Looking at global GDP at constant prices of 2017 adjusted for cost of living/purchasing power, China was the biggest economy in the world in 2019 with an adjusted GDP of more than USD 22.5 trillion according to World Bank. While the Chinese economy is projected by IMF to grow by a low of 1.2% in 2020 due to pandemic, the US in second rank is expected to see its USD 20.6 trillion GDP decrease by 6%. Asian countries, on the other hand, exhibit best growth prospects even during the coronavirus pandemic. European economies like Germany and the UK are expected to struggle in 2020, a fate they share with the industrial nation of Japan.
According to IMF, China and the US are to remain at the top of ranking in 2024 while Indonesia is expected to pull ahead of Germany. By 2030, China is supposed to be the biggest economy in the world in terms of nominal GDP, a record still held by the US. Asian countries are expected to make up most of the top 5 countries in the world by size of GDP in 2024 relegating European economic powerhouses to lower ranks. Asia’s burgeoning middle class is one of the reasons for the continental shift in GDP. While China has been the poster child of market growth in 21st century so far, the country is expected to tackle an aging population further down the line which will put a damper on consumption.
China and India’s economic growth has been steep since 1990s while Indonesia has even more recently entered the top 10 biggest economies in the world and is expected to reach rank 5 by 2024. Japan is expected to cling on to rank 4 in 2024 while Russia may slip to rank 6. Indonesia, together with Philippines and Malaysia, are expected to grow their labor forces significantly in the years to come contributing to a rise in average disposable incomes. Asian multinationals like Huawei and Tata have already emerged in this century and are more expected to appear on the global scene. But rapid growth in Asia also comes with its own set of problems like a quick growing divide between rural and urban incomes, environmental degradation and new challenges for governance and institutions.
Reflection on growth strategies of Asian tigers
South Korea, Taiwan, Singapore and Hong Kong are known as newly industrialized countries or Four Tigers of the late 20th century. Period of growth extends from 1960 to 1980. These countries have experienced excellent economic growth and are comparable with advanced countries in terms of industrial production. Despite different approaches, these countries had the following common features:
Adoption of export-oriented industrialization policy
Utilization of modern technology through licensing and joint ventures with MNCs
Promotion of excellent cooperation between labor and management
Focus on creation of low paid skilled labor
A closer look at Pakistan
Pakistan having a population of 208.57 million, GDP around USD 270 billion and per capita income around USD 1,130 is performing far lesser than Asian tigers who got independence much later than Pakistan. It is because Asian tigers focused on education as well as skilled labor since its inception. However, Pakistan lagged behind in capturing these opportunities. Moreover, dearth of technological skills also hindered the progress of Pakistan. Furthermore, instead of building socialist capital economy and bringing agricultural and industrial reforms, Pakistan lurked somewhere at the verge of mixed economy which further aggravated the situation. Going forward, in order to capture the path of progress, Pakistan must adopt export oriented policies along with investing in human capital so that it can progress incessantly.
The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan