catch up to the West.\nAt most, only lip service is being paid by many to liberal democracy.\nLiberalized trade and open markets, an article of faith for so long in the\nWest, has not been adopted in full and it is being gradually diluted even in\nthe West, particularly in the face of Asian competition.<\/strong><\/p>\n\n\n\n

The\ndominant economy of the West, the USA, is now being forced to backpedal on the\ntrade liberalization and globalization Crusade of yesteryear and is busily\nputting up barriers. The noisy call to open doors to foreign investments is\nbeing replaced by strict monitoring of inward investments, ostensibly for\nsecurity, environmental and sociological reasons. Some entertain genuine fears\nthat one of the pillars of the Bretton Woods institutional architecture, the\nWorld Trade Organization, might collapse due to US actions.<\/strong><\/p>\n\n\n\n

Economic\nand trade concepts advocated with messianic fervor are rapidly being modified\njust as resurgent Asia was beginning to reap their benefits. Sri Lanka, as it\nadopts post-election trade and investment policies, must be fully cognizant of\nthe sea changes affecting the attitudes of the West and the responses of the\nrest of the world. Gotabaya Rajapaksa\u2019s election manifesto appears to grasp\nthese sweeping changes and to position Sri Lanka strategically to reap\nadvantage effectively, including through exploiting the opportunities offered\nby booming Asia.<\/strong><\/p>\n\n\n\n

Did\nthe West promote a hoax all these years, or were these concepts advocated for\ntheir immediate convenience, including through post World War II international\ninstitutions set up to advance their own vision for a better world? Is it now\nbacktracking when confronted by a super competitive Asia which has become adept\nat exploiting the rules propagated by the West itself?<\/strong><\/p>\n\n\n\n

History\nhas witnessed a prosperous Asia fall from grace. In the early 1820s, Asia\naccounted for two-thirds of the world\u2019s population and more than 50% of the\nwealth produced globally. The subsequent impoverishment of Asia could be\nattributed to a number of overlapping factors, including its forcible\nintegration to a world economy on conditions determined by colonial and\nimperial priorities, development exhaustion, stifling and inward looking\nconservatism, perhaps influenced by regressive religious constraints,\ndissipation of the dynamism and innovation of the past, paucity of advances in\nmilitary technology, strategy and science and internecine conflicts which were\nunscrupulously exploited by Western colonial invaders.<\/strong><\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

It has been said\nthat in the 19th century, the world was Europeanized. In the 20th century, it\nwas Americanized. Now, it is being Asianized. Sri Lanka has another\nopportunity, through the astute management of its policies, both internal and\nexternal, to be part of the blossoming Asian success story. It is reassuring\nthat Sri Lanka\u2019s opposition presidential candidate, Gotabaya Rajapaksa, has\nidentified the seminal national need to participate in the Asian resurgence\ngathering steam now through a refined and responsive policy framework. Emerging\nAsia has many lessons to offer also.<\/em><\/strong><\/strong><\/p>\n\n\n\n

The\ncauses for the downfall hold lessons for Asia in the contemporary environment.\nThe same weaknesses, where they manifest themselves, including overwhelming\nsuspicions of other countries of the region, continue to be exploited by\ninterested outsiders who still remain in control of global financial structures\nand the media.<\/strong><\/p>\n\n\n\n

By\nthe late 1960s, Asia had slid to being the poorest continent in the\nworld, but with more than half of the world\u2019s population. Its social\nindicators were among the worst.<\/strong><\/p>\n\n\n\n

The\ntask of feeding this massive population was a practical and immediate\nchallenge, highlighted in the Club of Rome\u2019s \u2018Limits to Growth\u2019. But to the\nsurprise of many, Asia, modifying feudal and semi feudal socio-economic\nstructures and employing modern science and technology, pulled through and\nsurprised the many pessimistic commentators. The food problem was solved\ndespite the numerous publicly expressed reservations. Millions were extricated\nfrom absolute poverty within a single generation.<\/strong><\/p>\n\n\n\n

