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History of Asia’s development over the past 50 years and the role of ADB Yasuyuki Sawada Chief Economist, Asian Development Bank (ADB) Bio: Mr. Sawada is the chief spokesperson for ADB on economic and development trends, and leads the Economic Research and Regional Cooperation Department, which publishes ADB's flagship knowledge products.

Disclaimer: The views expressed in this presentation are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. 1 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

2 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

3 Overview: Asian Development Bank (ADB) • Founded in 1966, headquartered in , • Main Roles: help developing member countries in Asia and Pacific through: (i) combining finance and knowledge; (ii) promoting good policies; and (iii) catalyzing regional cooperation and friendship. • 3,630 Staff • International Staff (1,318): (142), (141), (103), (86), (82), Korea (76), PRC (67), (55), Philippines (54), (46), (45), (40), (26), others (355) • Contribution by members • Ordinary Capital Resources (capital share, voting power share) • Japan (15.6%, 12.8%), United States (15.6%, 12.8%), • PRC (6.4%, 5.4%), India (6.3%, 5.3%), Australia (5.8%, 4.9%), • Indonesia (5.4%, 4.6%), Canada (5.2%, 4.5%), Korea (5.0%, 4.3%), • Germany (4.3%, 3.7%), others (30.4%, 41.7%) • Asian Development Fund (cumulative contribution) • Japan (38.5%), United States (13.3%), Australia (8.3%), • Canada (5.8%), Germany (5.6%), United Kingdom (5.1%), • France (4.0%), others (19.4%) 4 ADB Regional Members (49 economies)

68 current members: • 49 regional members (46 DMCs) • 19 non-regional members

5 Organization Chart of ADB

Board of ADB Institute Governors Office of Anticorruption and Integrity

Independent Evaluation Office of Professional Conduct Department Board of 1 Office of the Auditor General Office of the Compliance Directors Review Panel Office of the Ombudsperson

Office of the Special Project President Facilitator Strategy, Policyand Partnerships Department - European Representative Office - Japanese Representative Office - North American Representative Office

Vice President Vice President Vice President Vice President Vice President Vice President (Knowledge Mgmt. & (Administration & (Operations 1) (Operations 2) (Finance & Risk (Private Sector & Sustainable Dev’t) Management) Corporate Mgmt.) PPPs)

Central and West Asia Department of Budget, Personnel and Office of Public-Private East Asia Department2 Controller’s Department Department2 Communications Management Systems Dept. Partnership

Economic Research & Regional Information Technology Private Sector Operations South Asia Department2 Pacific Department2 Office of Risk Management Cooperation Department Department Department

Sustainable Development & Office of Administrative Department2 Treasury Department Department Services

Office of the General Counsel 1 Board of Directors currently consists of 12 Directors from Australia, Canada, PRC, , Germany, India, Indonesia, Japan, Korea, , Philippines and the US. Office of The Secretary 2 Under operations departments, 40 field offices located in 40 countries. Procurement, Portfolio, and Financial Management Dept. 6 ADB Operations • Loans are financed from Ordinary Capital Resources (OCR) - Middle-income countries (per capita income ≤ $6,975): regular OCR at quasi market rate - Low-income countries (per capita income ≤ $1,175): concessional terms with long maturities and low interest rates • Asian Development Fund (ADF) grants are offered to countries with limited debt repayment capacity, i.e., , , and Pacific island countries • Technical assistance includes capacity building, project preparation, and research

(billion USD) 2020 Commitmentsa Q3 2020 Q3 2020 excluding cofinancing Outstanding Equity OCR (loans) 28.17 125.3b 52.7c Regular 23.65d 94.3 Concessional 4.52 31.0 ADF (grants) 1.08 1.5 Technical assistance 0.29 a Preliminary figures. b Excluding allowance for credit losses. c Including paid-in capital of $7.4 billion, ordinary reserves of $44.3 billion (comprising accumulated retained earnings ($13.6 billion) plus a one-time income ($30.7 billion) in 2017 due to the merger of the ADF loan assets with OCR) , and other reserves of $1.0 billion. d Including other debt securities and equity investments.

7 ADB Operations in 2020* by Volume of Financing Ordinary Capital Resources (OCR) and Asian Development Fund (ADF) Operations (Financing committed in 2020 increased to $29.25 billion from $21.64 billion in 2019)

By Country Industry and Trade By Sector ICT 2% (3%) 0.2% (3%) 4% (5%) India Agriculture 18% (19%) Others 4% (10%) 22% (27%) Water & Urban 7% (6%) Public Sector Management 32% (14%) Finance Philippines 11% (10%) 4% (1%) 14% (12%) 4% (5%) Transport Thailand 13% (35%) 5% (2%) Indonesia Energy 12% (8%) 15% (12%) 6% (6%) PRC Pakistan Health 8% (10%) 6% (10%) 13% (3%) PRC = People's Republic of . Bracketed numbers are from 2019. * Figures for 2020 are preliminary. 8 ADB Operations in Q3 2020 by Loans Outstanding Ordinary Capital Resources (OCR) and Asian Development Fund Operations (ADF) (Loans Outstanding in Q3 2020 increased to $125.29 billion from $109.33 billion in Q3 2019)

By Country By Sector Industry and Trade Health ICT 2% 2% 0.5% Multisector 3%

India Education Others 16% 20% 5% Transport Agriculture 28% 7% 4% PRC Water & Urban 15% Viet Nam 8% 7%

Finance Philippines Pakistan 9% 8% 11% Energy 18% Bangladesh Public Sector 9% Indonesia Management 10% 18%

PRC = People's Republic of China. 9 Economic Research and Regional Cooperation Department (ERCD) President

VP01

VP02 SDCC Office of the Chief Economist VPKM ERCD and Director General (EROD) VPAC DOC

VPPC Financial Cooperation Statistics and Data Innovation VPFR and Integration (FCI) Unit (SDI) Team Dean, ADBI

Economic Analysis and Macroeconomics Regional Cooperation and Operational Support Research Division Integration Division Division (ERMR) (ERCI) (EREA) 10 Examples of key ERCD outputs

MANUALS REGULAR PUBLICATIONS

OTHER PUBLICATIONS DIAGNOSTICS

11 https://adb-org.zoom.us/webinar/register/WN_2RNf2HIrTmOPRq9S7QGUtg 12 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

13 ASIA’S JOURNEY TO PROSPERITY Policy, Market, and Technology over 50 Years

14 Table of Contents

1. 50 years of Asian development 9. Trade, foreign direct investment, and 2. The role of markets, the state, and openness institutions 10. Pursuing macroeconomic stability 3. Dynamics of structural transformation 11. reduction and income 4. Modernizing agriculture and rural distribution development 12. Gender and development 5. Technological progress as key driver 13. Environmental and 6. Education, health, and demographic climate change change 14. The role of bilateral and multilateral 7. Investment, savings, and finance development finance 8. Infrastructure development 15. Strengthening regional cooperation and integration in Asia

