Asia is in the midst of a truly historic transformation, according to the Asian Development Bank (ADB). If it continues to grow on its recent trajectory, it could, by 2050, account for more than half of global Gross Domestic Product (GDP), trade and investment, and enjoy widespread affluence. Its per capita income could rise sixfold to reach the global average and be similar to European levels today (though Europe and North America will remain much richer in per capita terms).
The bank says the rise in prosperity holds the promise of making some 3bn additional Asians, hitherto commonly associated with poverty and deprivation, affluent by today’s standards. By nearly doubling its share of global GDP (at market exchange rates) from 27% in 2010 to 51% by 2050, Asia would regain the dominant global economic position it held some 250 year ago, before the Industrial Revolution. Some have called this possibility the “Asian Century”.
However, the ADB warns that only if Asia sustains its present growth momentum and addresses daunting multigenerational challenges and risks, will it achieve its elevated status.
The overview of a draft report, “Asia 2050—Realizing the Asian Century,” was unveiled at ADB’s 44th Annual Meeting in Hanoi, Vietnam on Wednesday and will be a topic of discussion among participants at the Governors’ Seminar, including the finance ministers of Bangladesh, France, India, and South Korea and the vice finance minister of China.
The draft report compares the potential outcomes for Asia under two competing scenarios: the Asian Century and the Middle Income Trap. In the more optimistic Asian Century scenario, the region’s GDP would soar to $148trn and account for 51% of global output in 2050. On a purchasing power parity basis, GDP per capita in Asia would rise to $38,600, compared with the projected 2050 global average of $36,600.
The alternative scenario assumes that Asia’s fast-growing economies -- China, India, Indonesia, and Vietnam - - will fall into the middle income trap of slowing growth rates and stagnating income levels over the next 5 to 10 years. Furthermore, none of Asia’s slow-growing economies would manage to accelerate its growth rate under this scenario. If these events occur, Asia would account for only 32%, or $61trn, of global GDP in 2050. On a purchasing power parity basis, GDP per capita would rise to only $20,300, or just over half of that under the Asian Century scenario.
“The difference in outcomes under the two scenarios and thus the opportunity cost of not realizing the Asian Century scenario is huge, especially in human terms,” Haruhiko Kuroda, ADB president, said.
Under the Asian Century scenario, almost 3bn additional Asians would enjoy the fruits of prosperity at least one generation earlier than under the Middle Income Trap scenario.
While developing Asia has made significant strides in tackling income poverty, non-income poverty still remains pervasive. For example, half of all Asians live without basic sanitation while 900m people in the region have no access to electricity.
The draft report highlights the challenges and risks that lie in the path of Asia achieving its development potential by the middle of this century and outlines the corresponding strategic decisions and actions facing Asian policy makers at the national, regional, and global levels.
The draft report overview was prepared specifically for ADB’s 2011 Annual Meeting. Following discussions of the report at the gathering, a comprehensive book will be published in August.
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