Innovation and globalization to spearhead Asia’s growth despite challenges

Innovation and globalization will continue to drive Asian growth in the coming years despite challenges such as the COVID-19 pandemic and current recession, panelists said on Thursday at the 24th Academic Seminar of the International Finance Forum (IFF).

Asia, which has seen phenomenal growth in the past 50 years, has benefited from pragmatic policies and approaches of many Asian governments, said Takehiko Nakao, Chairman of the Mizuho Research Institute and former President of the Asian Development Bank (ADB).

The seminar commenced with Nakao’s introduction of his memoir “The Rise of Asia: Perspectives and Beyond” (published in July 2022 and available on ADB’s website), in which he looked back at his tenure at the Asian Development Bank between 2013 and 2020.

The IFF also invited renowned economists to discuss current challenges and opportunities in Asia. The panelists included Professor Justin Yifu Lin from Peking University, Daniel Runde, Senior Vice President of the Center of Strategic and International Studies (CSIS), and Hoe Ee Khor, Chief Economist of ASEAN+3 Macroeconomic Research Office (AMRO Asia).

Industrialization, technological development, demographic dividend and globalization have been the driving forces of Asia’s rise, said Nakao.

“There is no such thing as Asia Consensus,” said Nakao, “But effective policies, strong institutions, governments’ decisiveness in introducing reforms, an ability to learn, and a clear vision for the future often championed by forward-looking leaders, mattered.”

Justin Lin from Peking University said standard economic theories such as the Washington Consensus failed to differentiate between developed economies and emerging markets.

“It is important to have an Asian voice in the global community,” Lin said.

Asia’s dynamic growth in the past decades and growing proportion in the global GDP to 24% from 4.1% in the past 50 years, best explains the region’s success, said Lin.

The panel also agreed on the important role the government played in the innovation-driven development of Asia, in promoting education, deployment of investment, protecting intellectual property and the private sector.

Though supply chain disruptions have impeded growth during the pandemic, Runde argued that companies should rethink supply chain issues as many have adopted the “China Plus One strategy” to shift some of the manufacturing from China.

Khor, however, said China’s manufacturing ecosystem was too advanced to be replaced.

“The global supply chain is so efficient and complex that any attempt to dismantle it is almost impossible,” Khor said.

As tensions between China and the US mount, the panel agreed that the two sides should have open communications. Experts said that a stable and cooperative Sino-US relationship will benefit the region.

Khor added that developing countries can benefit from the infrastructure investment competition between China and the US. Lin stressed that China’s growth would benefit the rest of the world.

China has adopted a slew of policies, such as investment in infrastructure to boost the economy, which will boost Chinese people’s confidence and spur consumption and investment, said Lin.

Jianhai Lin, Vice President of the IFF and ex-Secretary of the IMF moderated the discussion. The IFF Academic Seminar is one of International Finance Forum (IFF)’s flagship events where we bring top officials, economists and academics together to discuss the latest events and development around the world.

The International Finance Forum (IFF) is an independent, non-profit, non-governmental international organization founded in Beijing in October 2003 and established by financial leaders from more than 20 countries and regions, including China, the United States, the European Union, emerging countries and leaders of international organizations such as the United Nations, the World Bank and the International Monetary Fund (IMF). The IFF is a long-standing, high-level platform for dialogue and communication and multilateral cooperation that has played the role as the F20 (Finance 20).

SOURCE International Finance Forum (IFF)