Southeast Asia, the new rising star in the global market

We have been referring to the developing economies in Asia as the “Asian Miracle” since they not only witness very high rates of sustained growth, but also underpinning that growth, rapid increases in labor productivity and the import, adoption, use and development of technologically sophisticated processes for generating high-value goods and services.

Southeast Asia's Labor Force By Flickr User Robert Scoble (CC).

Southeast Asia’s Labor Force By Flickr User Robert Scoble (CC).

According to some analysts, Southeast Asian economies are forecast to grow at an average of nearly six percent per year throughout this decade, despite the slowdown in other regions of the world. Based on the analysis of Eric J. Wailes and Eddie C. Chavez in their paper “ASEAN and the Global Rice Situation and Outlook“, the region is projected to account for 53% of net exports, 14% of net imports, 29% of harvested area and 25% of total production.

The region, home to nearly nine percent of the global population, is also home to a large and growing pool of highly skilled, low-cost workers, shaped over years of domestic and foreign capital investment. Moreover, the Southeast Asia region has a strategic location since it sits at the crossroads between China and India in Asia and USA, Australia and New Zealand in the Pacific which grants it a competitive advantage over other regions in the world.

Joshua Aizenman, Minsoo Lee and Donghyun Park shed light in their paper “The Relationship between Structural Change and Inequality: A Conceptual Overview with Special Reference to Developing Asia” on the reasons behind the economic success in Southeast Asia. They explain that an indispensable core ingredient behind developing Asia’s remarkable economic success has been the explosive growth of trade with the rest of the world and with other countries within the region. Equally important to the region’s rapid growth has been the large inflows of FDI and other foreign capital into the region. The region has now become a globally significant exporter of capital, in addition to its technological progress, which has steadily shifted the region’s technological level toward the global technology frontier.

Southeast Asia’s economic, political, and market factors, combined with a landscape focused on attracting capital and development, have created an environment ripe with opportunity, but one still fraught with challenges. For example, transmission of HIV/AIDS, transnational crime including drug trafficking, human trafficking, piracy, labor migration, political instabilities including ethnic conflicts, financial market volatility, geographic challenges especially natural disasters and trans-boundary pollution are some threats facing the region.

By jointly taking action on issues that transcend national boundaries, countries can maximize their development prospects and increase their capacities to alleviate poverty, promote regional peace and security, and achieve sustainable development. Cooperation that further integrates the region expands opportunities to realize faster and more equitable economic growth and higher achievements of human development for South-East Asia.

It is important to reduce cross-country inequalities so that the whole of South-East Asia can compete on even footing with the rest of the world. Any lag or bottleneck in one part of the region could drag the rest, thus special attention, assistance, and cooperation within the region are highly recommended!

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