Industrialisation essential for Asian growth - ADB Report
SINGAPORE: Industrialisation must be an essential part of the growth
formula if Asian countries want to prosper and avoid the middle income
trap, said a new Asian Development Bank (ADB) report.
In a special chapter of Key Indicators for Asia and the Pacific 2013,
its flagship annual statistical publication, the ADB emphasised that
manufacturing is essential to a high productivity service sector,
technological innovation and modernising agriculture.
"Historically, no economy has reached high income status without
reaching at least 18% share of manufacturing in output and employment
for a sustained period," said ADB Chief Economist, Changyong Rhee.
The report noted that one group of economies - Hong Kong, China,
Japan, the Republic of Korea, Singapore and Taipei, China - rapidly
industrialised to become high income countries, while another group of
economies, including the People's Republic of China (PRC), Malaysia, and
Thailand, are transforming more slowly.
Other developing Asian nations, such as Bangladesh, India, Pakistan
or the Philippines, changing even more slowly, have created few
manufacturing jobs, and are shifting from agriculture to services.
"Right now, as services boom in the region, it's tempting to shun
industrialisation, but it will be a serious mistake if a country wants
to be prosperous," Rhee said.
Industry does not lead the way in Asia, the report said. Services are
the largest share of developing Asia's output and agriculture remains
the largest employer, providing an income for 700 million people.
Regional diversity means Asia's economies require different policy
priorities to promote transformation. Modernising the agricultural
sector is a key task in developing Asia, in particular for low income
countries.
For middle income economies heavily dependent on labour-intensive
sectors or currently bypassing industrialisation, the focus should be on
upgrading their industrial base. For these nations, quality education is
essential for industrial diversification and reducing the
path-dependency nature of structural transformation.
For small island economies, industrialisation may not be cost
effective, and the future lies in becoming competitive in certain
service sector niche markets.
Key Indicators for Asia and the Pacific 2013 also charts regional
progress in achieving the Millennium Development Goals (MDGs).
It noted that two years before the MDG deadline in 2015, most of the
region has made significant progress in reducing poverty, improving
access to universal primary education, and promoting gender equity and
women's empowerment.
The special supplement, A Framework of Inclusive Growth Indicators,
found that progress toward more inclusive growth has been positive in
the 1990s and 2000s on most indicators for the majority of developing
economies in Asia. |