Speaking at the International Conference on Balancing Economic Growth and Social Strengthening in Bangkok on 13 March, the UNCTAD Secretary-General warned Asian policy makers against complacency and taking satisfaction from the difficulties now facing advanced economies.
"In our globalized world we are in the same boat and we must understand that we will sink or swim together," Dr. Supachai said.While noting that winners have certainly emerged from finance-driven globalization, most prominently in East Asia, he cautioned that growth has been uneven in the developing world and there have been recurrent shocks and crises in many regions. He also noted that growth in gross domestic product alone does not lift all boats and has been accompanied by increased inequality in many countries, resulting in millions of people being left behind.
However, it is not a question of choosing between economic growth and social strengthening since the two are closely intertwined and form what UNCTAD has termed as inclusive development paths, he said.What is needed is a systematic rebalancing of the agenda and a more pragmatic approach to policy, the key components of which include strengthening the employment content of growth, improving income distribution, extending social protection, and ensuring full participation of women.
Dr. Supachai also warned against falling into the "middle income trap"
whereby instead of continuing to growsteadily after reaching middle income status, countries in this trap have bursts of growth followed by periods of stagnation or decline, or are stuck at low growth rates, unable to compete in manufactured exports with low-income, low-wage economies, but also unable to match the high-skill innovations of advanced economies. Avoiding this middle income trap would require social strengthening as well as investment in education, skill development and technological capabilities so as to allow countries to compete in higher value-added sectors, he said.
Noting that Asia has accumulated more than US$3.5 trillion in foreign exchange reserves and that according to the more optimistic projections of the Asian Development Bank, by 2050 Asia will account for more than 51% of global GDP and about 45% of global financial assets, Dr. Supachai felt that Asia has both the opportunity and responsibility to shape the rules of the global financial system to prevent recurring crises, starting at the regional and domestic levels.
Inclusive and sustainable development is a main theme for UNCTAD XIII in Doha next month. Innovation and technology, capacity-building, role of women in development, and financial reforms are also expected to feature in complementary panel discussions and side-events at the conference.