Saturday, April 30, 2005

Get serious about Asia, too

International Herald Tribune
Monday, July 8, 2002

The G-8 should wake up

by Thang Nguyen

GENEVA--As in Africa, there are developing countries in Asia which could use assistance from the Group of Eight partners to deal with health, education, governance, agriculture, environment, trade, investment, poverty and security. A recent study by the World Bank shows that 43.5 percent of the world's population that lives on less than $1 per day is in South Asia, and 23.2 percent is in East Asia and the Pacific region. Other studies by UN agencies show that Asia is on the low end of such spectrums as education, health and the digital divide.

For much of the second half of the 20th century the Asian economic miracle fueled an enormous amount of wealth in the region. Countries like Thailand, Indonesia, South Korea and Malaysia were transformed into newly industrialized economies.

Yet at the same time Vietnam, Laos and Cambodia were still fighting wars, against foreign powers or one another. As these countries concentrated their economic resources on fighting wars or dealing with other conflicts instead of development, they fell far behind in the development race.

When the Asian financial crisis of 1997 came, the most prominent victims were the Asian Tigers - Indonesia, South Korea, the Philippines and Thailand.

Today Asia still experiences political instability. Since 1998, when democratic movements removed President Suharto from power, Indonesia's internal conflicts have worsened. President Gloria Macapagal Arroyo, who is perceived as an able leader, took office at a time when the Philippine economy was at one of its worst points and other problems, such as the Abu Sayaff rebels, became more serious. In South Asia, the Kashmiri insurgency between India and Pakistan has been escalated to a near-war stage.

Perhaps it is time that someone follow in Bono's step and take leaders of the industrialized world like U.S. Secretary of the Treasury Paul O'Neil and Prime Minister Chr้tien, both of whom have toured Africa, to India, where there are people who live on less than $1 a day, children who are unvaccinated and unschooled, and old women and men who are dying of curable diseases.

The time is right for an Asia Action Plan to be proposed to G-8 countries. This plan would be a combined and balanced package of aid, increased trade and investment. The reason is that there are developing countries in Asia which are not yet at the takeoff stage at which they can grow independently by exporting well and having enough capital flows.

In order for aid to work in Asia, or any other developing region for that matter, it must be given in a draconian, performance-based manner. If recipient countries do not show results, donor countries have every reason to cut off their aid.

In addition to monitoring the results of aid, donor countries should make sure that it goes to areas such as education, through which a country's productivity can be increased. As the Chinese proverb says, teaching a man to fish is better than giving him a fish.

Developing countries in Asia have to do their utmost to bring about and sustain political stability. Their leaders must show both a genuine sense of commitment to reforms and act on what they say they will do to better their countries. Otherwise their countries will be too risky to foreign investors.

They have to ensure good governance, transparency and a competent labor force. It may seem a clich้, but these are the ways in which Asian developing countries can make themselves more competitive in the world economy if a plan like this is launched by leaders of Asia and the G-8 countries. The developed world has three options. First, enjoy the fruits of economic growth while the inequalities between itself and the developing world keep widening. Second, be held back by the underdeveloped world and cause global anger at the same time. Third, help the underdeveloped countries to grow and thereby make the world a more just and livable place.

The writer is regional manager, Asia, for the World Economic Forum. He contributed this comment to the International Herald Tribune.


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