Has COVID-19 Killed Asia’s Growth Miracle?
Asian economies must now continue to pursue catch-up growth, deeper regional integration, and further globalization in a much-changed and far tougher environment. Countries with large domestic markets will be especially tempted to localize production, potentially spelling the end of global supply chains.
SINGAPORE – For decades, most Southeast Asian economies climbed the income ladder by pursuing a growth strategy based on ramping up investment in export-oriented manufacturing and services, relentlessly upskilling their domestic workforces, and leveraging technological advances.
Today, the ASEAN+3 countries – the ten member states of the Association of Southeast Asian Nations plus China, Japan, and South Korea – can be proud of their accomplishments. The region’s economic transformation has been breathtaking, from its rising per capita income and share of global GDP to its human capital development and rapid ascent of global business competitiveness rankings.
The region has become the “factory of the world,” with highly efficient and cost-effective supply chains. Its success hinges on individual economies benefiting from cost efficiencies by specializing in the production of key components of increasingly complex products, supported by global demand resulting from trade-driven growth. And this growth strategy remains viable today, even as advanced and emerging economies alike shift to the technology-driven “new economy.”