15 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

16 Asia’s key development achievements • Rapid led to rising share in global GDP…

Average Annual per Capita Developing Asia’s share in global GDP increased from 4% to 24% in 1960-2018; GDP growth (%) including Japan, Australia and , Asia’s share rose from 13% to 34%. 1960- PRC India Philippines Rest of the 4.7 PRC 2018 1.1% 1.3% 0.2% Rest of DA 13.1% Rest of the 1.5% 5.6% World India 2010s 5.5 AUS & NZL 6.6% 2.2% 3.4% Japan 2000s 6.2 7.0% Latin America & Philippines the Caribbean European 0.4% 7.1% Union 1990s 4.9 Rest of DA MENA 23.2% 7.1% European 1960 3.9% 2018 Japan 1980s 5.0 Union 36.2% 7.5%

1970s 4.0 North AUS & America NZL 23.9% 1.9% 1960s 2.2 Sub-Saharan Latin America and the Africa Sub-Saharan Africa MENA North America Caribbean 2.2% 2.2% 4.3% 0 5 10 30.6% 7.4% AUS = Australia, DA = developing Asia, GDP = gross domestic product, MENA = Middle East and North Africa, NZL = New Zealand, PRC = People’s Republic of China. Sources: Asian Development Bank. Key Indicators Database. https://kidb.adb.org/kidb (accessed 2 August 2019); . World Development Indicators. https://data.worldbank.org (accessed 2 August 2019); and Asian Development Bank estimates. 17 Asia’s key development achievements (cont.) • … and improvement in broad development indicators. Developing Asia 1960 1980 2000 2018 Per capita GDP (constant 2010 $) 330 647 1,762 4,903 Extreme poverty rate (% of population) … 68.1 33.1 6.9 Life expectancy at birth (years) 45.0 59.3 65.8 71.8 Infant mortality (per 1,000 live births) 137.8 80.1 48.1 26.2 Mean years of schooling (age 20–24) 3.5 6.0 7.7 8.9

… = data not available, GDP = gross domestic product. Notes: Poverty refers to the rate of extreme poverty using the $1.90 per day international poverty line at 2011 purchasing power parity for 1981, 2002, and 2015. Life expectancy refers to life expectancy at birth in years. Infant mortality rate refers to infant deaths per 1,000 live births. Mean years of schooling are for those aged 20–24; data for 2018 refer to 2010. Sources: , Department of Economic and Social Affairs, Population Division. 2019. World Population Prospects 2019. Online Edition. https://population.un.org/wpp/ (accessed 23 August 2019); World Bank. PovcalNet Database. http://iresearch.worldbank.org/PovcalNet/home.aspx (accessed 28 September 2019); World Bank. World Development Indicators. https://data.worldbank.org (accessed 30 September 2019); and Barro, R., and J.-W. Lee. Database Version 2.2. http://www.barrolee.com (accessed 30 September 2019). 18 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

19 What explains Asia’s economic success?

• Peace and stability, especially after the Viet Nam War • Favorable demographic conditions • Freer trade and investment policies in advanced countries • A low-income level providing potential to catch up • Better policies and stronger institutions for market-based growth

20 (1) Relying on markets and private sector as engines of growth, with proactive state support to address market failure • In the last half century, Asian development policy shifted from state-led industrialization to market-oriented growth

2008–present: Late 1940s–late Late 1950–late 1970s: Late 1970s–early Early 1990s–2007: Global financial crisis, 1950s: Export promotion and 1990s: Broadening of Asia leading global Post-war political market-led growth in “East Asian Miracle” opening and market- growth, promotion of independence, Japan and “four tigers”, fully recognized, and oriented reform, inclusive growth and reconstruction, and and state control and first wave of opening growing trade and good governance, and start of state-led inward orientation in and market-oriented capital flows, Asian rethinking positive role Industrialization and the People’s Republic of reform in the PRC, financial crisis, and of the state in import substitution. China (PRC), India, and Viet Nam, India, and post-crisis reform. overcoming market many other countries. . failure.

21 (2) Promoting structural transformation

Output and Employment Shares, 1970-2018 • Structural transformation (ST) is the primary driver of growth across the world. • Stylized fact about ST: Over time, resources are transferred from agriculture to industry (up to a certain level) and services, and, within each of the three sectors, from low- to high-productivity production. • Asia is no exception, but with a faster pace. Share in Employment (% of total)

GDP = gross domestic product, USD = United States dollar. 1970s 71.0% 14.1% 14.9% Sources: For output shares: World Bank. World Development Indicators. https://data.worldbank.org/indicator (accessed 2 August 2019); United Nations (UN). UN Statistics Division Database. https://unstats.un.org (accessed 28 August 2019); national sources; and Asian Development Bank estimates. For employment shares: International Labour Organization (ILO). ILOSTAT Database. https://www.ilo.org/ilostat (accessed 28 August 2018 33.5% 25.5% 41.0% 2019); Organisation for Economic Co-Operation and Development (OECD). OECD Employment and Labour Market Statistics. https://www.oecd-ilibrary.org/employment/data/oecd-employment-and-labour-market- statistics_lfs-data-en (accessed 28 August 2019); Timmer, M. P., G.J. de Vries, and K. de Vries. 2015. Patterns of Structural Change in Developing Countries. In Weiss, J., and M. Tribe, eds. Routledge Handbook of Industry and Agriculture Industry Services Development. Abingdon: Routledge. pp. 65–83 (for the Groningen Growth and Development Center 10-Sector Database) (accessed 28 August 2019); and Asian Development Bank estimates. 22 (2) Promoting structural transformation (cont.)

• Structural transformation also involves shift from low- to high-productivity production within each sector, through technological progress Contribution to Asia’s GDP Growth (% of total) 15.0 ❑ “Growth accounting” framework to decompose GDP 21.9 31.2 40.8 growth into: 12.3

