Bridging development and trade gaps can make Asia-Pacific world economic centre of gravity - ESCAP

Wide gaps in human development together with inadequate physical infrastructure and intraregional trade are holding back the Asia-Pacific region from taking its rightful place as the global economic centre of gravity, the top regional United Nations official said recently.

“Changes taking place in the world economy are likely to catapult the Asia-Pacific region as the centre of gravity of the world economy with China, India and Indonesia emerging as the growth poles for not only the region, but also the entire world,” UN Under-Secretary-General and Executive Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP), Dr. Noeleen Heyzer told the Indonesia International Conference 2011 in Jakarta.

However, the region must address major challenges before it can realise its economic potential and reclaim “the pre-eminent position it had for most of human history,” the ESCAP chief cautioned.

The Indonesia International Conference 2011 brought together leading thinkers, Governments, multilateral agencies, international trade bodies and civil society representatives to analyse critical global political, economic and social issues.

“One should not underestimate the downside risks and policy challenges that the region faces in sustaining its dynamism that is so critical for closing the development gaps and catching up with the advanced countries,” Dr. Heyzer noted in her keynote address. Other key speakers included Dr. Mari Pangetsu, Minister of Trade, Indonesia and Dr. Marty Natalagwa, Minister of Foreign Affairs, Indonesia.

An immediate concern is the sharp rise in global food and energy prices which, according to ESCAP estimates, could delay and reverse progress in poverty reduction in many countries in the region.

The emerging economies in the region also have to cope with the adverse impact of volatile capital inflows which threaten economic stability.

The most basic challenge facing Asia-Pacific economies in the medium term is to reduce their traditional reliance on export markets in the slowing developed economies by deepening intraregional trade and investment, Dr. Heyzer said. “ESCAP analysis shows that consumption has failed to keep pace with growth in East Asian countries while investment has failed to keep up in ASEAN countries including Indonesia.”

There is considerable potential for a further boosting of trade among Asia-Pacific countries which has grown much faster than the region’s trade with the rest of the world. ESCAP studies show the presence of “considerable complementarities – in terms of matching imports of one country to buy exports of partner countries, within and between subregions,” Dr. Heyzer noted.

Realising this potential will require improving physical and trade connectivity within the region by developing transport links and harmonising international business procedures.

These challenges provide the region with a “historic opportunity to rebalance its economic structure in favour of itself to sustain its dynamism with strengthened connectivity and balanced regional development, and to make the 21st century a truly Asia-Pacific century,” the ESCAP chief concluded.