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Inclusive Development and Its Implications for Asia

Apr 27 , 2011

The recently concluded 10th anniversary Boao Forum for Asia (BFA) was a notable landmark for the colloquium that has witnessed rapid growth in Asia since starting in 2001. The BFA has intensified the need for international and regional cooperation and the 2011 annual conference signals to the world a very fresh impetus about its inclusive development concept.

Inclusive development should be considered as closely linked with fair distribution of income and preservation of the environment. Only when the development gap has been narrowed can economic growth and regional cooperation be sustainable. A demonstrable example is the case of Brazil. The country has made great efforts to raise general people’s income through poverty reduction program. In the past 15 years, Brazil, with a population of nearly 200 million, helped 36 million citizens move from poverty to middle class. It is a remarkable achievement obtained from inclusive growth. The rapid growth in Asia, however, has not yet solved the problem. Data from the Asian Development Bank (ADB) shows that almost 50 percent of Asia’s population is still living in extreme poverty, based on the standard of US$1.25 per head a day. Wide economic and social inequalities remain between large urban centers and the rural countryside in some Asian countries. Therefore this year’s BFA, with its theme “Inclusive Development,” actually emphasizes an important issue: how to deal with development patterns and regional cooperation. Ultimately, the inclusive development concept is intended to let all people and countries enjoy the benefits of economic growth and to eliminate all elements that inhibit regional cooperation.

In my memory, the inclusive concept can be traced back to the initial thinking around BFA’s formation. The idea to create a platform for Asia development was initiated and spearheaded by some non-governmental identities, including former Philippines President Fidel V. Ramos, former Japan Prime Minister Yasuhiro Nakasone, former Australian Prime Minister Bob Hawke, and others. I was honored to participate in the expert consultation meeting on the eve of the first BFA forum in 2001 and one of the heated debates involved the new organisation’s title and its mission. There were at least three suggestions: Boao Forum for Asia, Boao Asia Forum and Boao Forum of Asia. The Boao Forum for Asia was finally agreed, mainly because the forum does not only belong to Asia but also it is inter-regional. It would need to have been strictly a geographical forum were it be a forum of Asia. The BFA therefore, from its beginning, implied an inclusive sense of welcoming international elites to use it to advise on development for Asia. Thus, former U.S. President George Bush attended the BFA last year in Hainan. This year other former U.S. governmental-ranking officials addressed and participated in plenary sessions, as well as many other well-known people from almost all continents. 

The inclusive concept now evolves into a new phase but the emphasis seems to be on pragmatic action. This author argues that, given some regional progress already made in the forum’s first decade, the inclusive development concept should call for new initiatives and feasible policy choices to guide action. The policy guidance should focus on structural reforms that will be beneficial to business activity and economic coordination within a country’s borders, but also enhance cooperative economic relationships among regional members.

As a principle, the poverty reduction aim will be kept. The solution, however, must focus on requiring member countries to hasten growth, not only through recovery from the final phase of the current financial crisis but also with their internal reforms. The key here should be to solve prominent structural problems inside and among member countries. This is not an easy task because the structural reforms will deal with a country’s economic operational system. What should give policy analysts optimism is that member countries in the region have started work on these matters. Some examples are notable.

China, as host of the BFA, has already conducted its transition program to stimulate domestic demand. Specific measures include expanding rural consumer goods markets through the program “electrical appliances to countryside,” raising workers’ wages and other initiatives. China could do more in the field by further improving social safety networks to cover all rural areas and reforming financial services through opening the capital market.

Japan is now going all out in its efforts to recover its economy and return social life back to normal following the March earthquake and tsunami. Japan seems to have lost almost 20 years from its bubble economy since the early 1990s. Its economic weakness needs structural reform to transit to sustained growth. What Japan could do is to free up its service sectors, care more for its aging population and maintain energy conservation.

Southeast Asian countries have been hard at work on economic growth since the Paris Peace Accord in 1991. Although the 2009 global financial crisis was more devastating than the 1997 Asian financial crisis, most ASEAN members have been pursuing new economic development directions for many years. What is certain is that most ASEAN economies are externally dependent, but at the same time some are less open to other markets. They also still face structural reform obstacles from traditional systems. These countries, however, could institute measures to spur domestic demand. For instance, national economic development programs could be adjusted with incentives to enhance domestic market production because average people have a large demand for almost any goods that lift their living standards. Also, obstacles to foreign investment should be reduced, although some special measures are needed to prevent short-term capital from flowing in and out too quickly.

Another priority is regional cooperation. Without effective regional cooperation, the inclusive development concept could not be sustainable. Regional cooperation is essential for inclusive, balanced and sustained growth in Asia and BFA has served as a forum for regional cooperation for a decade. What can BFA do to further advance inclusive development in another decade? As a prestigious international forum, BFA could play a key role as a special super think tank and catalyst for regional cooperation strategies to stimulate inclusive growth. More than that, already existing institutions facilitating regional cooperation should generate more pragmatic initiatives. Several “ASEAN Plus” initiatives have worked well but more concrete steps should be taken. With its open and inclusive values, BFA could make some bold statements on APEC and the Trans-Pacific Partnership (TPP). We all understand that APEC is the premier economic organization in the Asia-Pacific region and therefore BFA could adjust its relationship with APEC to tackle a wide range of issues critical to long-term prosperity around the Pacific Rim. APEC‘s Yokohama Declaration has laid the foundations for an FTA agreement like the TPP. With BFA’s sense of inclusiveness, it should have a positive voice on that initiative to push inclusive development.

Cai Penghong is Senior Fellow at Institute for Asia Pacific Studies, Director of APEC Research Center, Shanghai Academy of Social Sciences.

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