Cracks in the Asian tiger growth model

Cracks in the Asian tiger growth model

The financial debacle that continues to hobble Asian economies
has revealed cracks in the tiger growth model in the region. As
Birman Maharjan writes in this Inter Press Service analysis, will
people take heed or will it be business as usual?

NEW DELHI: In July, at about the time when Southeast Asian
currencies and stocks had begun their devastating plunge, there
was another crisis brewing deep in the interior of the Indonesian
provinces of Kalimantan and Sumatra. Fires were igniting dry
brush left in areas recently cleared of rain forests.

The firestorm in the markets soon spread to the rest of Asia,
slashing and burning through stock markets and sending once
stable currencies crashing to the ground. Even the economic
bastions of East Asia were not spared. Venerated institutions
like Japan's Yamaichi Securities went bankrupt, and the proud
South Koreans crawled ignominiously to the International Monetary
Fund for a bailout.

Indonesia's forest fires spread a pall of soot and ash across
neighboring Malaysia and Singapore, and prevailing winds wafted
the smog as far away as Thailand and across the sea to the
Philippines. Millions suffered respiratory ailments, schools and
industries closed, and tourism was devastated. In poor
visibility, airliners hit mountains and tankers collided in the
crowded Straits of Malacca.

The stock market crisis was a warning from the market to the
region's profligate and greedy elite. The forest fires were a
warning from nature.

Economists and financial experts who till May were exhorting
the rest of the world to follow the example of Southeast Asian
tigers backpedaled furiously to turn the question around and ask
how the rest of the world could avoid the mistakes of the
Southeast Asian tigers.

The Indonesian government and the World Bank, which had
designed Indonesia's massive transmigration program that took
millions of farmers from the crowded island of Java to the
"empty", forest covered areas of Borneo, were suddenly blaming
the very farmers they helped resettle for the fires.

The farmers were easy scapegoats for economists and bankers
who took no responsibility for the ecological consequences of
their sterile projects, and for Indonesia's ruling elite which
owned the logging companies that profited from clearing
rain forests for settlers.

The fires, of course, were nothing new. They have been raging
every year for the past two decades. Only this time, the logged
forests were tinder dry because of the El Nio effect that in
turn could be partly a result of global warming. Global warming
is caused by the buildup in the atmosphere of carbon dioxide,
produced fossil fuel burning.

Some analysts, who had been warning all along that Southeast
Asia's economic growth was not sustainable, were suddenly proved
right. When Filipino economist Walden Bello wrote Dragons in
Distress: Asia's Miracle Economies in Crisis in 1991, many called
him alarmist and anti development. But sure enough, Southeast
Asia is paying an enormous price for its economic growth.

In the past three decades, Southeast Asia has lost half its
forest cover. Its cities are choked with pollution and traffic,
its rivers are sterile, its seas have been overfished.

"While rapid economic development has created dynamism and
wealth, Asia has at the same time become dirtier, less
ecologically diverse and more environmentally vulnerable," says
Kazi Jalal, who heads the environmental division of the Asian
Development Bank (ADB) in Manila.

In its new overview of Asia's economy, 'Emerging Asia, Changes
and Challenges', the ADB says it would be wrong to solely blame
economic growth for worsening pollution. In fact, countries with
slower growth in South Asia have seen environmental degradation
that is as bad.

It is clear that Asia's environmental problems stem from both
its affluence, which breeds destructive consumerism and wasteful
lifestyles, and from poverty which forces people to destroy for
daily survival the very environment they depend on. There are
indications that as countries become richer, they acquire the
resources to clean up. Japan, which has overfished oceans far
from home, has strict fishing regulations off its own shores.
Korea has cleaned up its air, but is worried about acid rain
blowing in from northern China.

Given time, income growth will take care of the environment,
experts say. But time is a luxury that nature in newly
industrializing Asia does not have. By the time Indonesia's 200
million people attain the living standard of the Japanese and
have the means to protect its rain forest, there will be no
rain forest left to protect. And the millions of species living
in them will have disappeared forever.

Asia's population is not only growing, but is becoming more
affluent. Given the present model for growth, what will Asia's
demand for energy, food and natural resources do to the global
environment in the next century?

The ADB's 'Emerging Asia' study pinpoints blame on bad
management and bad policies. It says: "Asia has mismanaged and
degraded its environment in a big way. Environmental damage has
been a consequence of neglect, bad policies and inadequate
institutions." The Bank questions the method and
not the model. It blames policy failures and inability of
governments to enforce legislation for environmental protection.
But it does not question whether the export oriented, consumer
led, manufacturing based growth was the right model all along.

In order to attain developed country living standards, Asia
does not have to make the same mistakes as developed countries
especially since growth models with smaller ecological footprints
have now been demonstrated to be feasible. Energy efficiency,
incentives for converting to renewable sources of energy,
recycling, policy shifts to sustainable industrialization are all
possible but the orthodox economists who make state and
international policies do not want to take it seriously.

There are less destructive ways by which Asia can develop,
without irreversibly damaging the world's ecosystem. But don't
look for them in the ADB 'Emerging Asia' report. Despite the
warnings from the market and from nature, for Asia's economists,
it looks like business as usual.

-- IPS