PHNOM PENH, Cambodia, 29 June 2006 – Free trade can benefit the poor of Asia-Pacific if countries adopt bold new policies that harness trade and economic growth to promote people’s well-being, the United Nations Development Programme announced today in the Asia-Pacific Human Development Report 2006, the first in a new annual series focusing on critical development issues in the region.
Opening to international trade has helped growth to soar and income poverty to substantially decline in many parts of the region, the Report acknowledged. Asia-Pacific now operates as the “factory of the world,” it said, both for cheap, labour-intensive manufactures as well as high-tech goods. East Asia’s “miracle” economies have especially used trade to multiply their exports and accelerate progress in combating the other aspects of deprivation, including education, health and gender equality.
Regional Growth Performance
| |
GDP growth (Average annual %) |
GDP per capita annual growth rate |
| 1980-1990 |
1990-2003 |
1990-2002 |
|
7.90 |
7.60 |
5.4 |
| South Asia |
5.50 |
5.40 |
3.2 |
| Europe & Central Asia |
|
0.60 |
-0.9 |
| Latin America & Caribbean |
1.50 |
2.70 |
1.3 |
| Middle East & North Africa |
1.30 |
3.20 |
- |
| Sub-Saharan Africa |
1.70 |
2.80 |
- |
Sources: World Bank, 2005a, IMF, 2004
Yet at the same time, trade has contributed to increased inequalities, not only between countries but also within national borders, among different areas, sectors and households. In addition, many of the region’s open economies – particularly the East Asian success stories – are creating far fewer jobs, especially for youth and women, and experiencing “jobless growth,” the Report warned. This has profound implications because employment represents the main channel for the effects of trade on human development.
Since 1990, some of the most trade-intensive countries, such as China and Singapore, have seen unemployment rates substantially increase. Moreover, the benefits of free trade have accrued more to highly-paid skilled workers rather than unskilled workers, further undermining human development.
Asia-Pacific region's share in world trade, 1973-2000 (%)
Source: WTO, 2005
Determined action on the part of governments’ necessary
“Asia and the Pacific have embraced globalization, but globalization cannot embrace the region’s poor without determined action on the part of governments,” said Hafiz A. Pasha, United Nations Assistant Secretary-General and Director of UNDP’s Regional Bureau for Asia and the Pacific, who officially launched the Report in a ceremony in Phnom Penh, Cambodia.
The Report outlines an eight-point agenda for national governments to make trade work more for the poor. The recommendations prioritise investments for competitiveness; adoption of strategic trade policies; a renewed focus on agriculture and rural development, which represents the bedrock for the poor; and strategies for combating “jobless growth.”
In addition, it urged preparation of new tax regimes; maintenance of stable and realistic foreign exchange rates; and strengthened regional cooperation. In particular, the Report says that the pooling of Asia-Pacific’s massive build-up of foreign exchange reserves represents an untapped windfall that can be used to finance the oil price shock affecting poorer countries and to promote investment in regional infrastructure.
Challenges for many countries to become ‘winners’
Some parts of Asia-Pacific, especially the 14 Least Developed Countries , or LDCs, and the Pacific Island countries, have been severely challenged by the lack of concrete
human development benefits from trade. These countries have been keen globalizers, but face tough terms in order to join the World Trade Organization, and are being out-competed and overwhelmed by exports from China, while also deriving few benefits from selling their own exports in the region’s largest market.
| |
Exports to China |
Imports from China |
Trade Balance |
LDCs
of which |
314 |
3560 |
-3246 |
| Bangladesh |
57 |
1906 |
-1849 |
| Cambodia |
30 |
452 |
-422 |
| Lao PDR |
12 |
101 |
-89 |
| Myanmar |
207 |
938 |
-731 |
| Nepal |
8 |
163 |
-155 |
| Low-income Countries |
11,460 |
12,945 |
-1485 |
| Middle-income Countries |
46,017 |
25,140 |
20,877 |
| Middle-Income Countries |
46,017 |
25,140 |
20,877 |
| High-income Countries |
247,109 |
228,419 |
18,690 |
| Total Asia-Pacific |
304,900 |
270,064 |
34,836 |
Source: IMF, 2006
“Asia-Pacific is a region of contrasts, and due to the tyranny of averages, the relatively poor performance of the Asia-Pacific Least Developed Countries gets less attention,” said Anuradha K. Rajivan, the leader of the multinational team that prepared the Report under the auspices of the UNDP Regional Centre in Colombo, Sri Lanka.
