Drivers and Trends in a Changing Asia

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April 22, 2015

Will Malaysia continue its trajectory of economic growth, or will it get caught in the so-called middle-income trap? Will Myanmar successfully shake off the legacy of decades of military rule and violent conflict and transform itself into a peaceful and thriving market democracy? Will the new, China-led Asian Infrastructure Investment Bank be a boon to rules-based Asian development, or just a challenge to America’s rebalance to Asia?

As the nations of Asia embrace what many have dubbed “The Asian Century,” they face an array of new and complex questions. These questions fall into broader categories of economics, geopolitics, demographics, gender relations, technological change, and democratic governance. As The Asia Foundation enters its 61st year of partnerships throughout Asia, we have identified some of the fundamental drivers and trends that will shape the region in the years ahead.

In most countries in Asia, there is now gender parity in elementary education, but higher education is often still unequal, and economic empowerment for women remains an unachieved goal. Photo/Conor Ashleigh

Amidst the rapid and continuing growth of Asian economies, there are some essential nuances to keep in mind. First, global integration will render Asia more vulnerable in the future to economic forces from outside the region, whether unrest in the Middle East, economic crisis in Brazil, a change of interest rates in the United States, or a general slowdown in Europe and North America. The fast-growth countries of Asia will need to rely more on domestic consumption and regional trade to drive continued expansion. Interestingly, into this mix come possible new institutions, such as the China-led Asian Infrastructure Investment Bank (AIIB), offering new visions for continuing economic growth.

The advent of the AIIB also underscores a general geopolitical shift towards Asia, reflected most clearly in the continuing rise of China. Some worry about Chinese assertiveness – pointing to island construction in the South China Sea or the Air Defense Identification Zone in the East China Sea – while others focus on China’s rapidly growing investment, trade, and foreign aid. India is another factor in this geopolitical shift towards Asia, as it strives to increase its economic clout while shifting its foreign policy from “look east” to “act east,” more actively engaging countries in Southeast and East Asia. Meanwhile, the United States has famously been “pivoting” to Asia, with its (possibly fraught) Trans-Pacific Partnership and increasing engagement with Australia, India, and ASEAN.

Underlying forces shape all of these developments. Demographic shifts continue, and vary across the region. After decades of worry about excessive population growth in Asia, Japan and South Korea now face the growing burden of aging societies, with fewer working-age citizens to support the growing population of elderly, while China and Thailand will soon be in the same situation. Other countries in the region – India, Timor-Leste, Afghanistan, Laos, and the Philippines – still have the familiar “youth bulge,” which, under the right economic conditions, can be an economic boon as a robust work force drives growth.

One social change that is already advancing is the gender revolution. In most countries in Asia, there is now gender parity in elementary education, but higher education is often still unequal, and economic empowerment for women remains an unachieved goal. Political participation in much of Asia is far from equal, and even in countries such as the Philippines that have a low overall gender gap, women lag the most in political empowerment. In some instances, change will be slow and painful, as conflict over gender roles can lie at the center of a broader conflict between “traditional” and “modern” views of life.

Rapid and accelerating technological changes will continue to be the most striking driver of change across the region. While the acceleration in other trends has been gradual, technological change has been accelerating geometrically (as predicted by Moore’s Law); and while rates of change in the underlying technologies are fairly predictable, product and process innovation have produced completely unanticipated and often disruptive changes. A highly interconnected global “ecosystem” is tying together a vast array of services: wireless connectivity, increasingly sophisticated software, and vast storage capacity and blindingly fast computing in the cloud, all available through handheld devices. By some estimates, 80 percent of Asian adults will have access to the Internet by 2020, mostly through smartphones, the prices of which are now plummeting. The economic, social, and political consequences of all this are unpredictable, but are sure to be huge.

Recent eulogies for the late Lee Kuan Yew have reflected on how much Asia changed in just his lifetime, exemplified by his own Singapore, which surged from post-colonial poverty to become a prosperous city-state. One complex legacy of Lee Kuan Yew is the continuing discourse about governance, citizen participation, and the meaning of democracy. In the West, there are concerns that the great Third Wave of Democracy has stalled and begun to retreat in the face of difficulties that advanced democracies like the US have encountered in the general task of governance. There has been much discussion of the idea that “democracy” and “Asian values” offer alternative models of governance. Militant Islamic movements reject secular democratic governance altogether, and the explosive rise of the Islamic State may yet produce echoes in some quarters in Asia. Resolving such debates can be complex when state institutions still labor under colonial legacies or the excessive influence, as in Cambodia and Timor-Leste, of the international community. Such institutions often do not mesh well with the underlying society, hampering effective governance and responsiveness to citizens’ needs and desires.

It seems certain, as we look ahead across Asia, that the next few decades will be just as thrilling, surprising, confusing, and challenging as the recent past – a prospect that excites us all.

Steven Rood is The Asia Foundation’s country representative in the Philippines. He can be reached at steven.rood@asiafoundation.org. Bill Cole is the Foundation’s senior director of program strategy, innovation, and learning in San Francisco. He can be reached at william.cole@asiafoundation.org. The views and opinions expressed here are those of the authors and not those of The Asia Foundation.

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