ASIA
08 August 2014
Asia's development renaissance
Asia is undergoing a dramatic development renaissance, after being surpassed by the West for two centuries. But this development is uneven and is still incomplete.
Asia is undergoing a dramatic development renaissance, after being surpassed by the West for two centuries. But this development is uneven and is still incomplete.
For much of human history, Asia accounted for more than half the world's population, and also more than half the world economy. This reality was turned upside down about two centuries ago when the economy of the Western world was transformed by the industrial and agricultural revolutions.
As the West developed strongly, Asia declined in relative terms. But Asia also suffered from Western colonialism and internal strife like the Boxer Revolution in China.
Following the end of the Second World War, a renaissance started to take hold in Asia. It began with the rise of Japan from the ashes of war. The newly industrialising economies of Hong Kong, Korea, Singapore and Taiwan followed. Then came Southeast Asian economies like Indonesia, Malaysia and Thailand. Next were China and India, followed by others like Vietnam and the Philippines.
These Asian economies now account for about 35% of global GDP, up from 29% a couple of decades ago, but well below their 60% share of the world's population. In other words, Asia's economic development is very much incomplete. In the following sections, we review briefly Asia's economic, social, political and human development.
Asia's GDP per capita has grown from $1800 in 1990 to $5700 in 2011. But its GDP per capita of $5700 is still much lower than the world average of $10000, and very much lower than North America's $47900.
Some Asian economies are near the top of the global league table -- Macao $66,700, Singapore $50,000, Japan $46,100 and Hong Kong $34300. Another group are in the middle of the pack -- Korea $22900, Malaysia $10000, Thailand $5600 and China $5300. While most Asian countries are poorer, for example Indonesia $3500, India $1600, Cambodia $900 and North Korea $500.
But economic development is a more complex process than just growing GDP per capita. It involves the transformation from agricultural-based economies towards industrial and then service and knowledge economies.
Before the industrial revolution, most people in Western countries were working in the agriculture sector. Today, just 1.7% of the North American work force works in agriculture, while the corresponding figure for Europe is 6.7%.
In Asia, 39% of workers work in the agricultural sector, a big decline from 50% twenty years ago, but still very much higher than in the West, and higher than the global average of 34%. In many of Asia's emerging economic powers, large shares of the work force are still employed in agriculture -- China 37%, India 51%, Indonesia 38% and Thailand 38%.
In all these economies, the contribution of agriculture to GDP is much lower. For Asia as a whole the contribution is 7%, and for China 10%, Indonesia 15%, India 17% and Thailand 12%. This discrepancy reflects the very low level of agricultural productivity in these countries, and the major developmental challenge facing their agricultural sectors.
Urbanisation, the movement of people from the countryside to the city, is another aspect of economic development. It enables people to work in higher value added activities in the manufacturing service sectors. Great concentrations of people facilitate economies of scale.
Western countries experienced massive urbanisation as their economies industrialised. Today, the urban population accounts for 82% of total in North America and 73% of total in Europe. Urbanisation is even higher in Japan (92%) and Korea (84%).
Asia is now in the midst of a tidal wave of urbanisation as the urban population has jumped from 29% of total in 1980 to 46% today. Urbanisation will continue to be a dominant feature in Asia for decades to come, even in the region's big emerging economies where urban populations are still relatively low -- China 52%, Indonesia 52% and India 32% -- and especially in the region's poorer countries -- like Cambodia 20% and Bangladesh 27%.
One consequence is that less and less people are living in "income poverty". The percentage of people living on less than $1.25 a day in developing Asia has fallen from 52% in 1990 to 18% in 2011. Current poverty rates range from 12% in East Asia to 13% in Southeast Asia and 29% in South Asia.
On the basis of a $2 poverty line, the progress is less marked, with the percentage of people living in poverty falling from 77% in 1990 to 40% in 2010. Current poverty rates based on a $2 poverty line range from 27% in East Asia to 35% in Southeast Asia and 62% in South Asia.
But history and experience show that economic development is a necessary, but not sufficient condition for social development. For example, male life expectancy in the US at 77 years is below the 80 male life expectancy in Japan, Hong Kong and Singapore, despite the immense wealth of the US.
In this context, government has very important role to play in social development through the provision of basic infrastructure, and health and education services.
Fundamental elements of the social infrastructure of every country are access to improved water sources and improved sanitation. Citizens in most Asian countries now have good access to improved water sources, especially if they live in urban areas.