17.7 9.2 ❑ Physical capital accumulation (green) 8.1

60.4 ❑ Labor input increase (orange) 48.2 41.8

❑ Human capital accumulation (yellow) (6.6) ❑ Total Factor Productivity (blue) 1970-1985 1995-2005 2010-2017 ❑ Asian economies relied on Physical capital Labor Human capital TFP ( ) = negative, GDP = gross domestic product, TFP = total factor productivity. Sources: Estimates based on data from Feenstra, R. C., R. Inklaar, and M. P. Timmer. ❑ first, physical capital accumulation and labor inputs 2015. The Next Generation of the Penn World Table. American Economic Review. 105 (10). pp. 3150–3182. http://www.ggdc.net/pwt (accessed 1 July 2019); and Asian Productivity Organization (APO). APO Database. https://www.apo- ❑ later, broad technological progress tokyo.org/wedo/measurement (accessed 1 July 2019). 23 (3) Investing in productive capacity • High-growth Asian economies made large investments in physical capital, financed largely by domestic savings. Gross Domestic Savings and Investment Physical capital stock Capital stock (% of GDP) (2011 constant $, growth 2010s 38.9 trillion) (%) 41.0 1960 2017 1960–2017 2000s 33.3 36.6 Developing Asia 3.9 176.0 6.9 1990s 32.3 32.9 Central Asia … 2.4 … 1980s 28.5 27.4 East Asia 1.3 108.2 8.1 1970s 26.1 PRC 1.0 94.9 8.3 24.9 1960s 20.3 South Asia 1.4 34.8 5.7 18.0 India 1.2 29.9 5.9 0 10 20 30 40 50 Southeast Asia 1.1 30.5 6.0 Gross domestic investment Gross domestic savings

... = data not available, PRC = People’s Republic of China. GDP = gross domestic product. Notes: Data are not available for the Pacific island countries. Data for 1960 are not available for Note: Data for Taipei,China refer to gross national savings. Central Asia and , Darussalam, , , , and . Sources: World Bank. World Development Indicators. https://data.worldbank.org (accessed Sources: Feenstra, R., R. Inklaar, and M. P. Timmer. 2015. The Next Generation of the Penn 2 August 2019). For Taipei,China: Directorate-General of Budget, Accounting and Statistics. World Table Version 9.1. American Economic Review. 105 (10). pp. 3150–3182 (accessed 4 May 2019); and Asian Development Bank estimates. 24 (3) Investing in productive capacity (cont.)

• A key part of physical capital investment was for infrastructure—transport, power, water and sanitation, and telecommunications.

Electricity Generation per Capita (kWh/capita) 11,491 • During 1971–2018, per Republic of Korea 321 10,363 capita electricity generation Australia 4,120 8,709 increased by 35 times in the Japan 3,648 8,615 OECD 4,247 Republic of Korea, 30 times 5,277 343 1971 in the PRC, 19 times in 5,092 2018 PRC 165 Thailand, 14 times in 3,501 World 1,398 Malaysia, and 9 times in 2,722 Thailand 134 India, significantly narrowing 1,215 India 117 the gaps with advanced 0 2,000 4,000 6,000 8,000 10,000 12,000 countries. kWh = kilowatt-hour, OECD = Organisation for Economic Co-operation and Development, PRC = People’s Republic of China. Note: Per capita electricty generation estimated with Enerdata’s electricity generation data and World Bank’s population data. Sources: Enerdata. 2019. Global Energy Statistical Yearbook. https://www.enerdata.net/publications/world-energy-statistics-supply-and-demand.html; and World Bank. World Development Indicators. https://data.worldbank.org/ (accessed 29 October 2019). 25 (4) Building human capital

• Many Asian economies put efforts to build human capital by making education a basic right through compulsory education, investment in schools, and education reform. Public Spending on Education Gross Enrollment Ratio, Both Sexes 78.9 (% of GDP) 80 (%) 4 60 52.1 3.6 3 3.3 37.5 39.0 40 34.3 2.7 2 2.5 25.0 2.1 20 11.6 6.5 1 2.4 5.0 0 0 1970 1980 1990 2000 2018 1970-1979 1980-1989 1990-1999 2000-2009 2010-2018 Secondary Tertiary GDP = gross domestic product. Note: Where no data are available for the specific year headings, +/– 5-year available data are reflected. Sources: Asian Development Bank. Key Indicators Database. http://kidb.adb.org (accessed 16 Rates can be more than 100% because of the enrollment of overage students and/or international students. Sources: United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute for Statistics (UIS). UIS Stat September 2019); World Bank. World Development Indicators Database. Database. http://data.uis.unesco.org/ (accessed 2 August 2019); Asian Development Bank estimates; for the People’s http://data.worldbank.org (accessed 2 August 2019); Asian Development Bank estimates; and for Republic of China (2018) and Japan (all years): World Bank. World Development Indicators. https://data.worldbank.org Taipei,China: Directorate-General of Budget, Accounting and Statistics. (accessed 2 August 2019); for : Government of Singapore, Ministry of Education. Education Statistics Digest 2018; and for Taipei,China: Ministry of Education. 2018 Education Statistical Indicators. • During 1970s–2010s, developing Asia’s public spending on education increased from 2.1% to 3.6% of GDP. Public spending on education contributed to rising school enrollments at all levels. 26 (5) Accelerating technological progress

Top 5 Patent Grantees in the United States • Leading Asian economies Innovation achieved accelerated Japan 52,409 • Human capital Republic of Korea 17,924 technological progress • Research institutes Germany 16,549 • Private R&D 2015 • Competition Taipei,China 11,690 PRC 8,116

Germany 3,810 1969

Adoption and Innovation of Technologies in Japan, — United Kingdom 2,739 1956–1988 Adoption France (%) 1,524 • Students/people Japan 1,416 abroad • Licensing 1965 Average Canada 935 design/patent Number of patents granted in the US • Reverse engineering • Machinery imports FDI = foreign direct investment, GNP = gross national product, • FDI, TC aid PRC = People’s Republic of China, R&D = research and • Trade development, TC = technical cooperation, US = United States. 27 (6) Opening trade and investment • High-growth Asian economies all maintained open trade and investment regimes, making Asia a center of global manufacturing production and value chains.

Asia’s Top 5 Merchandise Exports 600 Asia's Foreign Direct Investment (FDI) 40% (% of total) 1960-1969 2010-2018 35%

500 $ billion $ Textile yarn, fabrics, made 30% 11 Electrical machinery, up articles, etc. apparatus, and 20 400 appliances 25% Textile fibers, not manufactured, and waste 8 Machinery, other than 300 20% electric 14 15% Transport equipment 7 200 Transport equipment 9 10% Iron and steel 6 Petroleum and 100 petroleum products 6 5% Electrical machinery, 5 0 0% apparatus, and appliances Clothing 5 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2016 2017 Inflow (left) Outflow (left) 0 10 0 10 20 Inflow, % of world total (right) Outflow, % of world total (right) Source: World Bank. World Integrated Trade Solution. https://wits.worldbank.org/ (accessed 4 November 2019). • They initially promoted exports of labor-intensive manufacturing products, and over time, moved up to export more sophisticated • To attract FDI, they set up special economic zones (SEZs) and products such as cars, electronics, and machines. In the last 2–3 provided tax incentives, making developing Asia one of the most decades, they participated in global value chains. attractive FDI destinations, accounting for 35% of the world total in 2017. 28 (7) Maintaining macroeconomic stability • Compared with other developing regions, Asia did better in macroeconomic management, whether looking at growth, inflation, or frequency of economic crises Average Annual GDP Growth by Decade Average Inflation by Decade 12 70 (%) (%) 61.9 10 25 22.6

