The 19th century belonged to Europe. America rose as the indomitable superpower in the 20th century. The financial crisis of 2008 marked the beginning of an end; the days of the American hegemony over the world economy are numbered. Now, Asia is the most eligible candidate to take the baton of the 21st century.
We love this fancy idea because along with China, India is at the heart of this promising Asia growth story. We have witnessed an impressive growth during the last two decades. But it's too early to raise the toast. In fact, if we don't quickly pull up our sleeves and get on with serious work, the "Asian century" is going to be in jeopardy.
The Asian Development Bank has released a report titled "Asia 2050: Realising the Asian Century". It states that the performance of seven countries- India, China, Japan, South Korea, Indonesia, Malaysia and Thailand- will be the key to Asia's sustained rise.
Now the most interesting and important part of the report! It has pointed at 6 key challenges that these economies need to address. Let's discuss them briefly in the Indian context:
Large and increasing income inequalities The growth that our economy has witnessed so far has been dichotomous. The divide between the rich and the poor has widened a lot. This will eventually cause social and political tensions which are big hindrances to economic well-being.
The risk of falling into a "middle income trap". This is a major threat for a middle-income country like India. Some Latin American and some south-east Asian economies that once witnessed a phase of high growth could not keep the momentum going. They could not go further to achieve the high-income status.
Intense competition for finite natural resources Imagine a large and growing populace that aspire better standards of living. How are we going to meet the growing demand in times when the availability of resources is under strain?
Rising disparities across countries and sub-regions. Just as we earlier pointed that the growth was dichotomous, in the same way, the economic progress varies drastically across different regions. As a result, we witness massive migration to growth centers which puts a severe strain on the resources and infrastructure therein.
The challenge of governance and institutional capacity The spate of massive scams and scandals that we have witnessed in the recent past stands as a major roadblock to our country's progress. Unless we have robust institutions with sound governance, our growth prospects are very much in jeopardy.
We believe the report very well points at the real issues threatening the Asian economies. There is an urgent need to decisively deal with these rooted problems. Otherwise, our claim to the "Asian century" may simply slip out of our hands.