But despite the big progress made in providing improved sanitation (adequate toilets), overall the situation remains unsatisfactory in too many Asian countries, especially in rural areas. In East and South East Asia, only around 70% of citizens have improved sanitation, with only 60% of citizens in rural benefiting from improved sanitation. In South Asia, the situation is appalling with only 44% of citizens (31% in rural areas) having access to improved sanitation.
Basic objectives of every health system should be minimising maternal and infant mortality. In both cases, Asia has made dramatic progress, but remains very much behind the standards of advanced countries. While maternal deaths per 100,000 live births is just 5 in Japan and 3 in Singapore, the rate is 36 in East Asia, 158 in South East Asia, and 203 in South Asia. A similar story emerges for under-5 mortality which is 3 per 1000 live births in Japan and Singapore, but 14 in East Asia, 30 in South East Asia and 59 in South Asia.
Turning now to education, there have been improvements in the primary school survival and adult literacy rates across the different parts of Asia. But what is most striking are the disparities between these sub-regions.
Primary school survival rates are very high in East Asia at 95%, noticeably lower in South East Asia at 81% and very much lower in South Asia at 65%. Adult literacy is above 90% in East and South East Asia for both men and women. But the situation is disturbing in South Asia where the male literacy rate is 75% and the female rate merely 54%.
A good health and a good education should be outcomes of development which enable people to lead better and more fulfilling lives. They are also key ingredients of human capital, which is key to development, as the successful economies of East Asia have demonstrated. It is therefore not surprising that those countries which have invested the most in their human capital have also achieved the greatest economic development.
Perhaps one of the best summary indicators of social development is life expectancy, where Asian countries have also made great progress over the past three decades -- for example, China 68 to 74 (for males), Korea 68 to 78, Indonesia 62 to 69, Cambodia 52 to 69, India 58 to 65, and Bangladesh 60 to 70. But all of these countries have a much lower male life expectancy than the 80 years of Japan, Hong Kong and Singapore.
The HDI is a summary measure based on gross national income, education (in terms of years schooling) and life expectancy. In other words, "human development" is about having a long and healthy life, being knowledgeable and have a decent standard of living. It thus brings together most of the aspects of economic and social development that we examined above.
Countries are classified in one of four groups:
-- Five Asian economies make it into the top "very high human development" group -- Singapore 9th, Hong Kong and Korea both 15th, Japan 17th, and Brunei 30th.
-- Three Asian economies are classified in the second group, "high human development" -- Malaysia 62nd, Thailand 89th and China 91st.
-- Several Asian economies are in the third group, "medium human development", such as Mongolia 103rd, Indonesia 108th. the Philippines 117th, Viet Nam 121st, India 135th, Cambodia 136th, Laos 139th, and Bangladesh 142nd.
-- A number of Asian economies are also in the last group, "low human development -- Nepal 145th, Pakistan 146th and Myanmar 150th.
While a growing number of Asian countries hold elections, only Japan and Korea can be considered full mature democracies. Countries like India, Taiwan, Indonesia, and the Philippines can at best be considered "fragile democracies". Many other Asian countries are either officially or de facto one-party states.
Asia's mature democracies Japan and Korea have strong systems of rule of law. But somewhat ironically the non-democratic country of Singapore scores higher than Japan and Korea, while Hong Kong also scores very high. Other Asian countries score less well for the rule of law.
Asian countries do not score high in terms of freedom of the press. According to Reporters Without Borders, the best global rankings in Asia are -- Taiwan 50th, Korea 57th, Japan 59th and Hong Kong 61st.
In a survey of 60 countries globally by Freedom House, only two Asian countries, Japan and the Philippines were judged to have Internet freedom. Korea, India, Malaysia, Cambodia, Indonesia, Bangladesh, Sri Lanka and Thailand were judged to have "partly free" Internet. While Burma, Pakistan, Vietnam and China have "not free" Internet.
The key to removing these deprivations is developing people's "capabilities". People must be "enabled" or "empowered" to take charge of their lives.
Sen's approach is a very pragmatic and simple bottom-up approach. It is very insightful in that too, too many Asians have a vast array of deprivations that hinder their development. Providing them with improved capabilities could unleash much energy for development.
But the project is still very much work-in-progress.
Executive Director
Asian Century Institute
For much of human history, Asia accounted for more than half the world's population, and also more than half the world economy. This reality was turned upside down about two centuries ago when the economy of the Western world was transformed by the industrial and agricultural revolutions.
As the West developed strongly, Asia declined in relative terms. But Asia also suffered from Western colonialism and internal strife like the Boxer Revolution in China.
