Aisa-Pacific undergoes unprecedented growth<\/p>\n
The following article is an excerpt from a paper presented by
\nState Minister for National Development Planning\/Chairman of
\nBappenas Ginandjar Kartasasmita at a seminar organized by The
\nJakarta Post and the Asia Pacific Economics Group. This is the
\nfirst of two articles.<\/p>\n
JAKARTA: The growth in our region is both contributing to, and
\nrelying on, the rapid globalization we are experiencing. In turn
\nthis globalization is driven by very fundamental technological
\nforces. Rapidly falling costs in the areas of telecommunications
\nand transportation are driving the latest round of economic
\nintegration. The benefits of increased openness in trade,
\ninvestment and more fundamentally in ideas, have become
\nincreasingly clear. Thus more and more countries, especially in
\nour region, have acted to take advantage of the opportunities
\ncreated.<\/p>\n
In fact the impact is already changing the global and
\nespecially regional economy. Over the past decade and a half, the
\nAsia-Pacific region has emerged as the most dynamic in the
\nworld's economy. Eight of the world's fastest growing economies
\nare located in this region (the \"East Asian Miracles\" plus
\nChina). The main engine powering this growth has been trade. In
\n1980, trade between nations in the Pacific Basin accounted for
\njust 17 percent of total world trade. Today, annual trade between
\nPacific Basin nations exceeds US$ 1 trillion and approaches one-
\nthird of total world trade. It is interesting to note that this
\nyear Japan's trade with Asian countries has surpassed that with
\nEurope and the U.S. combined. Finally, the Gross Domestic Product
\nof Pacific Basin countries now accounts for around 50 percent of
\nthe world's GDP.<\/p>\n
There are a couple of interesting observations we can make
\nabout economic growth and rising trade. In the past, the pattern
\nof global economic growth saw Asian developing countries'
\neconomic growth reflect (at higher levels) the pattern of
\neconomic growth in the main industrial nations. In the 1990's,
\nthis pattern has begun to break down. In spite of one recession
\nafter another, economic development in East and Southeast Asia
\nhas not faltered. The pattern of trade and investment has
\nchanged. Inter-Asian trade has grown and many countries' domestic
\nmarkets have now reached the maximum size that they can, in
\nthemselves, function as economic locomotives. It is difficult to
\ntell, but it seems that investment in Indonesia and many other
\ncountries is as motivated by the importance of the markets as it
\nis as an export platform.<\/p>\n
This growth in trade and investment in the Asia-Pacific region
\nis not simply an out-growth of multilateral trade agreements.
\nImproved communications, accompanied by greater awareness and an
\naccommodating policy environment have raised capital flows to
\nlevels well beyond those of a few years ago. Our region has again
\ntaken the greatest advantage of the phenomena of global
\nintegration, which has both accompanied and set the stage for
\nglobal trade integration.<\/p>\n
It is interesting to see the impact this last decade's rapid
\ngrowth (in the Asian region) has had on public imagination. I am
\nsure that, like me, every time you go through an airport you see
\na new book, with a title like - Mega-Trends Asia, or Asia Rising.
\nThese books speculate on the impact of the changing world
\neconomic structure being wrought by the magnitude of the economic
\ntransformation taking place in Asia. These books' authors, and
\nother observers, feel that the preconditions for high growth in
\nthe region may continue for some time to come. As the current
\nNewly Industrialized Economies (such as Taiwan and Korea) begin
\nto slow, new countries including China, ASEAN (driven by
\nIndonesia as by far the largest entity) and countries as far away
\nas India are expected to maintain and even accelerate the
\nregional momentum.<\/p>\n
For the immediate future, the IMF predicts continued high real
\ngrowth, in excess of 7.5 percent, for the Asian region through
\nthe year 2000. Not surprisingly it expects this high growth to
\ncontinue to be associated with rapid trade growth with exports
\nand imports continuing to grow at rates above 10 percent. This
\ncompares to their estimate of 2.7 percent medium term growth for
\nindustrial countries.<\/p>\n
Longer-term predictions are much more difficult. Simple
\nextrapolations are unlikely to occur but they can be startling.
\nFor example, it is estimated that China alone, if it achieves
\nTaiwan's per capita income, will, say by 2025, have an economy 50
\npercent larger than the U.S., and 75 to 80 percent of the
\ncombined economy of the U.S., Europe and Japan. Imagine then the
\ncombined impact on the world's economy of the ASEAN region and
\nIndia growing at 7 to 8 percent as well.<\/p>\n
On the positive side this could create up to 200 million
\nmiddle class households (and 800 million to 1.2 billion people)
\nby the year 2000. These people will be by far the world's largest
\nmarket for many conventional products and may even dominate the
\nmarket for products that embody new technologies. Unlike
\nconsumers in industrial countries, Asian consumers are not as
\nwedded to existing technology, products and brands. In some
\nsenses the competition for their interest is starting afresh.<\/p>\n
The magnitude of the infrastructure needs to support this
\ngrowth are also startling. Estimates of infrastructure demand by
\nthe year 2000 range from US$700 billion to US$ 1 trillion. In
\nIndonesia alone infrastructure demand from 1994 to 2004 is
\nestimated to be around US$ 190 billion. Again this provides a
\nmassive opportunity and, at the same time, challenge. The
\nopportunity and challenge is to develop infrastructure
\nefficiently, and put it in place to strengthen intra-regional
\nlinkages while meeting internal objectives on equity.<\/p>\n
There is, of course, a downside. The world has never seen the
\nmagnitude of an economic transformation like this. Like any new
\nphenomenon there is likely to be friction. Some of these can be
\nanticipated. With the scale of rising demand, the long term
\nsecular decline in commodity prices may reverse, putting a
\npremium on efficiency and research into substitutes.<\/p>\n
We will also have to pay close attention to potential conflict
\nover increasingly valuable mineral rights, particularly in areas
\nwhere claims are contested. We also should not overlook the
\npotential for conflict over intellectual property rights, as the
\nmeaning and delineation of property rights have become blurred
\nbecause of the free flow of information. Perhaps the greatest
\nproblem, may arise in the scale of environmental and social
\nchanges in our countries created by rapid growth.<\/p>",
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