Asia’s role in the future

Randy KluverInstitute for Pacific AsiaTexas A&M University

Location

The rise of Asia

Since WWII, growth in Asia has been explosive

Asian tigers (Japan, S Korea, Singapore, Taiwan) provided one wave of development (1945-1990)

Next wave of “little tigers” has stalled somewhat (Indonesia, Thailand, Malaysia)

Next 20 years, though, will see Asia’s influence grow because of China and India

Current economic trends

China’s liberalization: opening of economy immediately shifted FDI flows out

of the rest of Asia has enjoyed annual economic growth of 8-12% since

about 1980. Gross GDP could conceivably pass that of the US by

2030, most certainly by 2050. India’s Growth

Stagnant for many years, primarily due to inability to break through economic reforms

started growing in recent years, and could also surpass US by 2050.

Are they compatible?

China China accounted for 7

percent of global merchandize exports and 6.1 percent of imports

China’s manufacturing industry is 41 percent of GDP,

Domestic market for goods: $1 trillion

Authoritarian capitalism

India India accounted for less

than 1 percent of exports and imports

India’s manufacturing industry is only 16 percent of GDP

Domestic market for goods: $250-330 billion

Democracy, but heavily state influenced economy

Post-war growth spurtsPercent of world GDP (PPP)

0

4

8

12

16

1 3 5 7 9 11 13 15 17 19 21 23 25

Years since turnaround

Germany

China

Japan

South Korea Taiwan, China

Critical issues:

Struggle for resources Energy: International Energy Agency warned that

demand for oil imports by China and India will almost quadruple by 2030 (2007)

Environmental Degradation

Worlds most polluted cities:

Other critical issues

Governance Different models lead to different results Losing sight of key priorities because of national pride

issues could undermine their potential Infrastructure (roads, highways, water systems,

housing, etc) India’s annual investments in infrastructure between 1998 and 2005 averaged 4% of GDP compared to 8.2% for China

Asia and global power

China is the only Asian country represented on the Security Council

Economic growth translates into various forms of geopolitical power.

Regional groupings have not been as significant as many had hoped (ASEAN, APEC, etc)

Military power is as yet insufficient for anything but border issues.

Asia has been largely unsuccessful in generating significant “soft power” except in limited areas.

© SIPRI 2007 www.sipri.org

Regional military expenditure, 1988-2006Regional military expenditure, 1988-2006

North America

Western Europe

Eastern EuropeAsia

Middle East

Latin America

Shares of world military spending by country 2006

Key challenges

China Potential for conflict:

Taiwan Demographics

Floating population Aging migration

India Potential for conflict:

Pakistan Demographics

Quickly emerging middle class

Population is not slowing as rapidly, creating greater demands on resources

How does the West respond?

Retreat, Resist, or Rejoice? US and Europe have shared fears, but

varying policy responses. US: China policy usually debated in election

years. Businesses and governments often have

different reactions, as well. Overall context of globalization has a

bearing on what ultimately happens.