'Locomotive of prosperity' may be losing steam

Because Asia cradles more than half of humanity, its future is the world's future.

In the last decade, this region stretching from Mt. Everest to the corals of Tahiti leaped ahead at a much faster pace than the bedraggled Western economies.

''Who would have thought 15 years ago that Asia would be the success that it is today?'' says C. G. F. Simkin, author of a just-released United Nations report on the region.

In many Asian newspapers, for instance, advertisements for buying real estate in Florida are common. It's just one sign of surplus wealth in the region. And like farmers at planting time, foreign banks are seeding down branch after branch in Asian capitals.

Some economists look to Asia as a ''locomotive of prosperity'' pulling the world out of recession.

''In the 1980s, Southeast and East Asia have a fair chance to become the fastest-growing region in the world, and to make further progress in a more equitable distribution of income,'' says Ulrich Hiemenz, an economist with the Asian Development Bank.

Asia's economic success, however, remains unusually dependent on its ''tao'' -- trade, aid, and oil. In the past year, all three have taken on dangerous uncertainty. Asia's ''growth bowl'' may not be filling up so fast as once expected.

Just two decades ago, Asian nations were almost equally poor. Today growth rates of gross domestic production vary from 11 percent in Singapore to below zero percent in Nepal.

This new economic dualism reflects Asia's two cultures: the Neo-Confucian and the Indian, which are the East and West of this none too cohesive region - and the twain hardly ever meet in their approach to business.

During the 1970s, the subcontinent countries, especially Nepal and Bangladesh , made little headway against poverty as they struggled with near-famines, poor farming, and political unrest. The Far East nations, however, most of which have at least some Chinese populations, weathered the 1970s unexpectedly well, with growth rates two to three times those in the West. And they kept inflation amazingly low.

A noticeable exception among the Far Eastern dynamos is China, which has just begun to open the door a crack to free enterprise and will likely remain a largely agricultural nation to the year 2000.

''The Chinese outside of China show incredible entrepreneurial skill when given liberty and certainty. But in their own country, the Chinese show little genius for governing themselves in achieving economic progress,'' says the UN's Dr. Simkin.

Japan, with nearly half of Asia's economic output, remains an anomaly in the region by being a member of the club of industrialized nations, to which it sends most of its exports. Yet last year's unexpectedly low 3.5 percent economic growth in Japan, and a projected 3.8 percent this year, have forced it to shift its focus of economic adventurism onto the nearer and growing markets of Asia.

The middle-income countries of Indonesia, Malaysia, Thailand, and the Philippines have been striving with some success for more industrialization like their eastern neighbors of Taiwan and South Korea. These four closely allied nations must still struggle to drag up the poor by trying to create jobs and surplus wealth in their largely agricultural countryside.

Many Asian nations are reaching the limits on available farmland. More than half their people till the soil -- and have been ripping up precious jungle forests when their old lands lose their fertility.

In China, for instance, with a population of more than 1 billion and an area of some 3.7 million square miles, population density remains three times the world average. In India, land scarcity is reflected by the 38 percent increase in urban population since 1970, resulting from continuing migration of landless, jobless rural folk.

In the 1970s, the new ''miracle rice'' created a Green Revolution, and food self-sufficiency was almost reached in many countries. Production of grains rose 1 percent a year per person.

But the effects of oil price increases, still seeping down into the economy, make the cost of irrigation, fertilizers, and pesticides almost too much for poorer farmers. They must achieve higher productivity on present land if national food output is to keep pace with growing populations.

Agricultural progress has begun to slow, jeopardizing efforts to reduce rural poverty, concludes the UN's Economic and Social Commission on Asia and the Pacific.

Faced with Western values and the idea that modernization means industrialization, Asian nations find it difficult to deal squarely with the problem of feeding themselves.

''It has become increasingly recognized that agricultural progress is important for general economic progress, and especially in the larger or poorer countries of Asia . . . ,'' the UN report concludes.

Any limits on agricultural progress could mean fewer jobs for rural peasants who have been drifting to cities in increasing numbers. As that migration to the cities continues, the 1980s could see greater pressures on business to expand into more labor-intensive, not capital-intensive, industries.

If Asia appears unified in any aspect, it may be in having a majority of strong centralized governments.

These range from virtual martial law in the Philippines, to the heavy tactics of Indira Gandhi in India, to long-term domination by one party in Japan (the Liberal Democrats have governed continuously since World War II), to communist government and variations on the theme of one-man rule.

Asia's limited tolerance for open political debate reflects its people's desire for consensus-style governance, and also the historical precedent of feudal states with pyramidal structures in which a small elite ruled over rural masses. Just what indigenous forms of democracy or oligarchy eventually take shape await years of economic progress.

Yet in many nations, the tug-of-war between free-marketers and those wanting controlled economies has gone to the side of more freedom. Government leaders have been pushed to open enterprise by the World Bank, the deep problems from oil price shocks, and the hard-to-pass-up models of the Far East ''economic dragon'' nations of Taiwan, Singapore, South Korea, and Hong Kong.

While the creation of new wealth from agriculture remains the No. 1 problem, other factors influence Asia's prospects for staying ahead of global growth.

''The future economic development in the Asian region [and elsewhere] will be burdened by even greater uncertainties than the past,'' states Mr. Hiemenz of the Asian Development Bank. For one, political turbulence in Indochina destabilizes not only Vietnam, Kampuchea (Cambodia), and Laos, but almost all of Southeast Asia. And the slow or fast emergence of China in world markets, like an elephant joining a roomful of tigers and cows, will set Asia's long-term direction.

More immediate concerns, however, are Western recession and world oil prices. So far, both have not greatly tarnished Asia's financial or export picture.

The pause in oil price rises has given breathing room for oil alternatives. The downward trend in exports to the West of Asia's raw commodities and assembled products has raised unemployment, but if Western economies pick up by late 1982, no serious damage is expected, and growth rates will quickly rise again.

With its high growth, Asia ably fills financial gaps with easy credit from international banks.

After achieving rapid growth in their industrial sectors during the 1970s, Asian nations are now making a difficult shift toward competition in the international market.

Many industries remain oriented to domestic markets and protected from international competition. But the 1979 oil price increase caused such a balance-of-payments problem that industries have been encouraged to become export-oriented, while also providing new jobs.

And international agencies have pushed for an end to protective tariffs for local industries. This poses political risks for some governments, which get around the pressure by such steps as offering artificially low interest rates on loans or gradually devaluing their currencies to boost exports.

Asia's industrial structure will have to make rapid changes because of growing labor surpluses (South and Southeast Asia), rising wage levels (East Asia and Singapore), and widening payments deficits (all oil-importing countries).

Population increases remain an obstacle to long-term growth.

Many Asian nations made easy initial successes in the 1970s in trimming birthrates, especially Indonesia, India, China, Singapore, Thailand, South Korea , and Sri Lanka. To persuade peasants to stay on family planning or to further reduce their number of children will be very difficult. And some nations, such as the Philippines, Bangladesh, and Pakistan, still have population growth rates of nearly 3 percent, which can negate any food or economic gains.

You've read  of  free articles. Subscribe to continue.
QR Code to 'Locomotive of prosperity' may be losing steam
Read this article in
QR Code to Subscription page
Start your subscription today