Following the end of the Second World War, a renaissance started to take hold in Asia. It began with the rise of Japan from the ashes of war. The newly industrialising economies of Hong Kong, Korea, Singapore and Taiwan followed. Then came Southeast Asian economies like Indonesia, Malaysia and Thailand. Next were China and India, followed by others like Vietnam and the Philippines.
These Asian economies now account for about 35% of global GDP, up from 29% a couple of decades ago, but well below their 60% share of the world's population. In other words, Asia's economic development is very much incomplete. In the following sections, we review briefly Asia's economic, social, political and human development.
Economic development in Asia
In the most simple terms, economic development can be viewed as a process of catchup or convergence of GDP per capita towards global leaders. As economies develop, their production of goods and services will climb, or converge, towards the level of the world's best.Asia's GDP per capita has grown from $1800 in 1990 to $5700 in 2011. But its GDP per capita of $5700 is still much lower than the world average of $10000, and very much lower than North America's $47900.
Some Asian economies are near the top of the global league table -- Macao $66,700, Singapore $50,000, Japan $46,100 and Hong Kong $34300. Another group are in the middle of the pack -- Korea $22900, Malaysia $10000, Thailand $5600 and China $5300. While most Asian countries are poorer, for example Indonesia $3500, India $1600, Cambodia $900 and North Korea $500.
But economic development is a more complex process than just growing GDP per capita. It involves the transformation from agricultural-based economies towards industrial and then service and knowledge economies.
Before the industrial revolution, most people in Western countries were working in the agriculture sector. Today, just 1.7% of the North American work force works in agriculture, while the corresponding figure for Europe is 6.7%.
In Asia, 39% of workers work in the agricultural sector, a big decline from 50% twenty years ago, but still very much higher than in the West, and higher than the global average of 34%. In many of Asia's emerging economic powers, large shares of the work force are still employed in agriculture -- China 37%, India 51%, Indonesia 38% and Thailand 38%.
In all these economies, the contribution of agriculture to GDP is much lower. For Asia as a whole the contribution is 7%, and for China 10%, Indonesia 15%, India 17% and Thailand 12%. This discrepancy reflects the very low level of agricultural productivity in these countries, and the major developmental challenge facing their agricultural sectors.
Urbanisation, the movement of people from the countryside to the city, is another aspect of economic development. It enables people to work in higher value added activities in the manufacturing service sectors. Great concentrations of people facilitate economies of scale.
Western countries experienced massive urbanisation as their economies industrialised. Today, the urban population accounts for 82% of total in North America and 73% of total in Europe. Urbanisation is even higher in Japan (92%) and Korea (84%).
Asia is now in the midst of a tidal wave of urbanisation as the urban population has jumped from 29% of total in 1980 to 46% today. Urbanisation will continue to be a dominant feature in Asia for decades to come, even in the region's big emerging economies where urban populations are still relatively low -- China 52%, Indonesia 52% and India 32% -- and especially in the region's poorer countries -- like Cambodia 20% and Bangladesh 27%.
Social development in Asia
Economic development is of course important. Its objective is to improve the lives of the people who participate in the economy and society.One consequence is that less and less people are living in "income poverty". The percentage of people living on less than $1.25 a day in developing Asia has fallen from 52% in 1990 to 18% in 2011. Current poverty rates range from 12% in East Asia to 13% in Southeast Asia and 29% in South Asia.
On the basis of a $2 poverty line, the progress is less marked, with the percentage of people living in poverty falling from 77% in 1990 to 40% in 2010. Current poverty rates based on a $2 poverty line range from 27% in East Asia to 35% in Southeast Asia and 62% in South Asia.
But history and experience show that economic development is a necessary, but not sufficient condition for social development. For example, male life expectancy in the US at 77 years is below the 80 male life expectancy in Japan, Hong Kong and Singapore, despite the immense wealth of the US.
In this context, government has very important role to play in social development through the provision of basic infrastructure, and health and education services.
Fundamental elements of the social infrastructure of every country are access to improved water sources and improved sanitation. Citizens in most Asian countries now have good access to improved water sources, especially if they live in urban areas.
But despite the big progress made in providing improved sanitation (adequate toilets), overall the situation remains unsatisfactory in too many Asian countries, especially in rural areas. In East and South East Asia, only around 70% of citizens have improved sanitation, with only 60% of citizens in rural benefiting from improved sanitation. In South Asia, the situation is appalling with only 44% of citizens (31% in rural areas) having access to improved sanitation.
