Reducing corruption and improving government accountability are the greatest challenges to making Asia the world’s wealthiest region by 2050, a draft report for the Asian Development Bank (ADB) said.
The study, released yesterday and discussed at the ADB’s annual meeting in Vietnam, says Asia is undergoing a historic transformation.
“If it continues to grow on its recent trajectory, it could, by 2050, account for more than half of global gross domestic product (GDP), trade and investment, and enjoy widespread affluence,” the report said.
Asia’s proportion of global GDP, rising from 27 percent last year, would match its share of global population and a per capita income of US$38,600 would leave the region as well off as Europe is today, it said.
Countries from the Pacific Ocean to Central Asia face many challenges if they are to achieve this, but underlying them all is a need for stronger institutions of governance, said the report aimed at regional policymakers and business leaders.
“The recent deterioration in the quality and credibility of national political and economic institutions (illustrated by rising corruption) is a serious concern,” the bank said.
Data from the World Bank Institute showed a “clear retreat in voice, accountability and political stability” in the region between 2008 and 2009.
While some places in Asia, notably Singapore and Hong Kong, are rated as among the world’s least corrupt, many others are among the worst.
“Asia must modernize governance and retool its institutions with an emphasis on transparency, accountability and enforceability,” the report said.
“Although daunting, the eradication of corruption is critical for all countries to maintain social and political stability and retain legitimacy,” it said.
Other countries should look to Japan, Singapore and South Korea as models, it said.
Demands for greater accountability, along with a greater voice, will come from Asia’s expanding middle class, but the form of their civic participation will generally be different from that of Western democracies, the report said, because traditional hierarchies will not be set aside in a such a short time.
Effective governance is necessary to manage the region’s other challenges, the report added — among them the “truly staggering” rate of urbanization and a need to reduce social inequalities and to take the lead in energy efficiency.
As its share of global GDP rises, Asia should also have a roughly equivalent proportion of world financial assets, based on a new model of finance built on lessons learned from past global crises, it said.
Continued rapid growth will also require leadership in science and technology, it added.
Meeting those challenges and achieving the “Asian Century” would bring affluence to about 3 billion more Asians by 2050 as growth spreads, said the report, which sees future growth led by China, India, Indonesia, Japan, South Korea, Malaysia and Thailand.
However, failure could occur if fast-growing countries — including China and India — fall into the so-called Middle Income Trap of stagnating growth without reaching the level of advanced economies.
“Asia’s rise is not pre-ordained,” ADB president Haruhiko Kuroda said at the report’s launch.