As\nSri Lanka readies itself for a new administration, and more responsive foreign\nand policy approaches are explored, it is pertinent to remember that Asia now\naccounts for 30% of world income, 40% of world manufacturing, and over\none-third of world trade, while its income per capita converged towards the\nglobal average. Already Asia\u2019s GDP exceeds that of the USA and EU. By 2040 it\nwill account for about over 50% of World GDP, with India or China having the biggest\nindividual GDP. China lodged 44% of patent applications in 2016. Hyderabad is\ncatching up to Bangalore as an IT hub. Technology was spurring Asia, especially\nSouth East and East Asia ahead. By 2040, Asia is likely to account for nearly\n40% of global consumption. Asia now accounts for around one-third of\nglobal trade in goods, up from about a quarter 10 years ago. Its share of\nglobal airline travelers has risen from 33% to 40%, and its share of capital\nflows has increased from 13% to 23%. China alone generated over 137 million\ninternational travelers per year spending over 130 billion Dollars and the\nnumber is expected to grow. When I started travelling on government delegations\nin business class in the middle eighties, it was rare to see nonwhite faces in\nthis class. Today, it is the other way around.<\/strong><\/p>\n\n\n\n

McKinsey\nGlobal Institute research demonstrates the impressive extent\nto which the global center of gravity is shifting toward Asia with the region\nincreasing its share of global trade, capital, people, knowledge, transport,\nculture and resources. Of eight types of global cross-border flows, only waste\nis flowing in the opposite direction, reflecting the decision by China and\nother Asian countries to reduce or eliminate imports of waste from developed\ncountries. China stopped the import of waste in 2017. Some, including the\nPhilippines, Thailand, Vietnam, Singapore and Malaysia have begun to return\nwaste to European source countries, something unthinkable two generations ago.<\/strong><\/p>\n\n\n\n

According\nto the World Bank, with regard to ease of doing business<\/strong> around the\nworld. India has risen to 63rd place, from 142nd when Modhi took office in\n2014. He is aiming for the top 50. China is already at 31. New Zealand and\nSingapore hold the top two positions.<\/strong><\/p>\n\n\n\n

The\nMiddle East demonstrated new strength with Saudi Arabia, Jordan, Bahrain and\nKuwait among the top 10 gainers. That most-improved group also included India,\nPakistan and Nigeria, three populous nations. Sri Lanka lags at 99 in the world\nrankings and must improve fast if the people\u2019s dreams of a better future and an\nexpanding economy are to be realized. Sri Lanka, with many natural and\nsociological advantages, needs to examine what is holding it back and\nunderstand what makes the other Asian countries shine. Inefficient Tax and\nadministrative structures, corruption, lack of transparency, dynamic and\nvisionary managers, uncertain policies and lost opportunities, etc come to\nmind. Gotabaya Rajapaksa\u2019s policy statement seeks to address these challenges\nmethodically.<\/strong><\/p>\n\n\n\n

21\nof the world\u2019s 30 largest and four of the 10 most visited cities are in Asia. A\ndizzying range of business opportunities have opened up in Asia’s mega cities.\nReflecting this trend, Yangon, Myanmar\u2019s commercial capital, attracted\ngreenfield foreign direct investment (FDI) in knowledge-intensive sectors\ntotaling $2.6 billion in 2017, up from virtually zero in 2007. The factors that\nmade investors attracted to Yangon are worth studying by Sri Lanka.<\/strong><\/p>\n\n\n\n

China,\nSouth Korea and Taiwan in East Asia; Indonesia, Malaysia, Philippines,\nSingapore, Thailand and Vietnam in South-East Asia, Bangladesh, India,\nPakistan, and Sri Lanka in South Asia, and Turkey in West Asia, account for\nmore than four-fifths of the population and income of the continent. Japan, a high\nincome country, was already industrialized 50 years ago.<\/strong><\/p>\n\n\n\n

Today\nChina\u2019s GDP, although its growth has slowed, tops USD 14 trillion. India\u2019s 2.6\ntrillion. China\u2019s economy has been expanding at 6% per annum and contributed\naround 30% of global growth in the past eight years. India\u2019s economy expanded\nat 5%. India is expected to overtake the Chinese economy around 2050. The\nregional grouping of ASEAN, with 600 million people and a combined GDP of $2.8\ntrillion, is surging ahead economically, including technologically, making it\nan attractive partner and a model to outsiders. The Asian Comprehensive\nEconomic Partnership (ACEP), currently being negotiated after the US withdrew\nfrom the Trans Pacific Partnership. offers further opportunities for\ncollaboration. China has long pushed to conclude this pact, which also includes\nJapan, South Korea, Australia, New Zealand and 10 Southeast Asian nations. The\ntechnological advancements of the region are breathtaking.<\/strong><\/p>\n\n\n\n

Asia\u2019s\neconomic transformation in this short time-span is almost unprecedented in\nhistory. Rising per capita incomes have transformed social indicators of\ndevelopment. Literacy rates and life expectancy have risen dramatically.<\/strong><\/p>\n\n\n\n