The Report, which Mr. Pasha described as “by and for the people of Asia-Pacific,” was the product of an extensive consultation process with hundreds of experts, scholars, government officials, representatives of non-government organisations, civil society and the private sector, and people from different walks of life.
Other key findings
Among other key findings of the Report, Trade on Human Terms: Transforming Trade for Human Development in Asia and the Pacific, were:
What was previously non-tradable has become tradable, especially in services, with great potential for short-term labour migration, business outsourcing and special-interest tourism to give people opportunities to rise out of poverty
The region has gained overall in the new quota-free era for textiles and clothing exports, but most of the gains have been pre-empted by China and India
In the face of trade barriers and distorted prices, agriculture has stagnated and Asia-Pacific has become a major importer, affecting both food security and rural livelihood
The Report argues that selective and properly sequenced opening up to trade remains the key to successfully managing globalisation.
“Trade and human development have a two-way relationship,” noted Minh H. Pham, Regional Manager of the UNDP Regional Centre in Colombo. “Overall, trade ‘winners’ and ‘losers’ are dependent on factors such as the pre-existing health, education and infrastructure development of a country, which then stimulates more growth.” In the “miracle” economies, for example, previous human development achievements had positively influenced their ability to take advantage of trade opportunities.
The United Nations Development Programme (UNDP) is the UN’s global development network, advocating for change and connecting countries to knowledge, experience and resources to help people build better lives. UNDP works in 37 countries in Asia-Pacific.
* * * * *
The UNDP Regional Centre in Colombo (RCC) was established in January 2005 to serve countries of Asia-Pacific. It is a regional hub for development knowledge and expertise, providing policy advisory and capacity development services in Poverty Reduction and HIV and Development, with Gender Equality as a crosscutting concern.
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From 2006 onward, Asia-Pacific Human Development Reports are evolving into an annual series. We expect the Reports to provide continuing analyses of critical development issues relevant at both the regional and country levels. The Asia-Pacific Human Development
Report Series will provide the region with a forum for furthering dialogues and structuring debates to support a pro-poor agenda.
For further information, please contact:
- Kay Kirby Dorji, Programme Advocacy and Media Advisor, UNDP Regional Centre in Colombo; email: kay.kirby@undp.org; telephone: (94-11) 452-6400 ext. 245; mobile: (94-77) 317 8556
- Aishath Jeelaan, Programme Advocacy and Media Officer, UNDP Regional Centre in Colombo; email: aishath.jeelaan@undp.org; telephone: (94-11) 452-6400 ext. 246; mobile: (94-77) 350 1776
Cherie Hart, Asia-Pacific Regional Communications Advisor, UNDP Regional Centre in Bangkok; email: cherie.hart@undp.or.th; telephone: (66-2) 288-2133; mobile: (66-1) 918 1564
In Geneva:
Jean Fabre, UNDP Deputy Director, Communications; email: jean.fabre@undp.org; telephone: (41-22) 917 8541
In New Delhi:
- Surekha Subarwal, Assistant Resident Representative, Communications and Advocacy, UNDP India; email: surekha.subarwal@undp.org; telephone: (91-11) 2462 8877 ext. 346
In London:
- Chandrika Deshpande, Communications Officer, UNDP Communications Office of the Administrator; email: chandrika.deshpande@undp.org; telephone: (44-20) 7396 5338, (44-9) 5746 0246
In New York:
- William Orme, Chief, Media Section, UNDP Communications Office of the Administrator; email: william.orme@undp.org; telephone: (1-212) 906 5388