8 20

6 15 12.2 9.1 4 10 7.3 8.7 7.4 4.0 5.1 2 5

0 0 PRC India NIEs ASEAN5 Rest of Latin Sub- OECD PRC India NIES ASEAN5 Rest of Latin Sub- OECD Developing America Saharan Developing America Saharan Asia Africa Asia Africa _ Full period 1970–1979 1980–1989 1990–1999 2000–2009 2010–2018 1970–1979 1980–1989 1990–1999 2000–2009 2010–2018 average ASEAN = Association of Southeast Asian Nations, GDP = gross domestic product, NIEs = newly industrialized economies, OECD = Organisation for Economic Co-operation and Development, PRC = People’s Republic of China. Notes: The NIEs comprise , China; the Republic of Korea; Singapore; and Taipei,China. ASEAN5 comprises Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam. Rest of Developing Asia refers to all Asian Development Bank developing member economies excluding the PRC, India, the NIEs, and ASEAN5. Sources: Asian Development Bank. Key Indicators Database. https://kidb.adb.org/kidb/ (accessed 2 August 2019); and World Bank. World Development Indicators. https://databank.worldbank.org/source/world-development-indicators (accessed 2 August 2019); International Monetary Fund. World Economic Outlook Database. https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/index.aspx (accessed 27 August 2019); and Asian Development Bank estimates. • Good macro management provided the basis for sustained growth, and reforms in response to the Asian financial crisis laid the foundation for future resilience. 29 (8) Promoting social inclusiveness and gender equality • Rapid economic growth and targeted policies led to rapid poverty reduction. Economic Growth and Poverty Reduction, 1981‒2015 Changes in Income Inequality and Annual per Capita (based on international poverty lines) GDP Growth, 1960s-1980s 3.0 MYA PRC 5

1970) Chile - Brazil 2.5 VIE BHU NEP PAK INO Republic of Korea 2.0 0 Argentina Taipei,China IND y = 0.25x + 0.42 1.5 Mexico R² = 0.38 -5 Colombia Thailand (p.p.) PNG 1.0 LAO

SOL SRI 1990 minus 1965 Venezuela Malaysia Singapore - PHI THA Philippines 0.5 -10 Indonesia Hong Kong, China VAN BAN MON 0.0

0.0 2.0 4.0 6.0 8.0 10.0 -15 Annual rate of poverty reduction reduction poverty of rate Annual Annual growth of per capita GDP (%) Peru GDP = gross domestic product, p.p. = percentage point, BAN = Bangladesh, BHU = Bhutan, IND = India, INO = Indonesia, -20 LAO = Lao People’s Democratic Republic, MON = Mongolia, MYA = Myanmar, NEP = , PAK = Pakistan, PHI =

Philippines, PNG = , PRC = People’s Republic of China, SOL = , SRI = Sri Lanka, THA = (1981 Gini in Change -2 0 2 4 6 8 10 Thailand, VAN = , VIE = Viet Nam. Notes: Poverty rates are measured using the $1.90 per day international poverty line for extreme poverty. The initial Average Annual per Capita GDP Growth, 1965-1990 year is 1981 for most economies, but 1984 for the Lao People’s Democratic Republic and 1990 for Solomon Islands. Sources: World Bank. PovcalNet Database. http://iresearch.worldbank.org/PovcalNet/home.aspx (accessed 7 November GDP = gross domestic product 2019); and World Bank. World Development Indicators. https://data.worldbank.org (accessed 2 August 2019). Sources: World Bank, The East Asian Miracle and World Bank. World Development Indicators. https://data.worldbank.org. • Asia had stable inequality in the 1960s–1980s, a pattern known as “growth with equity” in East Asia; since the 1990s, growth has been accompanied by rising inequality in some economies. 30 (9) Engaging with development partners & promoting RCI

• Asia benefited from engaging Net Capital Inflows by Nonresidents to Developing Asia, with bilateral partners and 25 1970–2017 multilateral development (% of gross domestic investment) banks in investing in 20 development, especially 15 infrastructure, education, and 1.1 health. 10 2.7 1.6 1.1 3.9 13.3 0.7 0.5 • In South Asia and Southeast 5 6.4 5.9 5.6 9.1 3.4 8.1 7.5 6.8 4.4 5.9 Asia, development assistance 1.4 2.4 1.9 1.7 financed 10–20% of gross 0 domestic investment in the -5 1970s and 1980s. 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017 • Such partnerships remain relevant to Asia’s changing Net FDI inflows Net official flows Net bank lending and bonds Net portfolio equity inflows needs, providing responsive FDI = foreign direct investment. Notes: Bonds are securities issued with a fixed rate of interest for a period of more than 1 year. They include net flows through support by combining cross-border public and publicly guaranteed and private nonguaranteed bond issues. Data are in current United States dollars. financing with policy advice. Sources: Asian Development Bank estimates; World Bank. World Development Indicators. https://data.worldbank.org (accessed 2 August 2019); United Nations Conference on (UNCTAD). UNCTADStat. https://unctadstat.unctad.org (accessed 28 August 2019); and Organisation for Economic Co-operation and Development (OECD). OECD Statistics. https://stats.oecd.org (accessed 26 August 2019). 31 (9) Engaging with development partners & promoting RCI (cont.)

% Shares of Intraregional Trade and Intraregional Foreign • Regional cooperation and Direct Investment Inflows, Asia and the Pacific integration (RCI) has played an 60 57.5 important role in supporting Asian development by 55

contributing to 48 • peace and security; 50 • intraregional trade and investment; and 45 • regional public goods. 40 • In 2018, close to 60% of Asian Trade trade were among Asian Foreign Direct Investment economies and 50% of FDI 35 inflows were from within Asia 30 and the Pacific region 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: ADB calculations using data from International Monetary Fund. Direction of Trade Statistics. https://www.imf.org/en/Data (accessed September 2019). 32 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

33 Issues subject to extensive debate

1. Is Asian development unique?

2. The role of industrial policy

3. Can industrialization be bypassed?

4. Importance of institutions

34 Issue one: Is Asian development unique?

10 policy recommendations of the Washington • Some studies considered the Asian experience Consensus unique, i.e., there is an “Asian development model,” which emphasizes the role of state interventions, as Fiscal discipline opposed to the so-called “Washington Consensus,” Public expenditure reform which follows more closely the standard economic theory of market economies. Tax reform Financial liberalization & market-determined • The book argues that Asian economies implemented interest rates policies and reforms that are not very different from standard economic theories of market economies— Competitive exchange rates in this sense, Asian development is not unique. Import liberalization • Asian economies adopted a more gradual and FDI liberalization pragmatic approach to implementing policy reforms, of state-owned enterprises including the practice of testing major policy changes before full-scale implementation and careful sequencing. In this sense, Asian Protection of property rights development is unique. 35 Issue two: The role of industrial policy

• Many Asian economies used industrial policies (IP) to promote development. “Horizontal” IP has worked by improving business environment. But targeted IP has been more controversial, and outcomes mixed.

