Despite the size and population of the Asia-Pacific region, the region only accounts for about a quarter of World GDP (see Figure 10) and a large proportion of this is accounted for by just one country (Japan). Many of the economies in the region are therefore, quite small. However, in a number of Asia-Pacific countries, economic growth has been dramatic. Until the economic turmoil of 1997 most commentators expected these high growth rates to be sustained and to spread to other countries in the region. There is no consensus at present on how soon respectable growth rates can be regained.
This section of the review starts by describing the main trends and current status of the economies in the region. It then discusses in some detail the main parameters which have contributed to the high rates of economic growth observed until recently for some countries in the region. While presentation of projections of future economic growth could have been done with some confidence till mid-1997, at this time of continuing great uncertainty, the focus is instead on the nature and causes of economic change.
The current size and distribution of GDP in the Asia-Pacific region is shown in Figure 17. As this figure shows, over three-quarters of production in the region is concentrated in the three Advanced Industrial Economies and the four Newly Industrialising Economies.
Figure 17: Asia-Pacific GDP in 1994
Source: AsDB, IBRD and CIA All figures are in US$ at 1994 prices and exchange rates
Japan is by far the largest economy in the region, accounting for about 60% of regional GDP, but another eight countries (see Figure 18) have economies of over US$ 100 billion (1994 prices and exchange rates). In contrast, the total GDP of all the Pacific Islands added together comes to only US$ 10 billion, less than the GDP of Sri Lanka.
Figure 18: GDP of the major Asia-Pacific economies in 1994
Source: AsDB, IBRD and CIA All figures are in US$ at 1994 prices and exchange rates
Trends in GDP the last 16 years to 1994 are shown in Figure 19. Overall, the GDP of the region has nearly doubled, in real terms, over the last 16 years (an increase of 95%). Two sub-regions have grown by less than this average: the Advanced Industrialised Economies and Pacific Islands (recording total real growth of about 70% and 50% respectively over the period). The top performer is North Asia, where GDP has increased by 325% from US$ 130 bn to US$ 550 bn. Nearly all of this sub-region is accounted for by one country, People's Republic of China, and this dramatic increase in GDP largely reflects the economic successes which have been achieved with market reforms in that country.
Growth in the Newly Industrialising Economies has been no less dramatic, with these economies tripling in size over the 16 years (a total increase of 228%). All four of these economies have grown by roughly similar amounts.
Figure 19: Changes in Asia-Pacific GDP 1978-1994
Source: AsDB, IBRD and CIA
The economies of Southeast Asia and South Asia have grown by 141% and 111% respectively over the period. There has, however, been some variation in performance within these two regions. In Southeast Asia, the relatively large economies of Indonesia, Thailand and Malaysia, along with Socialist Republic of Vietnam, have grown the most while other countries (e.g. Brunei) have grown only slowly. In South Asia, some of the smaller economies, such as Bhutan and the Maldives, have shown the highest rates of economic growth over the period, but the total growth of the sub-region has been largely determined by economic growth in India and, to a lesser extent Pakistan, which have grown more slowly.
In terms of the relative size of their economies, the importance of the Advanced Industrial Economies has diminished from a 77% share of regional GDP in 1978 to a 66% share in 1994. With below average economic growth expected to continue in these economies in the future, this trend is likely to continue. The relative importance of the Pacific Islands which account for well under 1% of the regional GDP has also diminished.
The relative importance of the North Asia sub-region has increased the most in the Asia-Pacific region, from a share of under 4% to over 8% of regional GDP over the period. This share is now about equal to that of Southeast Asia. The share of regional GDP gained by the other sub-regions has been only modest, in the range of 2% to 3% for each of them.
Figure 20: Trends in GDP growth in the Asia-Pacific region
Source: AsDB, IBRD and CIA
Figure 20 shows trends in GDP growth in the Asia-Pacific region over the period 1981-19924. This shows that economic growth has been in the range of 4-5% per annum over most of the period, with an average of about 4¼%. However, this average is greatly influenced by the slow growth of the mature Japanese economy. Excluding Japan, the average rate of growth in the rest of the region was more vigorous, being closer to 6¼%.
North Asia has shown the largest (but also most variable) rate of economic growth in the last decade, being generally between 6-12% per annum with an average of about 9½% per annum. Economic growth in the Newly Industrialising Economies has been close behind, and generally more stable, between 7-9% per annum with an average of about 7¾% per annum. Average annual growth rates of 5¾% have been achieved in Southeast Asia. These rates of economic growth have not shown any particularly strong trends over the last decade at the sub-regional level.
Economic growth in South Asia has averaged 4¾% per annum, slightly above average for the whole region. In contrast, the Pacific Islands have grown much more slowly than the rest of the region (about 2½% per annum on average). However, growth rates improved in both of these sub-regions between the late 1980s and the crisis of mid 1997 were at about 6-7% per annum.
The Advanced Industrial Economies have also grown more slowly than the rest of the region (about 3¼% per annum on average), but growth has slowed down in recent years and, in the case of Japan, has since the Asia economic turmoil started practically stalled.
By combining the information collected on the size and growth of the individual economies of the Asia-Pacific region, it is possible to classify them according to the stage of economic development each of them have reached. This could be done in several ways and one attempt to do this, based on GDP per capita level and growth, is shown in Table 10. This sort of classification may be more useful for examining future developments in the forestry sector in the region than the sub-regions used in this report (which are based on geographical proximity as well as economic development).
