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	Table of Contents
p. 15 of 77 BACK | NEXT Foreword, Acknowledgments, Acronyms and Abbreviations, Definitions I. Developing Asia and the world Overview of economic highlights and prospects Export or domestic demand-led growth in developing Asia? Introduction Export-led growth strategy Definition of domestic demand- and export-led growth strategies Demand-side growth-accounting exercise Decomposition analysis of stances in the private, government, and trade sectors Comparison of expenditure shares of open European countries and selected countries in the Asia-Pacific region Summary and conclusions Endnotes and references II. Economic trends and prospects in developing Asia III. Promoting competition for long-term development Statistical appendix

Asian Development Outlook 2005 : I. Developing Asia and the world

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Comparison of expenditure shares of open European countries and selected countries in the Asia-Pacific region

For comparison purposes, the expenditure shares of a group of small open developed economies in Western Europe (Belgium, Denmark, Netherlands, Sweden, and Switzerland) are analyzed and compared with those of the developing countries of Asia-Pacific.

The Asia-Pacific countries are divided into three groups: upper-income economies (UA), middle-income countries (MA), and low-income countries (LA). The LA group coincides with the World Bank's latest categorization of low-income countries.¹⁰ The MA group coincides with the World Bank's countries in Asia-Pacific that are categorized as lower-middle-income countries. The UA group comprises those economies in Asia-Pacific that are above the income brackets for the lower-middle-income countries as categorized by the World Bank.¹¹

Figures 1.23 and 1.24 show the average shares of exports and imports, respectively, in GDP for the European countries, UA economies, MA countries, and LA countries.

Figure 1.23 indicates that the European and UA economies have significantly higher shares of exports in GDP than the MA and LA countries. The UA economies have by far the highest share of exports among all countries and their export share increased the most between 1983 and 2003. For all categories of countries, the shares of exports and imports grew fast between 1983 and 2003.

Changes in the import share are quite different (Figure 1.24). The European countries had higher import shares than the MA and LA countries in 1983, but in 1993 both the MA and LA countries had exceeded the import share of the European countries. In 2003, the MA countries' import share still exceeded that of the European countries, but the share of the LA countries fell again below that of the European countries. The UA economies again have had the highest share of imports since 1983, and their import share is also growing the fastest.

Figure 1.25 indicates that net exports (exports less imports) as a share of GDP are positive and growing for the European and UA economies. On the other hand, net exports are negative for both the MA and LA countries in three periods analyzed. But the net export position of the MA countries had clearly improved in 2003 (almost zero on average). The LA countries still had large negative net exports in 2003, of around 8% of GDP on average.

It must be stressed that the UA economies improved their net export share considerably between 1993 and 2003. In 2003, it was almost twice as large as the net export share of the European countries.

Domestic demand--defined as consumption (private and government) plus GDCF--and net exports sum to GDP. Thus, Figure 1.25 also indicates that the share of domestic demand has been decreasing significantly in the European, UA, and MA economies.

The above analysis shows that the UA and MA economies--where most of the emerging markets in the Asia-Pacific region are categorized--on average improved their net export position between 1993 and 2003, and that the UA and MA economies' share of domestic demand also declined. The UA economies even outperformed the European countries in terms of exports and net export shares.

The decreasing share of the domestic demand components in the UA and MA economies is borne out in Figures 1.26 and 1.27, which graph the average shares of consumption (private plus government) and GDCF (or gross domestic investments), respectively, in GDP.

Figure 1.26 indicates that consumption shares fell in all groups of countries between 1983 and 2003. It is clear that, although the MA and LA countries have higher consumption shares than the European and UA economies, the shares are decreasing more quickly over time in the first two groups of countries. The UA economies have the smallest share of consumption, even lower than that of the European countries.

For GDCF, Figure 1.27 shows that all of the categories of Asian countries have had, since the early 1980s, higher shares of investment to GDP than the European countries. The latter have very stable gross investment shares of between 18% and 19% of GDP. The UA economies had the highest investment share in 1983 and 1993. But this share, as well as that of the MA countries, fell during the 1993-2003 decade, with the UA economies' investment share losing almost 10 percentage points. The LA countries, on the other hand, increased their investment share in this decade.

Thus, on average, there is no indication that strong domestic demand-led growth or consumption-led growth has been taking place in the developing countries of Asia-Pacific during the last decade. The shares of consumption and GDCF declined during the last decade in the UA and MA economies (i.e., the share of domestic demand declined, which means that the net exports share improved). The LA countries' consumption share also fell, but their GDCF share increased. This is a positive indication that the lower-income countries, which are capital scarce, are accumulating capital at a faster rate than the other groups.

The outstanding performance of the UA economies in terms of exports and net exports reinforces the general perception that these four economies are some of the strongest export performers in the world.

What is worrisome is the very large negative net exports still plaguing the low-income Asia-Pacific developing economies. This is discussed further in the following section.

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