➢ Targeted IP was discredited after the Asian financial crisis but received renewed attention in recent years. • The book argues that targeted IP, if used badly, can lead to rent-seeking, unfair competition, and inefficiency; but if used wisely, can be effective, especially in areas with strong positive spillovers and coordination problems. • Targeted IP is more likely to succeed when it is performance-based and promotes competition, with clear targets, sunset clauses, and transparent implementation rules. • As a country becomes more developed, IP should focus more on supporting R&D to promote technological innovation that are less intrusive.

36 Issue three: Can industrialization be bypassed? • Asian economies achieved high growth by promoting manufacturing and exports through large capital investment, R&D, trade and FDI, education and training, and SEZs. 50 Manufacturing Employment Export Growth and Economic Growth, 1960–2017 (% of total) 10

8 Singapore PRC Rep. of Korea Egypt Indonesia Malaysia Taipei,China Pakistan Thailand 6 Hong Kong, China Sri Lanka India Colombia Australia Nepal Philippines 0 4 JapanBrazil India PRC NIEs ASEAN4 GDP growth Bangladesh Bubble size: Population 2 Papua New Guinea (annual average, %) (annual average, Venezuela New Zealand USA (2017). Color gradient: Nigeria Trade/GDP (2017) 1970-1979 1980-1989 1990-1999 2000-2009 2010-2018 0

ASEAN = Association of Southeast Asian Nations, NIEs = newly industrialized economies, PRC = 0 2 4 6 8 10 12 14 16 18 People’s Republic of China. Growth in export of goods and services (annual average, %) Notes: ASEAN4 includes Indonesia, Malaysia, the Philippines, and Thailand. NIEs include Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China. Sources: International Labour Organization (ILO). ILOSTAT database. https://www.ilo.org/ilostat (accessed 28 August 2019); Timmer, M. P., G.J. de Vries, and K. de Vries. 2015. Patterns of Structural GDP = gross domestic product, PRC = People’s Republic of China, USA = United States. Change in Developing Countries. In Weiss, J., and M. Tribe, eds. Routledge Handbook of Industry and Notes: GDP and exports of goods and services are in constant national 2011 prices. Trade-to-GDP ratio is based on nominal Development. Abingdon: Routledge. pp. 65–83 (for the Groningen Growth and Development Center values. Trade refers to exports plus imports of goods and services. 10-Sector Database) (accessed 28 August 2019); and Asian Development Bank estimates Source: Feenstra, R. C., R. Inklaar, and M. P. Timmer. 2015. The Next Generation of the Penn World Table. American Economic Review. 105 (10). pp. 3150–3182. http://www.ggdc.net/pwt. • Historically, manufacturing was important almost in all high-income countries worldwide before de-industrialization. • Manufacturing is important because it: produces tradable outputs and generates foreign exchange; has high income elasticity of demand, large scope for innovation, and scale economies; and creates better paying jobs. 37 Issue four: The importance of institutions

Government Effectiveness Score and Per Capita GDP • There is a positive association between quality of in 2011, Developing Asia institutions and , and Asia 6.0 is no exception. But this correlation may vary across different dimensions of institutions and 5.0 depends on a country’s stage of development.

• At a low-income stage, igniting growth is a ) 4.0

priority, and government effectiveness, regulatory GDP quality and control of corruption are important. 3.0 As a country becomes more developed, the y = 0.39x + 3.86 priority is sustaining growth, and accountability 2.0 R² = 0.60 and wide citizen participation could become (per capita

more important. Log 1.0 • In some Asian economies, creating a vision for the future that was shared across a wide 0.0 spectrum of society and promoted by forward -2.0 -1.0 0.0 1.0 2.0 3.0 looking leaders, made a difference, especially Government effectiveness score

when backed by a component bureaucracy. GDP = gross domestic product. Source: Asian Development Bank. 2013. Asian Development Outlook 2013 Update: Governance and Public Service Delivery. Manila 38 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

39 Asia’s challenges in post COVID-19 era

Asia’s development gaps with advanced countries remain large—in 2018, developing Asia’s per capita GDP was just 13% of OECD level with remaining and emerging challenges, such as: 1. Overcoming the health crisis by “smart” approaches and achieving universal health coverage 2. Promoting innovation-based growth 3. Making growth more inclusive and narrowing gender gaps 4. Reopening education with better quality 5. Reducing large infrastructure gaps 6. Building back greener 7. Responding to demographic change and population aging

40 There are renewed COVID-19 waves globally… but it is stable or declining in developing Asia The virus continues to spread globally… …with South Asia being the epicenter in developing Asia.

New cases, 7-day moving average (Log scale) New cases, 7-day moving average (Log scale) 1,000,000 100,000 South Asia United States Southeast Asia Developing Asia 10,000 100,000 Latin America Central Asia 1,000 Euro Area East Asia 10,000 100

The Pacific 10 1,000 1

100 0 3 2020 4 2020 5 2020 6 2020 7 2020 8 2020 9 2020 10 11 12 1 2021 2 2020 3 2020 4 2020 5 2020 6 2020 7 2020 8 2020 9 2020 10 11 12 1 2021 2020 2020 2020 2020 2020 2020

Note: Latin America includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, , Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Mexico, Sources: European Centre for Disease Prevention and Control, Johns Hopkins University, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela. Telegraph UK, and Worldometer (accessed on 25 January 2021) . Sources: European Centre for Disease Prevention and Control, Johns Hopkins University, Telegraph UK, and Worldometer (accessed on 25 January 2021). 41 With containment easing despite new outbreaks, mobility has improved to varying degrees Containment measures in Asia are now being eased… …which has helped mobility start to normalize. 7-day moving average stringency by subregion 7-day moving average mobility by subregion

Index, 7-day moving % change from average baseline, 7-day moving 100 20 average

The Pacific

80 South Asia South Asia 0

Central Asia 60 East Asia Southeast Asia -20 East Asia Southeast Asia 40 Central Asia The Pacific

-40 20

0 -60 1 2020 2 20203 2020 4 20205 2020 6 20207 2020 8 2020 9 2020 10 11 12 1 2021 2-2020 3-2020 4-2020 5-2020 6-2020 7-2020 8-2020 9-2020 10- 11- 12- 1-2021 2020 2020 2020 2020 2020 2020 Note: The Government Response Stringency index is a composite measure of nine response indicators including school closures, workplace closures, and travel bans, rescaled to a value from 0 to 100, with 100 being the strictest response. Source: University of Oxford. (accessed 26 January 2021). 42 But no end is yet in sight for the global tourism collapse…

For the 24 economies with tourist arrivals data available in Q4 2020, the year-on-year decline in arrivals ranges from 85% to 100%. For Pacific economies, year-on-year declines in arrivals are between 96% and 100%.