Table 10 - Per capita GDP and GDP growth in Asia-Pacific economies
Average growth |
Gross Domestic Product per capita in 1994 (in US$ at 1994 prices and exchange rates) | |||||
in GDP per capita 1979-1994 |
0-500 |
500-2,000 |
2,000-5,000 |
5,000-10,000 |
10,000-20,000 |
over 20,000 |
< 0% p.a. |
Kiribati |
Vanuatu Samoa Philippines DPR Korea |
New Caledonia |
Brunei |
||
0-2½% p.a. |
Mongolia PDR Lao Nepal Bangladesh |
Solomon Islands Papua New Guinea Myanmar |
Fiji |
New Zealand Australia |
||
2½-5% p.a. |
India Pakistan Cambodia Bhutan |
Tonga Sri Lanka |
Malaysia |
Japan | ||
5-7½% p.a. |
Indonesia |
Thailand Cook Islands |
Rep. Korea |
Taiwan Province of China |
Hong Kong SAR, China Singapore | |
over 7½% p.a. |
PR China SR Vietnam |
Maldives |
||||
Note: Countries with a GDP of less than US$ 10 bn are shown in italics
At the top-end of the development scale are the Advanced Industrial Economies and Newly Industrialising Economies. As Table 10 shows, these sub-regions are fairly homogenous in terms of their economic strength. The former is characterised by high per capita GDP and moderate to low per capita GDP growth, while the latter is characterised by moderate to high per capita GDP and high per capita GDP growth. Growth will probably remain at around 2-2½% in the long-run in the Advanced Industrial Economies.
At the third level of development are countries with low to moderate GDP per capita combined with moderate to hitherto high rates of growth in GDP per capita. This level contains the group of countries moving towards the ranks of the Newly Industrialising Economies and comprises: Thailand, Malaysia, Indonesia, Sri Lanka, Socialist Republic of Vietnam and People's Republic of China. The latter two countries are not particularly wealthy, but have achieved incredible economic growth rates over the last decade as they have begun to develop market economies and reduce central planning and control. People's Republic of China is also the second largest economy in the region after Japan and has the potential to match or even surpass Japan in the early part of the next century.
Countries with low GDP per capita combined with low to moderate GDP per capita growth are generally at the fourth level of development. Countries from the Asia-Pacific region in this group include: India, Pakistan, Bangladesh and Myanmar. It can be expected that, given the right policy environment, these economies will grow faster and become richer in the future, although this might take some time. The economy of the Philippines should be considered as a member of this group. However, relatively low economic growth combined with it's currently high rate of population growth has resulted in a decline in per capita GDP in recent years, so it could be considered that this country is somewhat behind the others in this group.
Countries in the Asia-Pacific region not included in the four groups above are at various stages of development but should probably be considered as a separate, more diverse group because of their widely varying and unusual circumstances. For example, all but two of the countries in this group have GDPs of less than US$ 10 bn (at 1994 prices and exchange rates) and many rely on only one or two products for most of their income (e.g. oil in Brunei; tourism and fishing in the Maldives; tourism and sugar in Fiji; and nickel in New Caledonia). Most of these countries have little scope to develop diversified for the foreseeable future. They cannot, therefore be generally considered as similar to the economies listed above.
The two larger economies in this group are also quite unusual of which the Democratic People's Republic of Korea is one of the few remaining truly centrally planned economies in the World and is quite isolated (in economic terms) from most of the rest of the region.
The popular press and even some analytical works tended till the post 1997 economic turmoil to treat the Asia-Pacific region as if all economies were close to or could realistically achieve within a modest time period the status of the high-performance economies of south-east Asia. Some contrasts are mentioned below in order to illustrate the inappropriateness of generalising about the region. Some indicators of the skewed regional profile are illustrated in Annex 3.
From what follows, it emerges that a few countries have a driving role for Asia-Pacific: their exceptional performance, the extreme magnitude of their contribution, or their size gives them a large influence on regional totals and averages which can be misleading if not qualified. Secondly, among the most influential countries in economic terms are small ones with low populations (e.g. Singapore, Hong Kong SAR, China, Taiwan Province of China) so that overall regional averages or per capita numbers are unhelpful in characterising the condition or prospects of many Asians. In brief, selected contrasts to illustrate the situation include the following:
Until the mid 1997 economic turmoil caused reversal from praise to criticism and "I told you so" stances, an industry had developed, which showed few signs of flagging, to explain the "super-growth" phenomenon of a number of economies in Asia. There were endless references to a "miracle". Full appreciation of the complex sets of variables which explain how and why any given country or group of countries was developing so fast requires reference to the original analyses. Even these originals cannot provide the full story, nor can they be treated as gospel - controversy reigned and analysts did not achieve consensus on the region's development. its determinants or at what pace it would continue to grow.
The earlier summary assessment of regional contrasts in Asia-Pacific suggests that it was never meaningful to talk of a miracle for all of Asia when the concerned countries were relatively few and small. The inclusion of China among the ranks of "miracle" countries lent them a regional significance which would otherwise be missing. As indicated earlier, there are many countries in the region which were never among the outstanding list, many of these had a significant share of Asia's population relative to the countries that were doing extremely well.
Notwithstanding the fact that it was only a handful of the Asia-Pacific which have grown very fast, they boosted the region's significance on the world stage so that the global economy no longer rests only on North America and Europe but includes Asia as its third pole. Forbes (1997) reports that in 1992, the GDP shares were 28.9% for Europe, 27.8% for North America and 22.9% for Asia. In 1993, Asian members of the Asia-Pacific Economic Cooperation (APEC) for 24.6% and 27.7% of world imports and exports respectively.
4 For presentational purposes, five-year moving averages are presented in Figure 20, to smooth-out the effects of short-term changes in economic growth.
