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