The Asia-Pacific region remains a global economic center and one of the fastest-growing areas worldwide. However, structural changes in the global economy and industry are presenting many countries with worsening income distribution.
Increasingly severe inequality, stagnating middle-class incomes, worsening poverty and credit restrictions have made finding solutions to the problems all the more pressing and important.
Governments are seeking ways to introduce policy measures that promote inclusive growth — economic growth that promotes opportunities equally throughout society and distributes the benefits of increased prosperity, in monetary and non-monetary terms, fairly — to maintain stable economic growth.
Creating sustainable regional growth necessitates improving the living standards of everyone, and requires that economic policymakers and businesses alike prioritize economic inclusion.
The driving force and development of inclusive growth has to move in concert with economic growth so that the two can benefit from a synergistic effect.
If the two diverge, there is a risk that ordinary people will not perceive any of the economic growth and that the fruits brought by economic prosperity will only be available to a select few. If that happens, the imbalance in economic growth and social tensions would increase.
According to related research carried out by the Asian Development Bank, every 1 percent of economic growth yields a 2 percent drop in the incidence of poverty. In addition, the speed and form of this economic growth is linked to a decline in poverty.
Inclusive growth places the same emphasis on equal opportunities and economic growth. The form that economic growth takes must incorporate two points: First, it must mitigate distortions introduced by the market, competition and market failures, and provide more opportunities for the less well-off in society to grow; second, it must ensure a social safety net for those classed as the chronically poor, to provide for their specific needs.
Inclusive growth emphasizes the creation of opportunities for all and gives everyone a chance to develop. This can be realized on two levels: By creating a sufficient number of jobs through a high degree of sustainable economic growth, and by ensuring equal opportunities through comprehensive social inclusion.
This high degree of sustainable economic growth is driven by the private sector, while the government is responsible for providing good infrastructure, human capital and economic stability to address market imbalances, reduce the impact of external factors, and maintain an environment more conducive to investment and business.
Inclusion was listed as a core principle of the APEC Growth Strategy in their 2011 Leaders’ Declaration. Other strategy principles included balance, innovation, security and sustainability.
The idea is to ensure that all people, in the process of regional and global economic integration, have access to potential opportunities and successes.
The strategy also included bolstering the development of micro, small and medium-sized enterprises (MSMEs), promoting the entrepreneurial spirit, fostering human capital and encouraging employers to hire more labor.
Implementation is expected to improve social safety nets, support disadvantaged groups, and create new economic opportunities for women.
The APEC growth strategy is geared toward “complete social inclusion.”
If a high degree of sustainable economic growth is to be achieved, the disruptive innovative growth driven by the digital economy cannot be ignored.
In recent years, digital products and services have gradually transformed lifestyles worldwide and initiated a digital revolution. The digital economy has rapidly entered the mass market, improving the efficiency of individuals, enterprises and governments, each in their own way.
The inclusive growth agenda in the Asia-Pacific region should include the following elements: the digital economy, MSMEs, women’s empowerment, and jobs and skills.
Asia-Pacific economies are middle-income economies, and therefore have a certain amount of growth impetus in terms of trade and infrastructure. With the right investment, digital technologies and the digital economy will assist in overcoming obstacles to economic development, and create opportunities.
The higher the level of digital development, the more prices will come down and the more effective the solutions will be. This will, in turn, allow us to break through impediments to economic development, to the benefit of all participants.
The digital economy will also enable the consumer models operating in the Asia-Pacific region to transition from trade to commerce. Although trade in services is generally higher than trade in goods, digital technologies will enhance the value of the former.
In addition to the benefits it will bring to commerce, the digital economy will increase government efficiency, transparency and inclusiveness.
The digital economy will require a lot of investment, but in the following decade it will be a core factor in promoting inclusive growth.
Most businesses in the Asia-Pacific region are MSMEs. They provide the highest percentage of job opportunities. Hence, they are to be important drivers of inclusive growth and increased competitiveness.
During the digital transformation of the economic and business environment of small enterprises in the digital age, policymakers should provide business information, training and opportunities to increase the competitiveness of MSMEs. This will enable these enterprises to integrate more smoothly with the global value chain and allow them to have more of an impact.
This will be a crucial factor driving economic prosperity and growth in the Asia-Pacific region.
Women constitute half of the world’s population, a fact that is unfortunately not reflected in their participation in the global labor market. Clearly, there remains considerable growth potential in this area.
Greater participation by women in the jobs market also happens to be a resource that cannot be ignored in terms of achieving inclusive growth. Increasing the labor participation of women will bring further added value and socio-economic benefits.
The government, business and labor sectors should work to bring about equality in work and life to tempt women into the workplace. Promoting professional skills training to increase the areas in which women can develop will also enhance the quality of family life.
Increasing jobs and job skills entails boosting investment in human capital, increasing the employment rate, extending core-talent training, providing diverse professional skills training, increasing the competitiveness of jobless people, providing advice for the physically and mentally disabled and developing specific labor skills.
Establishing links between academic and technical skills, providing diverse, accessible technical skills training options and helping people gain new skills are also crucial.
This skills and training investment in human resources will go a long way toward addressing changes in the labor market.
Victoria Tsai is an assistant research fellow at the Taiwan Institute of Economic Research.
Translated by Paul Cooper
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