Rethinking growth in Asia and the Pacific

November 9, 2023

The region can once again show the way – by forging ahead on an evolved path of human development

Over the past few decades, Asia and the Pacific has seen faster progress in human development than any other region in the world. No statistic illustrates this better than the 1.5 billion people that were lifted out of extreme poverty, with China accounting for 770 million of them. This advancement has empowered many to enjoy improved health, wealth and education.

But it has also been tainted by environmental degradation, climate change, erosion of biodiversity and persistent socio-economic disparities. Millions in the region continue to live precarious lives amid entrenched inequalities and, alarmingly, there has barely been any catching-up on human development across countries.

This is the moment for the region to confront the dual challenge of producing growth that is both fast enough and of the right kind – the kind that is more inclusive and sustainable. This can mean taking big and bold decisions to pivot from old growth pathways to new ones. In these turbulent yet transformative times, such changes must happen when new patterns in globalization are combining with intense demographic and technological change to produce formidable headwinds to the established drivers of growth and job creation.

How to recalibrate growth strategies is one of the central questions posed in the recently launched 2024 Regional Human Development Report titled Making Our Future: New Directions in Human Development for Asia and the Pacific. The report by the United Nations Development Programme proposes three central recommendations for countries to consider as they recalibrate economic pathways to power human and green development.

First, ensure that growth aligns with combating climate change. Science and the evidence show that these can no longer be treated as antithetical. The region’s CO2 emissions surged from 23 percent of global output in 1990 to 48 percent in 2022, reflecting its carbon-intensive industries. It is urgent to transition to carbon-neutral, climate-resilient models. China can inspire this transformation – leveraging its leadership in renewable technology and expertise in green development, which itself could be a driver for growth and job creation. And let us bring back to the centre the forgotten value of biodiversity. The region’s “right kind of growth” must prioritize biodiversity protection, adhering to the Kunming-Montreal Global Biodiversity Framework, to counter the observed decline, even its significant destruction, due to prevailing growth trajectories.

Second, complement growth policies with a people-centered focus on expanding choice and reducing insecurity. The region continues to grapple with persistent structural exclusion – be it in the form of 800 million women out of the labor force or 1.3 billion people working outside the formal sector. Countries must prioritize access to quality education and healthcare, adapt and modernize social protection to evolving needs, and improve food and energy security for all, so that all people can improve their lives and well-being. Through such means, the report refers to building greater resilience by placing the gains from human development on a more solid footing. We note that exclusion has hurt economic and social opportunities and rights significantly in the region. A razor-like focus on achieving women’s equality could boost the region’s annual GDP by $4.5 trillion by 2025, and including people with disabilities in formal employment could raise GDP by 1 percent to 7 percent.

"This is the moment for the region to confront the dual challenge of producing growth that is both fast enough and of the right kind – the kind that is more inclusive and sustainable."

Third, maximizing the potential of domestic markets and strengthening external competitiveness. Export-led growth for the region remains a viable strategy. However, given the current headwinds, it would require a greater focus on serving consumers in fast-growing international markets and building competitiveness to capture a greater share of value chain income and jobs. China can be a reference point, demonstrating the ongoing importance of investments in upskilling and innovation for the workforce of the future – if accelerated, these could add as much as $1.98 trillion to GDP of the region by 2030. Domestic integration and subnational specialization can also produce further dividends in domestic markets.

Within the region, cutting across these recommendations is also a need to pay greater attention to implementation. In other words, to make change happen. Turning these ideas into action requires proactive and visionary leadership that can swiftly adapt and reallocate resources towards new policies and programmes; build consensus by encouraging public discourse and feedback; and use all means at hand, including fiscal instruments, to incentivize the adjustments or new policies required.

We are confident that Asia and the Pacific region can once again show the way – by forging ahead on an evolved path of human development. Growth that is based on human development imperatives will be an important part of the region’s future narrative, acting as a driving force for progress that benefits both current and future generations.

Kanni Wignaraja is UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific.

Beate Trankmann is UNDP resident representative in China. 

Originally published in China Daily.