Basic objectives of every health system should be minimising maternal and infant mortality. In both cases, Asia has made dramatic progress, but remains very much behind the standards of advanced countries. While maternal deaths per 100,000 live births is just 5 in Japan and 3 in Singapore, the rate is 36 in East Asia, 158 in South East Asia, and 203 in South Asia. A similar story emerges for under-5 mortality which is 3 per 1000 live births in Japan and Singapore, but 14 in East Asia, 30 in South East Asia and 59 in South Asia.
Turning now to education, there have been improvements in the primary school survival and adult literacy rates across the different parts of Asia. But what is most striking are the disparities between these sub-regions.
Primary school survival rates are very high in East Asia at 95%, noticeably lower in South East Asia at 81% and very much lower in South Asia at 65%. Adult literacy is above 90% in East and South East Asia for both men and women. But the situation is disturbing in South Asia where the male literacy rate is 75% and the female rate merely 54%.
A good health and a good education should be outcomes of development which enable people to lead better and more fulfilling lives. They are also key ingredients of human capital, which is key to development, as the successful economies of East Asia have demonstrated. It is therefore not surprising that those countries which have invested the most in their human capital have also achieved the greatest economic development.
Perhaps one of the best summary indicators of social development is life expectancy, where Asian countries have also made great progress over the past three decades -- for example, China 68 to 74 (for males), Korea 68 to 78, Indonesia 62 to 69, Cambodia 52 to 69, India 58 to 65, and Bangladesh 60 to 70. But all of these countries have a much lower male life expectancy than the 80 years of Japan, Hong Kong and Singapore.
Human development in Asia
The Human Development Index (HDI) (developed by UNDP) was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone.The HDI is a summary measure based on gross national income, education (in terms of years schooling) and life expectancy. In other words, "human development" is about having a long and healthy life, being knowledgeable and have a decent standard of living. It thus brings together most of the aspects of economic and social development that we examined above.
Countries are classified in one of four groups:
-- Five Asian economies make it into the top "very high human development" group -- Singapore 9th, Hong Kong and Korea both 15th, Japan 17th, and Brunei 30th.
-- Three Asian economies are classified in the second group, "high human development" -- Malaysia 62nd, Thailand 89th and China 91st.
-- Several Asian economies are in the third group, "medium human development", such as Mongolia 103rd, Indonesia 108th. the Philippines 117th, Viet Nam 121st, India 135th, Cambodia 136th, Laos 139th, and Bangladesh 142nd.
-- A number of Asian economies are also in the last group, "low human development -- Nepal 145th, Pakistan 146th and Myanmar 150th.
Political development in Asia
Political development is a vast field covering democracy, rule of law, media and Internet freedom, and human rights.While a growing number of Asian countries hold elections, only Japan and Korea can be considered full mature democracies. Countries like India, Taiwan, Indonesia, and the Philippines can at best be considered "fragile democracies". Many other Asian countries are either officially or de facto one-party states.
Asia's mature democracies Japan and Korea have strong systems of rule of law. But somewhat ironically the non-democratic country of Singapore scores higher than Japan and Korea, while Hong Kong also scores very high. Other Asian countries score less well for the rule of law.
Asian countries do not score high in terms of freedom of the press. According to Reporters Without Borders, the best global rankings in Asia are -- Taiwan 50th, Korea 57th, Japan 59th and Hong Kong 61st.
In a survey of 60 countries globally by Freedom House, only two Asian countries, Japan and the Philippines were judged to have Internet freedom. Korea, India, Malaysia, Cambodia, Indonesia, Bangladesh, Sri Lanka and Thailand were judged to have "partly free" Internet. While Burma, Pakistan, Vietnam and China have "not free" Internet.
Development as freedom and Amartya Sen
Amartya Sen, a Nobel prize-winning economist from India, believes that "development is freedom". For Sen, development is all about the expansion of human freedoms, about people gaining freedom to control their lives. This means removing the "deprivations" that plague human lives, or in other terms removing "unfreedoms" -- these deprivations or unfreedoms can be economic, social, environmental and political in nature.The key to removing these deprivations is developing people's "capabilities". People must be "enabled" or "empowered" to take charge of their lives.
Sen's approach is a very pragmatic and simple bottom-up approach. It is very insightful in that too, too many Asians have a vast array of deprivations that hinder their development. Providing them with improved capabilities could unleash much energy for development.
Concluding comments
Asia has made great advances in its economic, social, human and political development.But the project is still very much work-in-progress.
Author
John WestExecutive Director
Asian Century Institute