Asia 2050: Realizing the Asian Century

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Edited by: Harinder S. Kohli, Ashok Sharma & Anil Sood

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  • Chapters
  • Front Matter
  • Back Matter
  • Subject Index
    • Executive Summary
    • Makings of the Asian Century
    • Actions at Three Levels
    • National Action Agenda
    • Regional Cooperation
    • Global Agenda
    • Asian Century vs. Middle Income Trap
    • The Intangibles
    • Chapter 1: Introduction
    • Why an “Asia 2050” Study?
    • What is “Asia”?
    • Is the Asian Century Preordained?
    • Structure of the Book

    Part I: Makings of the Asian Century

    Part II: Realizing the Asian Century

    • Chapter 6: Realizing the Asian Century: A Strategic Framework
    • Three Dimensions
    • National Action
    • Regional Cooperation
    • Global Agenda
    • Chapter 7: Growth and Inclusion
    • Introduction
    • What Progress Has Asia Made?
    • Import Substitution, Export Orientation, Poverty, and Inequality
    • Poverty Reduction and the Millennium Development Goals (1990 to Date)
    • What is Inclusive Growth?
    • Why Focus on Inclusion and Equity?
    • What is Asia's Status?
    • Action Agenda
    • Chapter 8: Driving Productivity and Growth
    • Introduction
    • Why Focus on Productivity and Entrepreneurship?
    • Productivity and Entrepreneurship in Asia
    • Getting Entrepreneurship and Innovation Right: PRC and India
    • Key Elements of the Entrepreneurship and Innovation Ecosystem
    • Overall Policy Framework
    • Priorities and Action Agenda
    • Chapter 9: A New Approach to Urbanization
    • Looking Back 40 Years at Asian Cities
    • Asia's Urbanization Avalanche
    • Rural Development and Urban Development are Complementary
    • Cities of the Future
    • Major Risks to Be Managed
    • Priority Agenda for Moving to a Better Urban Future
    • Visionary Leadership
    • Chapter 10: Transforming Finance
    • Asia's Financial Rise: Past and Present
    • Alternative Scenarios of Asian Finance in 2050
    • Implications of the Asian Century for Asian Finance
    • Conventional Wisdom in Finance: The Great Recession of 2007–2009
    • Current Reform Proposals and Asia
    • Asia in the International Financial Architecture
    • Global Reserve Currency
    • Future Asian Financial System: Taming Finance to Serve the Real Sector
    • Transformational Changes to Serve the Real Sector
    • Transforming Business Models for Asia's Financial Institutional Structure
    • Regional Cooperation and Asia's Global Financial Leadership
    • Priority Action Plan for Asian Finance in 2050
    • The Importance of Using Global Best Practice
    • Asian Finance as a Global Leader
    • Chapter 11: Reducing Energy Intensity and Ensuring Energy Security
    • Introduction
    • Historical Perspective: Evolution over 40 Years
    • Implications for Energy Security
    • Implications for Climate Change
    • Improving Energy Security Through Efficiency and Diversification
    • Minimizing Damage from Sudden Supply Disruptions
    • Priorities for Domestic Action
    • Priorities for Regional Cooperation
    • Chapter 12: Action on Climate Change in Asia's Self-Interest
    • Emerging Economies' Contributions to Global Emissions
    • Impact of Climate Change: Business-as-Usual Scenario
    • Impact of Climate Change: Mitigation by Developed Countries Only Scenario
    • Impact of Climate Change: Complementary Mitigation Actions by Developing Asian Economies Scenario
    • Transition to Low-Carbon Economies
    • Adaptation and Risk Management
    • Global Burden Sharing
    • Chapter 13: Transforming Governance and Institutions
    • Analytic Framework
    • The past 40 Years
    • Governance Challenges in Asia Today
    • The Corruption Dimension
    • Drivers for Change in Governance and Institutions
    • Key Actors of Institutional Change
    • Principles and Priorities
    • Chapter 14: Regional Cooperation and Integration
    • The Importance of Regional Cooperation for Asia's Future
    • Cooperation Instead of Conflict
    • The State of Play 40 Years Ago: Asia in Disarray in 1970
    • Forty Years of Progress with Regional Economic Integration: 1970–2010
    • Drivers of Economic Integration
    • Prospects for Further Economic Integration
    • Contours of Future Cooperation and Integration
    • Priority Areas to Facilitate Regional Cooperation
    • Institutions for Regional Cooperation
    • Prospects and Institutional Options
    • Chapter 15: Realizing the Asian Century: Asia's Role in the World
    • Dramatic Change in Asia's Global Footprint
    • Implications of Asia's Global Role
    • Global Commons
    • Global Trading System
    • Global Shipping Lanes, Trading Routes, and Communications Channels
    • Global Financial System
    • Climate Change
    • Global Peace and Prosperity
    • Relations with other Parts of World
    • Development Assistance
    • Impact of National and Regional Policies on others
    • Global Governance
    • Managing Asia's Rise
    • Chapter 16: Conclusion: Cost of Missing the Asian Century
    • Tackling Transformation
    • National Action Agenda
    • Regional Cooperation Agenda
    • Changing Asia's Role in the World
    • Priorities across Countries
    • Need for Enhanced Resilience
    • Cost of Missing the Asian Century
    • The Intangibles
  • Copyright

