Conference highlights need for regional cooperation to boost productivity

Friday, 21 November 2014 01:51 -     - {{hitsCtrl.values.hits}}

MANILA, PHILIPPINES: Developing Asia must boost productivity if it is to continue to enjoy strong economic growth, reduce poverty and inequality, and avoid getting mired in the middle-income trap, delegates heard at an Asian Regional Cooperation and Integration conference that ended on 18 November. “It is critical that the region tackles the structural issues underlying slowing productivity,” said Iwan J. Azis, Head of the Asian Development Bank’s (ADB) Office of Regional Economic Cooperation. “Deeper regional cooperation and integration can help to do that through better infrastructure, energy, trade, and finance as well as labour mobility.” The two-day conference held at ADB on Monday and Tuesday gathered government officials, private sector leaders, academics, and other experts from around the region to discuss the productivity challenge and the way forward for regional cooperation. Developing Asia has seen strong growth in recent decades on the back of high investment and, in most countries, a young and eager workforce which shifted from rural work to higher-paying manufacturing jobs in the cities. Economic liberalisation coupled with greater cross-border integration in trade and finance also helped as supply chains spread across the region. The structural change in the region has been more growth-enhancing than in other parts of the world. However, in recent years, external conditions such as slower global growth, inadequate infrastructure, and other supply-side constraints have slowed productivity growth in many Asian countries. With the external environment likely to be less benign in coming years, a key challenge for Asia is to reverse that trend and sustain high productivity growth. Delegates noted that the contribution by greater regional cooperation to higher productivity depends on the country concerned. Landlocked, fragile, and conflict-affected states must improve their fundamentals such as human resources and basic infrastructure. But greater use of information and communication technologies can draw financing from multiple sources and share information that allows development of niche markets. For middle and higher-income countries, higher-quality infrastructure and skills can help make trade more efficient and ensure economies move up the value chain. IT-related technologies and new ways of managing could also boost productivity. For Asia’s high-income countries, however, new high productivity activities may be necessary to sustain their high level of productivity, they said. Other areas that were discussed included regional financing mechanisms to promote better cross-border infrastructure and trade, and economic zones that can boost productivity by attracting investment and cutting trading costs. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2013, ADB assistance totalled $21.0 billion, including cofinancing of $6.6 billion.