Asia's economic growth must be equitable, says ADB President

17 August 2011

Haruhiko Kuroda with Dr Michael Spence (right) and Professor John Hearn (left).
Haruhiko Kuroda with Dr Michael Spence (right) and Professor John Hearn (left).

Asia is at risk of instability unless its dynamic growth of recent decades becomes more equitable and environmentally sustainable, according to one of the region's financial leaders.

Haruhiko Kuroda, President of the Asian Development Bank, spoke at an International Forum at the University today about Asia's 'unfinished agenda' - the need for future growth to be socially inclusive and more widely distributed.

Speaking to an audience that included the Vice-Chancellor, Dr Michael Spence, Mr Kuroda said Asia had been the fastest growing region of the world for several decades, and now accounts for more than a quarter of global output. Over the past decade, exports from the region have grown by an average of more than 11 per cent per year.

He said there was no doubt that Australia has contributed to the region's growth and has benefited from its trade and investment links. In the last five years Australian exports to Asia have risen by an average of 15 per cent per year, driven by Chinese demand for coal and iron ore.

The growth of a large middle class in Asia also opens up huge opportunities for Australia as a provider of services including education, he said. By 2020 Asia is expected to have a larger middle class than the rest of the world put together.

But Mr Kuroda, a former advisor to the Japanese Cabinet, warned that the economic boom was only half the story, and that disparities between countries could easily destabilise the region.

Asia is still home to the majority of the world's poor, and progress towards achieving the Millennium Development Goals has been slow. Infant mortality in some areas is ten times higher than in developed countries, he said.

Policy makers would have to ensure that the region's growth was more evenly shared, and that there was wider access to opportunities and to basic public services such as health and sanitation.

He pointed out that economic progress has frequently led to environmental problems such as deforestation, land degradation and water and air pollution.

"We must ensure that future growth is socially inclusive and environmentally sustainable," he said.

Speaking after Mr Kuroda, Professor of Accounting Alex Frino said much of the focus for the unfinished agenda would be on China because of its size and economic strength.

But Professor Frino warned that China also faces problems, including an aging population and the knock-on effects of the fragile US economy. This poses a major threat to China's export market, not least because China's other major trading partners are also dependent on the well-being of the US economy, said Professor Frino.

Professor John Hearn, the Deputy Vice-Chancellor International, said higher education and research has a vital role to play in Asia's future. Universities are drivers of reform and innovation, he said, although the competition for talented staff and students will only increase.

The Forum was organised by the International Portfolio as part of the Sydney World Program. The next event in the series will be a Forum with OECD Deputy Secretary-General Aart de Geus on 30 August.

Contact: Richard North

Phone: 02 9351 3191

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