Challenging questions as the 'Asian Century' begins
Asia's boom economies, led by China and India, must overcome a series of complex challenges to guarantee the region's long-term prosperity, according to Asian Development Bank executive Stephen Groff.
Speaking at a Sydney World Program reception, Groff said governments across the region had a collective responsibility to tackle a list of critical issues: to address inequality, to pursue sustainable development and to introduce modern systems of governance.
"Asia's future prosperity, and the eradication of extreme poverty, will require much more than simply high growth," he said.
Groff, Vice President of the Asian Development Bank, is responsible for the bank's operations in East Asia, Southeast Asia, and the Pacific. His mandate includes establishing strategic and operational priorities and producing investment and technical assistance operations.
Before his appointment in October 2011, he was the deputy director for development cooperation at the OECD and the deputy vice-president for operations at the Millennium Challenge Corporation.
Groff described what he called the 'Asian Paradox' - the fact that the world's fastest growing region remains home to nearly half the world's extreme poor.
"Asia's rapid yet uneven rise, which has brought the scourge of inequality, must be dealt with firmly," he said.
"Inequalities must be narrowed or social stability will be threatened."
Groff said the region's long-term prosperity would depend heavily on the intensity of its resource use, including water and food, and its ability to manage the region's carbon footprint. It was in Asia's best interests to encourage and invest in innovation and clean technology to maintain its impressive growth momentum, he said.
"Then there is the great challenge of governance and institution-building—an Achilles heel for many Asian economies," he added.
"Institutional quality must be improved as much as corruption must be quashed."
He said the ultimate challenge was effective governance — governance that provides access to quality health care and education; infrastructure; efficient, livable cities; stable banking and financial systems; and reliable, fair legal structures that protect citizens' rights.
"In short, Asia must modernise its governance systems and retool its institutions to ensure transparency, accountability and enforceability," Groff said.
He said the future must be measured not in terms of Asia's recent past, but in the context of the problems it faces.
"If it pursues sustainable development and improves governance as key building blocks for the future; then yes, an 'Asian Century' is both plausible and reachable. But policies that worked when Asia was low-income and capital scarce are less likely to work today and unlikely to work in the future," he concluded.
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