Member economies of the Association of Southeast Asian Nations (ASEAN) have displayed resilience over the years, weathering challenges and propelling themselves to become the world’s fifth largest economy, with gross domestic product (GDP) expanding at an annual rate of 4.6% between 2000-2021. It was only in 2020 that the region’s economy contracted by 3.2% from the previous year due to the COVID-19 pandemic.
A new Asian Development Bank (ADB) report finds that the path to recovery has proven uneven and diverse, yielding development gaps among member countries of ASEAN. Narrowing the Development Gap: Follow-Up Monitor of the ASEAN Framework for Equitable Economic Development says the regional bloc has made progress in various socioeconomic indicators at varying paces for its member states. In turn, the pandemic pushed back progress in the region by several years and has compelled ASEAN member states to find pathways for accelerated growth to ensure that that development gaps are reduced.
The report’s lead author, Southeast Asia Department Principal Economist James Villafuerte, says regular monitoring of progress in narrowing the development gap is crucial to ensure that development programs implemented by member states remain impactful and relevant.
What are the key takeaways from the report?
The study, which provides a simple and concise snapshot of development progress in ASEAN as a whole and across ASEAN member states, points to gains both in the areas of economic progress and human development. For instance, rapid economic growth in the region over the last two decades has contributed to significant reductions in poverty. The proportion of ASEAN people living in extreme poverty – below the international poverty line of $2.15 per person per day, fell to less than one in 30 persons (3.3%) in 2019 from about one in three persons (36.6%) in 2000. This is due in part to improvements such as better access to finance as well as better internet connectivity, which have both been rising in the subregion. Internet penetration averages 63% among ASEAN member states as of 2020—an increase of about 55.7 percentage points from 2000. Human development in the ASEAN community, as reflected by the Human Development Index (HDI), has also improved over time and the gap in HDI among ASEAN member states has also narrowed.
Despite these improvements, however, the digital divide still persists in information and communication technology (ICT) infrastructure and digital skills. For example, a wide disparity in ICT skills are evident across ASEAN member economies, with richer economies such as Brunei Darussalam, Malaysia, and Singapore doing better.
ASEAN economies have shown great resilience battling the pandemic, but much work still needs to be done and the region needs to work together to ensure that the poorest members of the ASEAN community are not left behind. We hope this monitor can help policymakers work on policies and programs that can promote inclusive growth within ASEAN member states and across the ASEAN community.
What specific areas do ASEAN governments need to work on to address development gaps across the region?
The report has identified many development issues. Topping the list is the need for increased investments in skills development by member states, and collectively by the ASEAN community. Another area is improving the quality of learning in the region. With the world undergoing constant change due to a steady flow of new trends, resilience can only be developed among the ASEAN population by developing their skills to cope with future challenges. Benchmarking can be an effective way to narrow development gaps, especially in skills. But, in such cases, benchmarks need to be periodically reviewed to assess progress in achieving targets, understand the barriers and bottlenecks to poor development performance, and identify issues that need critical attention to narrow inequalities within and across member states. The ASEAN bloc needs to shift from making do with meeting basic targets to working towards quality-of-life targets such as improved skills in reading, math and science, better nutrition, access to quality health care, and better evacuation centers in times of disaster.
As the world becomes more digital, technology can also widen inequality among and within ASEAN member states. People, firms, and countries that fail to invest in digital skills, infrastructure, and finance are likely to bear the costs of being less competitive.
Innovation must also be harnessed in business processes and basic public service delivery across member states. More widespread digitalization and use of the internet can eventually lead to increased and widespread prosperity, especially for those likely to be left behind. More affluent member states can provide technical assistance to improve access to and stability of internet connectivity, as well as enhancing digital skills of people.
Enhanced trade within ASEAN – in terms of goods, services, and human resources – can also promote sustainable consumption and production, aside from increasing economic opportunities, so that no person and no member state will be left behind.
Another area that needs to be addressed by the ASEAN community is the quality of its available economic and social data so that it can effectively measure economic and social progress. Development data gaps persist not just in the region but also across the rest of the world. This could be due to the frequency of data source collection or the lack of disaggregated data. Member states will need to invest more in enhancing the availability, quality, and disaggregation of data. Without sufficient development data, member states will not be able to set clear policy priorities and the entire ASEAN community will not be able to develop a collective action agenda across countries, especially in promoting economic and social inclusion.
Southeast Asia is one of the most vulnerable regions in the world to climate change. Many of its residents depend on agriculture and natural resources but regularly face flooding and extreme weather events. Does the report consider this a priority area and one which should have the collective attention of member states?
Closer regional trade and financial integration in Asia and the Pacific has huge benefits that drive economic growth and development.
Asia and the Pacific is stronger and more resilient when it works collectively to address challenges such as climate change, pandemics, and financial shocks.
Addressing climate change and protecting the environment is a specific area of partnership that mutually benefits Southeast Asian countries. Many development goals and targets, especially the Sustainable Development Goals, are supportive of one another. For instance, the eradication of extreme poverty can be achieved faster with investments in quality education and lifelong learning for all thus enabling the poor and other vulnerable sectors to get better jobs. Using affordable, clean, and renewable energy will positively impact health, education, productivity, and the environment, particularly in areas with a high incidence of poverty. Meeting climate goals will also help meet other socioeconomic goals and improve lives, particularly for those vulnerable to climate impacts. Given the rapid urbanization in ASEAN, with majority of the population expected to live in urban areas by 2050, it is critical to develop urban agriculture, reduce and manage food waste, green many of the different economic sectors, develop more peri-urban areas (otherwise known as urban-rural transition zones), and reconnect cities with rural locales to make cities healthier and more sustainable.
The region has borne the brunt of climate change, especially climate-related hazards. So, partnerships for climate action are not only necessary to address this “silent killer,” but also offer new opportunities for collaboration and innovation.