Transcript 1. Moving to higher value added regional trade

ASEAN ECONOMIC Community
A Long Term View
Mathew Verghis
Lead Economist
The World Bank
DTN Annual Symposium 2012
AEC 2015 and Beyond
February 24, 2012
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A Preview
• In the long term: Asian Century or Middle
Income Trap?
• What trap?
• Claiming the Asian Century
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Asia could enter the
Asian Century by 2050…
Sub Saharan
Africa, 2%
Middle East &
North Africa, 3%
Rest of
World, 2%
Europe, 18%
Latin America &
Carribean, 10%
Asia, 52%
North America,
13%
Asia GDP: $174 trillion
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…Or could enter a Middle Income Trap!
Middle Income Trap Scenario
Middle East &
North Africa, 5%
Sub Saharan
Africa, 4%
Rest of World, 2%
Europe, 28%
Asia, 31%
Latin America &
Carribean, 9%
North America,
21%
Asia GDP: $65 trillion
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2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
Gross National Income per capita (2000 constant USD)
Current trajectory not encouraging
$25,000
GNI per capita (2000 constant USD)
$20,000
$15,000
China
Korea, Rep.
Malaysia
$10,000
Taiwan, China
Thailand
$5,000
$-
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What trap?
 Global environment might be less favorable
 Reaching limits of low-wage based
manufacturing
 Environmental concerns
 Growth with equity
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What could be the new sources of
growth for ASEAN?
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1. Moving to higher value added regional trade
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1. Moving to higher value added regional trade
ASEAN can increase exports of finished
products to China
Share of processing imports in China’s total imports by country of origin, 2007 (%)
Share of Processing Imports in Total Imports
70
60
50
40
30
20
10
0
Australia Vietnam Indonesia
EU-19
Canada
United
States
Malaysia
Japan
Thailand Singapore
South
Korea
Philippines Taiwan
Countries
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2. Skills Development to Move Up Value-Chain
Lack of skills and skills mismatch are major
obstacles to firms’ operations in ASEAN
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2. Skills Development to Move Up Value-Chain
Skill Gap in Creativity, Leadership and English
are largest
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2. Skills Development to Move Up Value-Chain
Increased quality of higher education would
help raise competitiveness of ASEAN countries
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2. Skills Development to Move Up Value-Chain
Quality of basic education is key to
further skills improvements
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3. Services Sector as a new engine of growth
Rising services share have led the way for
successful economies
80
Services (% of GDP)
70
60
40
30
China
Korea, Rep.
Malaysia
Taiwan, China
Thailand
20
10
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
Percent
50
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3. Services Sector as a new engine of growth
ASEAN members maintain high level of
restrictiveness in services trade
Services Trade Openness
60
Thailand, EAP and OECD
50
PHL
IDN
CHN THA
MYS
OECD
30
40
VNM
ITA
FRA
FIN
KOR JPN
PRT BEL
CAN
DNK
AUS
GRC
AUT
USA
DEU
HUNCZE
ESP
SWE
GBR
IRL
NLD
NZL
20
KHM
10
MNG
5
6
7
8
9
Log of GDP per capita
EAP economies
10
11
12
OECD economies
Source: Borchert, Gootiiz and Mattoo, "Policy Barriers To International Trade in Services:
New Empirical Evidence", World Bank: forthcoming.
Note: GDP per capita taken from WDI, 2007 PPP data in constant 2005 international US$
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4. Making sure growth is Sustainable…
…Environmentally and Socially
CO2 missions per capita
Stockhom
3.6
PARIS
4.6
TOKYO
4.7
4.9
JAKARTA
6.0
HONG KONG
7.8
NEW YORK CITY
9.6
LONDON
SINGAPORE
9.7
10.1
BEIJING
10.7
Bangkok
13.0
LOS ANGELES
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
tCO2e / capita
Buildings
Power
Industry
Ground Transportation
Aviation and Marine
Waste
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THANK YOU
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