Asian economies, in the most dynamic region of the world economy for the foreseeable future, have an especially important role in shaping any future global agenda.
With US unemployment still above 9 percent, and employment problems expected to continue for the next while, authorities in China, Japan, Korea and Southeast Asia realize they must be less dependent on US (and European) consumers, and rely more on domestic and regional demand in Asia, and fostering the growth of new and emerging markets – even while contributing to the stabilization of the high-income economies.
In Asia, the domestic priority is now on adjusting growth and development models towards stronger internal and intra-regional capacity for sustainable growth. For example, to reduce excess current account surpluses, even as it continues to develop, China is undertaking domestic reforms to:
- strengthen social safety nets, including pension and health insurance programs;
- further develop physical infrastructure to reduce supply bottlenecks to sustainable growth; and
- increase investment in the engines of sustainable long-term growth, such as energy and resource efficiency, renewable and clean energies, green transportation and cities and quality-of-life services such as health care and sanitation.
A number of countries in Southeast Asia, as well as Brazil, Russia and the emerging economies of Africa and South America, have similar developmental needs.
However, it is equally important that Asia develop new means for redistributing its accumulated surpluses to other parts of the world. The sub-regional “Connectivity” projects backed by the Asian Development Bank that link South and Southeast Asia, and Central Asia, are a promising start. Asia is now putting concerted attention into ways of redistributing wealth to other zones of the South (as well as the already-developed North).
One area where Asia has unique experience is in looking beyond trade to the importance of investment in creating new jobs, and providing the accompanying infrastructure. Interestingly, Inter-American Development Bank officials suggest that Asia has a unique track record in establishing international production networks that span the region, as well as mobilizing the financial resources needed for the massive investment in economic infrastructure, especially the transport and communications links that support such integrated production. Asia’s experiences also demonstrate that governments — the public sector — have a vital role to play in supporting such investment; however, the scale of investment needed for megaprojects often exceeds what can be generated by government alone, in the form of government grants or soft loans. Private sector resources sometimes need to be marshalled, in partnership with the public. Asia has much to offer here, from resources management, innovative financing, technical expertise on engineering and design, to project management. The world is at the start of a new phase, with opportunities for what Justin Lin, chief economist of the World Bank, calls “Three-way Learning” — involving South-South and South-North, as well as the traditional North-South, relationships.
Principles and Modalities for France
To date, much of the G20 debate has been dominated by calls for burden sharing. The global discussion would benefit from a reframing to benefit sharing. This sentiment underlies the guiding slogan from the Seoul G20 Summit last November — the first leaders’ summit to be held in Asia: “Shared Growth Beyond Crisis.”
One way to address global imbalances is through coordinated benefit sharing — via the international redistribution of national surpluses and excess domestic savings — for the provision of global public goods.
The G20 can make a difference on global benefit sharing if it concentrates on a few vital issue-areas and provides for policy convergence, matching supply with demand for targeted global public goods. A viable approach is to focus first on building new consensus on principles and modalities for global benefit sharing. What is called for here is a principles-based approach, followed next by concrete programs of shared growth.
For actors such as Canada, Japan, the United Kingdom, Australia, the US and the European Union, the G20 can serve as a useful forum for building new international consensus with the rising non-Development Assistance Committee donors (such as Brazil, India, China, Turkey and most recently, Ecuador) on innovative options for meeting commitments on global health and climate change.
The G20 can also encourage policy that facilitates the financing of infrastructural investment via new combinations of public spending and global or regional capital markets. There is a deep reservoir of experience in Asia and elsewhere, which may provide lessons to be shared, both good and bad, about the financing of infrastructure.
Asian members of the G20 can draw on their own past success and experience and play a greater role in helping to set the vision and ambitions for global realignment and systemic reform — changes that are crucial to achieving more balanced and sustainable global growth.
Asia has resources to share in a globally coordinated effort of benefit sharing.
If the French G20 presidency can help mobilize some of Asia’s resources for the global good and support its rise to leadership, it will have made a big difference.
Gregory Chin is a senior fellow and acting director of the Development Program at The Centre for International Governance Innovation.