Asia Cannot Bypass Manufacturing on Path to Prosperity: ADB
August 22, 2013 Leave a comment
Asia Cannot Bypass Manufacturing on Path to Prosperity: ADB
By Jakarta Globe on 3:40 pm August 21, 2013.
Industrial manufacturing is vital to the economic development of Asian nations trying to create high income societies according to a report released Wednesday by the Manila-based Asian Development Bank (ADB).
In a special chapter included in “Key Indicators for Asia and the Pacific,” the bank’s flagship annual publication, ADB emphasized the importance of manufacturing in establishing more productive service sectors, fostering technological innovation and modernizing agriculture.“Historically, no economy has reached high income status without attaining at least an 18 percent share of manufacturing in output and employment for a sustained period,” Changyong Rhee, ADB’s Chief Economist, wrote in the report
The special chapter notes that one group of Asian economies — Hong Kong, Japan, South Korea , Singapore and Taiwan — reached high income status rapidly, while another group of economies — including the People’s Republic of China (PRC), Malaysia and Thailand — are transforming more slowly.
The Asian nations that have been slowest to develop, such as Bangladesh, India, Pakistan and the Philippines, have created few manufacturing jobs and are shifting from agriculture to service-based economies.
“Right now, as services boom in the region, it’s tempting to shun industrialization, but it will be a serious mistake if a country wants to be prosperous,” Rhee said.
Services are the largest sector in developing Asia’s economic output and agriculture remains the largest employer, providing income for around 700 million people in the region.
Furthermore, agricultural modernization is a key challenge for developing Asia, especially in low-income countries.
Middle-income economies that depend heavily on labor intensive sectors should focus on upgrading their industrial base, the report said. For these nations, high quality education is essential for industrial diversification and reducing the path-dependent nature of structural transformation.
For small island economies, the report said, industrialization may not prove cost effective, in which case becoming competitive in service sector niche markets may be the answer.
“Key Indicators for Asia and the Pacific 2013″ also charts the region’s progress in achieving its Millennium Development Goals (MDGs), noting that two years before the MDG deadline in 2015, most of the region made significant progress in reducing poverty, improving access to universal primary education and promoting gender equality.
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