Significance: The biggest flagbearers of globalisation and liberal economic consensus on free markets in the world were the U.S. and U.K. However, recently they have withdrawn their stance and turned against the trends. Hence, it is up to the biggest beneficiaries of globalisation like India and China to hold a consensus and realise the projected Asian Century.
What is Asian Century?: The Asian Century is the projected 21st-century dominance of Asian politics and culture, assuming certain demographic and economic trends persist. The concept of Asian Century parallels the characterization of the 20th century as the American century and the 19th century as Britain’s Imperial Century.
A 2011 study by the Asian Development Bank found that an additional 3 billion Asians could enjoy living standards similar to those in Europe today, and the region could account for over half of global output by the middle of this century.
Parameters of Asian Century:
- Per Capita Income: Per capita income is an important parameter to measure the quality of living in Asia. ADB projects that it could rise sixfold in purchasing power parity (PPP) terms to reach Europe’s levels today by 2050.
- Gross Domestic Product: It signifies the total value of goods and services produced in the country. ADB notes that the total GDP in the continent could well double its share of global gross domestic product (GDP) to 52 percent by 2050 and this would enable Asia to regain the dominant economic position it held some 300 years ago, before the
However, the successful realisation of such an Asian century is not a foregone conclusion. Instead, it has to be achieved with political will among the several nations in Asia, addressing the current challenges to the realisation of the Asian century.
Challenges to Asian Century:
- Economic Inequality: Many in Asia have escaped poverty, but capital continues to flow disproportionately to the tiny elite. Systemic favouritism for the rich along with the worsening plight of the poor mandates immediate policy attention. A recent Credit- Suisse study reveals that the absolute number of Asians living on less than $1.25 per day has decreased from 1.7 billion in 1981 to 700 million today. However, it is still a very large proportion of the population. The increasing inequality within countries could undermine social cohesion and stability.
- Middle Income Trap: Out of 45 developing members of ADB, 33 Asian economies have achieved middle-income status, and 5 are in the high-income group. Countries fall into the middle-income trap if they are unable to move from a low-cost to a high-value economy, making it difficult for them to compete with both low-income and high-income countries. More than 15 countries globally have been middle income for at least the past 50 years, including three in Asia – Malaysia, the Philippines, and Thailand.For some countries the risk of getting caught in the Middle Income Trap for a host of domestic economic, social, and political reasons.
- Competition: According to the World Economic Forum’s Global Competitiveness Report 2015, Singapore tops the table when it comes to competitiveness and comes in at number two globally. The five largest ASEAN economies: Malaysia, Thailand, Indonesia, the Philippines and Vietnam have all been improving fast and feature in the top half of the field. The Intense competition for finite natural resources could lead to variations in the level of development for the tiger economies of Asia as newly affluent Asians aspire to higher standards of living.
- Multiple alternate order: The global order has become a matter of debate and discussion, given the alternatives that are emerging. It started with the proposal of an Asian Monetary Fund, expansion of the UN, and the incremental evolution of BRICS. The unipolar world is getting eroded while a multipolar configuration is emerging. Within Asia, the US wants a unipolar configuration, while China proposes a multipolar order thereby challenging this configuration. It leads to non-coordination among Asian countries
- Climate Change: Asia continues to be exposed to climate change impacts. Home to the majority of the world’s poor, the population of the region is particularly vulnerable to those impacts. Unabated warming could largely diminish previous achievements of economic development and improvements, putting the future of the region at risk.Global warming and climate change could threaten agricultural production, coastal populations, and numerous major urban areas. Food shortages could increase the number of malnourished children to another 7 million by 2050.
- Governance: Good governance to build economies that are socially inclusive and environmentally sound will be vital for achieving sustainable development. Despite the region’s success in producing fast-growing economies, many countries still face a host of governance issues, including poor public services, weak government institutions, and corruption.
How to realise Asian century?:
- Inclusive Growth: Growth and inclusion need not be mutually exclusive instead they can be mutually reinforcing. To sustain growth over the long-term, almost all Asian countries must give much higher priority to inclusion and reduce inequalities whether it be rich or poor, rural or urban, literate or illiterate and along gender and ethnic lines.
- Urbanisation: Asia will be transformed by 2050 as its urban population will nearly double from 1.6 billion to 3 billion. Asia’s cities can develop as the centres of higher education, innovation, and technological development. The quality and efficiency of urban areas can determine Asia’s competitiveness and its social and political stability. Asia must take advantage of being early on its urbanization growth curve to promote compact, energy-efficient and safe cities.
- Innovation and Technology: The continuing rapid growth of Asian economies over the next 40 years will require a harnessing of the full potential of technology, innovation and, critically, entrepreneurship. More Asian countries need to emulate Japan, Republic of Korea and Singapore, and come closer to achieve global best practice. The fast-growing converging economies, particularly PRC and India, must move from catching up to frontier entrepreneurship and innovation to create breakthroughs in science and technology.
- Financial transformation: Asia’s share in global GDP is projected to rises about 50 percent or more. In such a situation Asia should also have about the same share of the world’s financial assets, banks, and equity and bond markets, etc. The policymakers should be careful about the 1997 Asian financial crisis and the 2008 GFC and strive to avoid such a scenario.
- Regional cooperation: It is critical for Asia’s march toward prosperity. It will cement the region’s hard-won economic gains in the face of vulnerabilities to global shocks, it could be an important bridge between individual Asian countries and the rest of the world. It can also help those Asian economies that are rebalancing growth toward “internal” demand to fully open their markets to neighbours in the region.