Decline in tourist arrivals, selected developing Asian economies India Indonesia Viet Nam Vanuatu Fiji Sri Lanka Taipei,China Rep. of Korea FSM Singapore Nepal Hong Kong, China Papua New Guinea Solomon Islands Thailand Maldives % change year on year % change year on year 40 100

20 50 0

-20 0 -40

-60 -50 -84.8 -80 -95.7 -100 -100 Jan 2019 Apr Jul Oct Jan 2020 Apr Jul Oct Jan 2019 Apr Jul Oct Jan 2020 Apr Jul Oct

FSM = Federated States of Micronesia. Sources: CEIC Data Company; IMF Tourism Tracker; and official sources (accessed 19 January 2021). 43 …with many travelers deferring travel for a longer period.

Travel plans after bans are lifted

47% 52% of survey respondents plan to 45% wait six months to a year or more 36% after travel bans are lifted before 33% 33% 32% traveling or have deferred travel 28% indefinitely. 22% 23% There has also been a shift toward domestic 14% 15% 14% 15% 12% and short-haul travel. 7% 8% 5% 5% 3% 4%

Not wait at all Wait a month or two Wait six months or so Wait a year or so Not travel for the foreseeable future February Survey April Survey June Survey August Survey

Source: IATA

44 Diverse impacts on remittance receipts. Changes in Remittance Receipts in Selected Economies in Asia and the Pacific, in Comparable Periods in 2019 and 2020 (in %)

45 COVID-19’s impact will drag into 2021.

COVID-19’s impact on developing Asian subregions (relative to a no-COVID baseline)

COVID-19’s global impact: 5.5% to 8.7% of lost global GDP in 2020 3.6% to 6.3% of lost global GDP in 2021

COVID-19’s regional impact: 6.0% to 9.5% of lost regional GDP in 2020 3.6% to 6.3% of lost regional GDP in 2021

Note: Small tourism-dependent economies include Cook Islands, Fiji, Maldives, Palau, and Vanuatu. Source: The Impact of COVID-19 on Developing Asia: The Pandemic Extends into 2021. ADB Brief No. 159, 4 December 2020. 46 Regional GDP contracted by 0.4% in 2020…

After a 0.4% contraction in 2020, growth will resume this year… …but output will remain well below where it should be.

Real GDP growth in developing Asia Real GDP levels in developing Asia 2015 real GDP = 100

% 140 8 Pre-COVID trend 6.8 6 130 5.9 April 2020 6.2 5.1 ADO 4 2.2 120 2 December 2020 ADOS September 2020 0 Update 110 -0.4 -0.7 -2 2018 2019 2020 2021 100 Forecast 2015 2016 2017 2018 2019 2020 2021 ADO = Asian Development Outlook, ADOS = ADO Supplement, GDP = gross domestic product. Forecast Source: Asian Development Outlook database. 47 …with East Asia doing much better than the rest of the region. GDP growth (%)

2020 2021 2020 2021 September December September December September December September December Update ADOS Update ADOS Update ADOS Update ADOS

East Asia 1.3 1.6 p 7.0 7.0 Southeast Asia -3.8 -4.4 q 5.5 5.2 q Hong Kong, China -6.5 -5.5 p 5.1 5.1 Indonesia -1.0 -2.2 q 5.3 4.5 q People’s Rep. of China 1.8 2.1 p 7.7 7.7 Malaysia -5.0 -6.0 q 6.5 7.0 p Republic of Korea -1.0 -0.9 p 3.3 3.3 Philippines -7.3 -8.5 q 6.5 6.5 Taipei,China 0.8 1.7 p 3.5 3.3 q Singapore -6.2 -6.2 4.5 5.1 p Thailand -8.0 -7.8 p 4.5 4.0 q South Asia -6.8 -6.1 p 7.1 7.2 p Viet Nam 1.8 2.3 p 6.3 6.1 q India -9.0 -8.0 p 8.0 8.0 The Pacific -6.1 -6.1 1.3 1.3 Central Asia -2.1 -2.1 3.9 3.8 q Kazakhstan -3.2 -3.2 2.8 2.8

Developing Asia -0.7 -0.4 p 6.8 6.8 Excluding NIEs -0.5 -0.3 p 7.2 7.2 p = upgraded forecast, q = downgraded forecast, no sign = unchanged. ADOS = Asian Development Outlook Supplement. Source: Asian Development Outlook database. 48 Asian governments stepping in significantly.

Government income support accounts for more than half of the region’s policy response. Policy packages in developing Asia

Note: Data as of 11 January 2021. One out of ADB’s 46 developing members has zero amount, i.e., . Source: : ADB COVID-19 Policy Database, accessed on 16 January 2021. For the database, see Felipe, J., and S. Fullwiler. 2020. “ADB COVID-19 Policy Database: A Guide.” Asian Development Review 37(2): 1–20. 49 Many economies moved from balanced budgets and low debt to sizeable deficits and higher debt.

Public debt and fiscal balance 150% 2019 BHU 2021 125% MLD

100% 2019: 9 DMCs BHU 2019: 2 DMCs 2021: 19 DMCs MLD 2021: 1 DMCs LAO 75% SAM KGZ LAO

VAN PNGTAJ SAM NEPMYATONTAJ 50% BAN UZB TON KGZ 2019: 19 DMCs CAM 2019: 10 DMCs VAN Public Public Debt(% GDP) of 2021: 18 DMCs KIR RMI 2021: 2 DMCs TIM PNGMYA RMI 25% TUV BANSOL KIRFSM NEP TUV AFGUZB CAM AFG FSM TIM 0% SOL -50% -40% -30% -20% -10% 0% 10% 20% 30% Fiscal Balance (% of GDP)

DMC = developing member country, GDP = gross domestic product. Notes: Projections are from Baseline Scenario. Comprises a panel of 40 ADB DMCs. Lower-income DMCs are shown with darker shaded dots and labels. Sources: ADB projections using data from World Economic Outlook (WEO) October 2019, WEO April 2020, WEO October 2020 and Asian Development Outlook (ADO) Update – September 2020. 50 51 Vaccination policies differ significantly Vaccine Procurement in Selected Asian Economies

