Dissemination Seminar on Asia 2050 Study - Rajat M. Nag | Asian Development Bank

Dissemination Seminar on Asia 2050 Study - Rajat M. Nag

Speech | 12 July 2011

Keynote speech by ADB Managing Director General Rajat M. Nag at the Dissemination Seminar on Asia 2050 Study on July 12, 2011 in Jakarta, Indonesia.

Minister Alisjahbana, distinguished panelists, ladies, and gentlemen,

On behalf of the Asian Development Bank, let me extend a very warm welcome to this Dissemination Seminar on our now completed flagship study “Asia 2050”. There has been significant interest in the key messages of the study—globally, around the region, as well as here in Indonesia. One reason for the keen interest is that our messages are broadly based on the vibrant debates, constructive criticisms, and other inputs from the round of consultation seminars we held throughout the region and elsewhere. Those who joined our seminar here in January may well find your comments incorporated among the key messages.

Asia has indeed done very well over the past four decades. It is the most successful development story in recent times. Many people don't hesitate any more to talk about so-called the Asian Century. Discussions on the economic center of gravity being shifted to our region are no longer an astonishing story. There are certainly signs to support these. But as we look forward to the next four decades, it does not take long before we realize that the challenges we face now are not negligible at all and will be quite different from those we have overcome to get here. In a nutshell, while an Asian Century is plausible, it is far from pre-ordained. There is much work to be done to ensure we stay the path in a constantly evolving global and regional economic environment.

Given our region's extremely diverse and complex social and economic landscape, the rapid—yet uneven—rise to date proffers both important opportunities and significant challenges.

As we continue our march toward increased prosperity and a region free of poverty, we must confront both short- and long-term critical issues that must be resolved. How do we simultaneously sustain rapid growth and narrow the inequalities that appear to be only widening? And how do we do this while mitigating environmental damage in the race for limited resources?

ADB commissioned the “Asia 2050” study to shed some light on these critical issues we all are facing now. The study develops the most likely scenarios of where the region might be 40 years down the line; identifies the drivers of change and the often difficult policy choices our region must make; and explores the corresponding national, regional, and global agendas we should be thinking about now.

The study presents two alternative scenarios of Asia's economic trajectory toward 2050. We call them “the Asian Century Scenario” and “the Middle Income Trap Scenario”. Their titles are rather self-explanatory. But we examine them underscoring the potential payoffs that proactive policies can bring against the costs of inaction.

The two scenarios are rough sketches of how Asia's future might unfold given the policy choices made—and how they are pursued as we seek more inclusive and environmentally sustainable growth and development.

The next 40 years in Asia will be shaped by risks associated with disparities within and across countries, the middle income trap, competition for finite natural resources, climate change, and rising urbanization. Our future calls upon us to meet the challenge of providing good governance and strong institutions to maintain continuous growth momentum while addressing inequality issues and avoiding conflicts to foster peace and prosperity across the region.

The risks will mutually interact with the new realities that will drive Asia's future—particularly the changing demographic structure and its effect on the labor force, the emerging middle class, globalization, communication and technology, and regional cooperation and integration.

To rise to the challenges and translate these into opportunities, Asian leaders need to devise bold and innovative national policies, while pursuing avenues for regional and global cooperation. Asia 2050 can actually offer policy makers a tool kit for taking advantage of new opportunities while avoiding potential pitfalls. These aren't etched in stone. But they are guides to what may happen—both positive and negative.

The Study lays out a policy menu that could work toward achieving the best scenario for 2050. I am sure my colleagues from ADB will present more details on this in the following session. But I would like to take this opportunity to discuss some of the ideas we have brought up in the Study.

Clearly, a single approach will not apply to all of Asia. Given our diversity, precise actions must be country-specific. In general, each country's national action agenda should give high priority to inclusion and elimination of inequalities within their borders.

Local strategies must also highlight effective management of urban areas, promotion of policies which support energy efficiency and diversification, and cultivation of an environment that values innovation and entrepreneurship.

Local leaders must also do more to raise the level of good governance. Competent and honest governments should efficiently deliver basic services, including education and health care. This will raise productivity while promoting political stability and,with that, private sector confidence and business investment.

Increasingly, an important dimension of strong governance and institutions is the capacity to deliver inclusive growth that spreads the fruits of development to the wider population.

Lastly, let me briefly touch on a particular driver of this transformation—regional cooperation. By coming together in recent decades through dialogue, trade, and investment, Asia's economies have grown more rapidly than they would have without pursuing integration.

The region's rapid economic growth owes much to the development of the intricate web of regional supply chains and production networks known as “Factory Asia.”

Regional cooperation and integration should continuously target the free flow of trade and investment throughout Asia—one that is market-based and collaborative.

As our economic stature rises, so does our responsibility to help manage the global commons—whether addressing climate change or maintaining global peace and prosperity. It is in the region's own interest to take action in the global arena where so much is at stake.

We, of course, know that the policies and strategies proposed have gestation periods spanning many decades. So we need to get a head start. Asia 2050 should keep us thinking as we act with the appropriate urgency in developing and implementing new polices and strategies.

National leaders must take ownership of their respective action plans to ensure they are effectively implemented.

Let me close by reiterating my sincere gratitude to all of you for participating in today's seminar.

I should also mention that this seminar has been organized cognizant of Indonesia's recently launched Master Plan for the Acceleration and Expansion of Economic Development 2011–2025. The Master Plan is expected to provide the building blocks to transform Indonesia into one of the 10 major economies in the world by 2025.

However, achieving a self-sufficient, advanced, just, and prosperous Indonesia, the vision of the Master Plan will require strong dedication and bold initiatives to overcome the challenges ahead. I hope our Asia 2050 study will provide some reference in identifying areas for your focus and ideas for future innovation in transforming Indonesia into one of the world's major economies by 2025 and toward 2050. It is in this context that I hope each participant will have an opportunity to look into Indonesia's specific development challenges and solutions from the perspective of the key messages of Asia 2050.

As Southeast Asia's largest economy, ASEAN chair for 2011, and member of the G20, we see Indonesia as a leader in bringing the vision and agenda of Asia 2050 to the table—both across the region and globally.

I look forward to having a very productive and rich discussion.

Thank you.