President\nXi Jinping\u2019s flagship Belt and Road Initiative, covering more than 68 countries,\nincluding 65% of the world’s population and 40% of the\nglobal gross domestic product as of 2017, pledged $60 billion\nin financing for projects across the African continent. China\u2019s trade with\nAfrica has soared over the past 20 years from about $10 billion to close to\n$200 billion. In a reflection of shifting balances of power, nearly twice as\nmany African leaders attended the Forum on China-Africa Cooperation in Beijing\nin September than the UN General Assembly in New York two weeks later. The BRI holds\nconsiderable promise for Sri Lanka.<\/strong><\/p>\n\n\n\n

Russia\ninvited over 50 African leaders to its first Russia-Africa summit in Sochi in\nlate October, the culmination of a strategic push that marks Moscow\u2019s re-entry\ninto the continent. With trade and investment replacing aid, and due to the\ninroads already made by China and Russia, US and European multilateral lenders\nare also directing more funds towards Africa. Africa offers exciting new trade\nand investment prospects for Sri Lankan businesses.<\/strong><\/p>\n\n\n\n

But\nit is important to recognize that Asia is bewilderingly diverse. There are\nsignificant differences between countries in geographical size, embedded\nhistories, colonial legacies, nationalist sentiment, natural resources,\npopulation size, income levels and political systems. The reliance on market\nforces and the degree of openness of economies has varied greatly across\ncountries and over time.<\/strong><\/p>\n\n\n\n

Similarly,\nthe politics and ideologies have also tended to differ widely from\nauthoritarian regimes and oligarchies to substantial democracies. From\ncommunism, socialism with capitalist characteristics, to state capitalism and\nsimple robber baron capitalism. Development outcomes differed and different\npaths to development were adopted, because they decided early that there was no\nuniversal one size fits all solutions.<\/strong><\/p>\n\n\n\n

Rising\ninvestment and high savings rates combined with the spread of education,\nespecially technical education, were significant underlying factors\ncontributing to Asia\u2019s performance. Rapid industrialization fuelled growth, often\nled by exports. Coordinated and well considered economic policies, including\ninternational policies, contributed. The developmental states in South Korea,\nTaiwan China and Singapore coordinated policies across sectors over time in\npursuit of national development objectives, using carrot-and-stick policies to\nimplement their agenda, and were able to become industrialized nations in just\n50 years. China emulated these developmental states with tremendous success,\nand Vietnam followed the same path two decades later. Both countries have\nstrong one-party communist governments that could effectively coordinate and\nimplement policies.<\/strong><\/p>\n\n\n\n

The\nrole of government<\/strong><\/p>\n\n\n\n

Successful\nAsian economies gradually embraced openness. Integration with the world economy\nwas almost always strategic and cautious, rather than passive insertion. Trade\npolicy was liberal for exports but in many instances, restrictive for imports.\nOn many occasions, it was designed to encourage local manufacture. Government\npolicies towards foreign investment have been shaped by national development\npriorities, rather than willy nilly. While openness was necessary for\nsuccessful industrialization, it was not sufficient and facilitated\nindustrialization only when combined with industrial policy.<\/strong><\/p>\n\n\n\n

Governments\nperformed a vital role in the transformation of Asia. It was catalyst and\nsupporter. Success at development in Asia was about managing this evolving\nrelationship between states and markets, by finding the right balance in their\nrespective roles.<\/strong><\/p>\n\n\n\n

While\nSri Lanka has posted some impressive socio-economic indicators, there are other\nareas where it could learn from the experiences of the region. As Sri Lanka\nreadies itself for a new administration, it would be instructive to study the\nidentifiable factors which propelled the Asian miracle.<\/strong><\/p>\n\n\n\n

Dr.\nPalitha T. B. Kohona, a Sri Lankan born diplomat, was the former Permanent\nRepresentative of Sri Lanka to the United Nations (UN). Until August 2009 he\nwas the Permanent Secretary to the Ministry of Foreign Affairs of the Government\nof Sri Lanka and was the former Secretary-General of the Secretariat for\nCoordinating the Peace Process.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By Dr Palitha Kohona\u00a0 Courtesy Asian Tribune Asia, after having been accorded the dubious distinction of being the poorest continent in the 1960s, has within a very short space of time, transformed itself into the economic powerhouse of the world and is achieving prosperity at a dizzying pace. This rapid rise has caught the West […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-94857","post","type-post","status-publish","format-standard","hentry","category-politics"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/94857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=94857"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/94857\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=94857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=94857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=94857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}