140%

120%

100%

80%

60%

40%

20% Percent of Population Covered Population of Percent 0%

CanSino Gamaleya Janssen Moderna Novavax Oxford Pfizer Sinopharm Sinovac

Source: Duke Global Health Innovation Center (https://launchandscalefaster.org/COVID-19). 52 53 Achieving universal health coverage (UHC)… • Asian economies Health Expenditures by Subregion, 2000, 2010, and 2016 Out-of-Pocket Of Which, Government Total current health Current Expenditure improved their Health Expenditures expenditure (% of GDP) (% of total current health (% of GDP) overall healthcare expenditure) systems by 2000 2010 2016 2000 2010 2016 2000 2010 2016 Developing Asia 3.9 4.1 4.8 1.2 2.0 2.5 55.9 43.9 39.5 ❖ raising government Central Asia 5.0 4.1 5.5 2.0 1.8 2.1 57.5 52.2 57.1 spending on East Asia 4.3 4.5 5.2 1.3 2.4 3.1 55.3 39.5 35.5 health; People’s Republic of China 4.5 4.2 5.0 1.0 2.2 2.9 60.1 40.8 35.9 South Asia 4.3 4.5 5.2 0.9 0.8 0.9 69.1 65.3 64.4 ❖ implementing India 4.0 3.3 3.7 0.8 0.9 0.9 71.7 65.2 64.6 reforms in health Southeast Asia 2.8 3.4 3.9 1.2 1.4 1.9 41.6 42.9 37.1 The Pacific 3.6 2.9 3.1 2.7 1.7 2.0 8.9 12.4 10.0 service delivery, Developed Asia 7.2 9.0 10.6 5.7 7.2 8.5 16.3 15.3 14.4 institutions, and Australia 7.6 8.4 9.3 5.2 5.8 6.3 21.0 19.7 18.9 financing; and Japan 7.2 9.2 10.9 5.8 7.5 9.1 15.9 14.6 13.5 Latin America and the Caribbean 5.9 7.9 8.6 2.5 3.5 4.1 41.9 39.2 36.7 ❖ encouraging Sub-Saharan Africa 5.1 5.3 5.2 1.7 1.9 1.8 32.4 33.5 36.7 private health OECD 9.3 11.6 12.6 5.6 7.4 10.1 16.3 14.6 13.9 sector World 8.6 9.6 10.0 4.9 5.8 7.4 19.1 18.9 18.6 GDP = gross domestic product, OECD = Organisation for Economic Co-operation and Development. participation. Note: Private enterprises and other nongovernment organizations account for the difference between total current health expenditure and the sum of government and out-of-pocket current health expenditure. 54 Source: World Bank. World Development Indicators. https://databank.worldbank.org/reports.aspx? … and improving education quality

Average Science/Mathematics Test Scores (% of student participants achieving 400+ and 600+) Singapore 37.0 93.8 Kazakhstan 20.8 93.5 Hong Kong, China 22.2 93.5 Viet Nam 11.6 92.8 Japan 24.0 92.6 Taipei,China 28.6 90.5 ROK 20.7 89.2 PRC* 24.6 87.3 2.7 82.7 US 10.5 81.0 OECD 11.6 79.2 Malaysia 5.8 77.4 Mongolia 1.1 71.8 Thailand 1.4 57.5 Georgia 1.4 52.7 0.3 48.6 Indonesia 0.4 44.6 Philippines 0.3 39.5 Kyrgyz Republic 0.1 18.5 600+ 400+ India* 0.1 16.2 0 20 40 60 80 100 OECD = Organisation for Economic Co-operation and Development, PRC = People’s Republic of China, ROK = Republic of Korea, US = United States. Notes: PRC* includes only Beijing, Shanghai, Jiangsu, and Guangdong. India* includes only Himachal Pradesh and Tamil Nadu. The test scores are standardized to range from 0 to 1,000. Data are for 2015 Programme for International Student Assessment (PISA) / Trends in International Mathematics and Science Study (TIMSS) scores except for Armenia and the Philippines (TIMSS 2003); Mongolia (TIMSS 2007); Azerbaijan, India, and the Kyrgyz Republic (PISA 2009). Sources: Organisation for Economic Co-operation and Development (OECD). 2016. PISA 2015 Results in Focus. Paris; OECD. 2010. PISA 2009 Results: Learning Trends. Paris; International Association for the Evaluation of Educational Achievement (IEA). 2016. Trends in International Mathematics and Science Study 2015. Chestnut Hill, MA: TIMSS & PIRLS International Study Center, Boston College; IEA. 2008. Trends in International Mathematics and Science Study 2007. Chestnut Hill, MA: TIMSS & PIRLS International Study Center, Boston College.; and IEA. 2004. Trends in International Mathematics and Science Study 2003. Chestnut Hill, MA: TIMSS & PIRLS International Study Center, Boston College. 55 Addressing rising income inequality

Gini coefficients change in 1990s-2010s End-year value Asia’s Inequality in the Global Context PRC (1990-2017) 46.7 (I) Pre-tax and Post-tax and Sri Lanka (1990-2016) 39.8 (C) Region Pre-transfer Post-transfer % Difference Indonesia (1990-2017) 38.1 (C) Gini (mean) Gini (mean) Bangladesh (1991-2016) 32.4 (C) India (1993-2012) 35.7 (C) Developing Asia 40.0 37.4 (6.3) Japan, Australia, and New Lao PDR (1992-2012) 36.4 (C) 45.7 32.6 (28.6) Pakistan (1990-2015) 33.5 (C) Zealand Latin America and the Viet Nam (1992-2016) 47.1 43.4 (7.7) 35.3 (C) Caribbean Mongolia (1995-2016) 32.3 (C) Sub-Saharan Africa 45.9 45.0 (1.8) Nepal (1995-2010) 32.8 (C) Philippines (1991-2015) 40.1 (C) 46.8 29.9 (36.0) Thailand (1990-2017) 45.3 (I) Malaysia (1992-2015) 41.0 (I) North America 48.6 34.5 (29.1) -10 -5 0 5 10 15 OECD 46.4 31.0 (33.2) Lao PDR = Lao People’s Democratic Republic, PRC = People’s Republic of China. Notes: Bars refer to changes in Gini coefficients between the two indicated periods. Numbers in the column on the right refer to levels of Gini coefficients for the final year. Symbols in parentheses indicate whether a Gini coefficient is income-based (I) or consumption ( ) = negative, OECD = Organisation for Economic Co-operation and Development. expenditure-based (C). Note: Mean refers to the simple average of Gini coefficients of the countries in the region. Sources: World Bank. PovcalNet Database. http://iresearch.worldbank.org/PovcalNet/home.aspx (accessed 1 October 2019); for the Source: Solt, F. 2019. Measuring Income Inequality across Countries and over Time: The Standard World PRC: National Bureau of Statistics of China. China Statistical Yearbook. http://www.stats.gov.cn/english/Statisticaldata/AnnualData/ Income Inequality Database, Version 8. (accessed 1 March 2019); and for Thailand: National Economic and Social Development Board. Social Development Indicators. https://www.nesdb.go.th/nesdb_en/main.php?filename=social_dev_report (accessed 1 March 2019). https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/%20LM4OWF (accessed 1 August 2019). 56 Narrowing gender gaps

