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Opening remarks at the Governors' Seminar: "Beyond Factory Asia: Fueling Growth in a Changing World"
Opening remarks by ADB President Takehiko Nakao on 3 May 2013 at the Governors' Seminar: Beyond Factory Asia: Fueling Growth in a Changing World
Your Excellencies, ladies and gentlemen:
It is indeed an honor to welcome all of you to this morning’s Governors Seminar.
We often hear about “Factory Asia,” how it supplies manufactured products in abundance to the world. Over the past several decades, Asia’s burgeoning manufacturing and supporting service industries have carved a path out of poverty for millions of Asians. The industrialization and associated population shift from rural to urban areas provided the impetus for continued strong economic growth in several countries around the region. Of course, it also created many challenges, such as rapid urbanization and environmental degradation.
Asia’s intricate production networks and increasingly complex just-in-time supply chains have been fueled by new technologies that made “Factory Asia” possible. These now comprise a significant portion of the high-profile products it produces.
At today’s seminar, eminent panelists will discuss medium term perspectives of this “Factory Asia” in light of the changing global economic landscape. I would like to make three points we may want to keep in mind during today’s discussion.
First, Factory Asia does not encompass all of Asia. Many areas within the region have not adopted the same model or approach. Factory Asia is concentrated where infrastructure is basically good; where there is a large pool of untapped, potentially productive labor; where regulatory structures allow relatively free trade; and where the private sector is largely free to adapt to changing demand and supply. In that sense, there may be potential for Factory Asia to further spread its wings to other frontiers.
Second, the shift toward igniting domestic and regional demand as a major source of growth is well underway. As incomes grow and the middle class widens, products manufactured in Asia will increasingly be consumed within the region. There is also the cost trend. Wages and other costs will continue to rise, adding pressure to increase productivity. And there is the constant innovation provided by new technology—whether through new processes like additive manufacturing, such as 3-D printing, or the increasing use of robotics for line manufacturing or artificial intelligence. “Factory Asia” itself is clearly evolving.
And third, as value-added rises, so must skills. Huge investments must be made in education and skills training that are appropriate for the needs of the future. For any of this evolution to proceed, the right infrastructure must be in place.
I will stop here. Once again, I welcome you all to this year’s Governors Seminar. I feel we are assured of a lively debate on just what Factory Asia really is and how it might evolve in the decades ahead.