Share of Vulnerable Employment of Women Challenges to achieve gender 100 (% of total female employment) 80 equality: 60 40 79.0 82.8 53.2 55.2 20 38.4 46.9 46.0 22.0 ❑ Increase women’s access to the 0 8.1 Central Asia East Asia South Asia Southeast The Pacific Developing Japan ROK World formal labor market and decent (excl. ROK) Asia Asia work Notes: East Asia excludes the Republic of Korea. Workers in vulnerable employment include own-account workers (self-employed persons without engaging employees) and contributing family workers (self-employed persons working in an establishment operated by a relative of the same household). Source: Asian Development Bank calculations using data from International Labour Organization. ILOSTAT. https://www.ilo.org/ilostat/ (accessed 1 March 2019). ❑ Reduce women’s unequal share of Gender Wage Gap in the World by Income Level, 1995–2015 unpaid care and domestic work

❑ Increase women’s public and political participation Developing Asia Rest of the World ❑ Eliminate gender discrimination in laws, policies, and social norms

Real GDP per capita (2010 US dollars) GDP = gross domestic product, US = United States. Sources: Wage data from Terada-Hagiwara, A., S. Camingue-Romance, and J. Zveglich. 2019. Gender Differences and Relative Pay: Does the Stage of Development Matter? Paper presented at the Asian and Australasian Society of Labour Economics 2019 Conference, National University of Singapore, 12–14 December; real per capita GDP data from World Bank. World Development Indicators. https://data.worldbank.org; for Taipei,China: data from Directorate-General of Budget, Accounting and Statistics. 57 Reducing large infrastructure gaps

Developing Asia’s investment needs, 2016–2030 ($ billion in 2015 prices) Baseline Climate-adjusted Total % of GDP Total % of GDP Central Asia 492 6.8 565 7.8 East Asia 13,781 4.5 16,062 5.2 South Asia 5,477 7.6 6,347 8.8 Southeast Asia 2,759 5 3,147 5.7 The Pacific 42 8.2 46 9.1 Asia and the Pacific 22,551 26,166 5.1 5.9 Annual Average 1,503 1,744

GDP = gross domestic product Sources: ADB estimates.

58 Protecting environment and tackling climate change

Global Shares of Greenhouse Gas (Carbon Dioxide Equivalent) • Pressure from rapid Annual Emissions economic development Rest of Developing Rest of Developing Asia, 11.3%% Asia, 12.7% has created many Europe, 14.1% PRC, 8.7% environmental problems. Europe, People's North 29.3% Republic America, • Environmental policy India, 3.5% of China, 15.3% 2014 24.7% responses were initiated 1990 Japan, 3.4%

and expanded in recent AUS and LAC, NZL,1.6% 8.4% 2–3 decades. North India, America, MENA, • But much more action is 19.0% 6.8% 5.3% Sub-Saharan Japan, 2.8% needed to make the Latin Sub- Africa, 5.9% Australia America and Saharan and region’s development Middle East the Caribbean, Africa, New and North 10.4% 7.7% Zealand, sustainable and Africa, 8.1% 1.2% contribute to global AUS = Australia, LAC = Latin America and the Caribbean, MENA = Middle East and North Africa, NZL = New Zealand, PRC = People’s Republic of China. efforts. Note: Includes emissions from land use, land-use change, and forestry. Source: Authors' calculations from World Resources Institute. CAIT Climate Data Explorer. http://cait.wri.org. (accessed 26 October 2019) 59 Responding to demographic change and population aging

Total Population (billion) and Population by Age (% of Total), Developing Asia, 1950‒2018

1950 1960 1970 1980 1990 2000 2010 2018 100 5.0 4.0 3.5 3.6 4.1 4.7 5.5 6.3 7.9 90 4.5 80 4.0 70 3.5 59.7 56.1 55.1 57.6 61.4 64.0 60 67.6 68.1 3.0 50 2.5 40 2.0 30 1.5

Population by age, % of Total of % Total age, by Population 20 40.4 41.3 1.0 36.4 38.2 billion population, Total 34.0 30.6 10 26.1 24.0 0.5 0 0.0 1950 1960 1970 1980 1990 2000 2010 2018 0-14 15-64 65+ Developing Asia

Source: United Nations, Department of Economic and Social Affairs, Population Division. 2019. World Population Prospects 2019. Online Edition. https://population.un.org/wpp (accessed 18 June 2019).

60 Presentation outline 1. Overview of the Asian Development Bank 2. 50 years of Asian development • Asia’s key development achievements • What explains Asia’s economic success • Issues subject to extensive debate • Asia’s challenges in post COVID-19 era 3. Summary and further readings

61 Summary

• Asia’s economic success owes much to creating better policy and stronger institutions. The book highlights the following: 1) relying on markets with proactive state support; 2) promoting structural transformation; 3) investing in productive capacity; 4) building human capital; 5) opening trade and investment; 6) maintaining macroeconomic stability; 7) promoting social inclusiveness; and 8) engaging with development partners and promoting RCI. • Going forward, Asia still faces many challenges and there is no room for complacency. • Asia must continue to maintain good policy, strengthen institutions, and contribute to the development of science and technology and to tackling global issues.

62 Further readings

• Akamatsu, K. 1962. A Historical Pattern of Economic Growth in Developing Countries. The Developing Economies. 1 (August). pp. 3–25 • Cherif, R., and F. Hasanov. 2019. The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy. IMF Working Paper. No. WP/19/74. Washington, DC: International Monetary Fund. • Maddison, A. 2007. Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History. New York: Oxford University Press. • Myrdal, G. 1968. Asian Drama: An Inquiry into the Poverty of Nations. London: Alien Lane, The Penguin Press. • Prebisch, R. 1962. The Economic Development of Latin America and Its Principal Problems. Economic Bulletin for Latin America. 7 (1). pp. 1–23 • Rodrik, D. 2004. Industrial Policy for the Twenty-First Century. KSG Working Paper Series. No. RWP04- 047. Cambridge, MA: Kennedy School of Government, Harvard University • Rosenstein-Rodan, P. 1943. Problems of Industrialisation of Eastern and South-Eastern Europe. Economic Journal. 53 (210/211). pp. 202–211. • Williamson, J. 1989. What Washington Means by Policy Reform. Washington, DC: Peterson Institute for International Economics. • World Bank. 1993. The East Asian Miracle: Economic Growth and Public Policy. New York: Oxford University Press.

63 Thank you!

My email address is: [email protected]

The soft copy of the book can be downloaded at https://www.adb.org/publications/asias- journey-to-prosperity

64 A Course Question

• Can manufacturing-driven growth be bypassed in your country? What is the role of industrial policy on manufacturing or non-manufacturing sector?

65