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    List of Figures, Tables, and Boxes

    Figures
    • 202.1 Asia's share of global GDP 1700–2010
    • 222.2 World GDP growth rate is steadily increasing
    • 232.3 Developing Asia GDP growth, 1990–2015
    • 303.1 Asian total factor productivity (1990–2050) is converging with best practice
    • 323.2 Working age population (20–64) will begin to decline in all Asian subregions (1990–2050)
    • 333.3 Asia will account for 70 percent of the world's added capital stock between 2030 and 2050
    • 353.4 PRC's middle class is about to take-off
    • 363.5 India's middle class is about to take-off
    • 373.6 Mobile phone subscriptions still have room for growth in PRC and India
    • 444.1 Conflicts by region
    • 474.2 PRC and India's rise is more dramatic than historical precedents: Average increase in percentage point share of global GDP per decade
    • 646.1 Strategic framework
    • 767.1 Thailand: Poverty falling, inequality growing
    • 827.2 PRC: Urban income deciles
    • 837.3 Urban Gini coefficients
    • 837.4 Spatial inequality: Human Development Index for country's highest-and lowest-ranking regions
    • 847.5 Average years of school (age 15–19), lowest and highest income quintiles
    • 857.6a Men's level of education in India (%)
    • 857.6b Women's level of education in India (%)
    • 867.7 Philippines: Prenatal care provision (%)
    • 877.8 Indonesia: Hepatitis B vaccination coverage (%)
    • 877.9 South Asia sanitation (%)
    • 887.10 Gender inequality in Asia
    • 917.11 Action agenda
    • 1008.1 High growth in converging countries is increasingly a result of TFP improvement
    • 1018.2 Entrepreneurship is correlated with TFP levels
    • 1028.3 Asia's TFP has been growing fast due to very high growth in converging countries
    • 1038.4 TFP levels and growth rates
    • 1118.5 Trends in PRC scientific publications
    • 1138.6 Asia's ranking on Ease of Doing Business indicators varies by region and income/convergence level
    • 1148.7 Asia's physical infrastructure leaves much room for improvement
    • 1158.8 Education index scores are correlated with TFP levels
    • 1168.9 Asia must try harder on different education indices
    • 1178.10 High-income countries in Asia have high secondary and tertiary enrollment, but others are far behind
    • 1208.11 Asia's share of global R&D expenditure has been growing significantly and has surpassed the US
    • 1218.12 Asia is home to a significant share of world researchers
    • 1228.13 Asia's innovation scores vary markedly by subregions and convergence stage
    • 1339.1 Northeast Asia will be the most urbanized region of Asia
    • 1409.2 Urban Gini coefficient (by country)
    • 1409.3 Urban Gini coefficients over time
    • 15310.1 Baseline, 2009
    • 15410.2 Asian Century scenario, 2050
    • 15510.3 Middle Income Trap scenario, 2050
    • 15510.4 Two-scenario projections for the Asian finance sector landscape, 2009–2050
    • 15610.5 Two-scenario projections for the US finance sector landscape based on Asia's shares, 2009–2050
    • 15610.6 Two-scenario projections for the EU finance sector landscape based on Asia's shares, 2009–2050
    • 18111.1 Asia will lead world energy demand
    • 18211.2 PRC and India will see a huge increase in energy-related carbon emissions
    • 19411.3 Growth of wind power capacity in India and PRC (MW)
    • 20412.1 Developing countries account for a greater proportion of current emissions than the G20 Annex 1 countries
    • 20512.2 Three-quarters of the growth in combustion-related global emissions between 2002 and 2007 came from developing countries
    • 20912.3 Asia has the ability and incentives to address climate change
    • 20912.4 Action by Asian countries can significantly mitigate damage from climate change
    • 21012.5 Emerging market action significantly reduces sea-level rise
    • 21212.6 Major developing economies are responsible for a rapidly increasing amount of low-carbon energy technology patenting
    • 22713.1 Asia has worsened in voice and accountability as well as political stability, but it has improved in other areas: Asia governance indicators (weighted by GDP)
    • 22813.2 Asia-7 has outperformed the rest of Asia in governance: Governance indicators (weighted by GDP)
    • 22813.3 Asia-7 has outperformed the rest of Asia in governance: Governance indicators (weighted by population)
    • 22913.4 Asia-7 has lagged behind the rest of the world in governance: Governance indicators (weighted by GDP)
    • 22913.5 Northeast Asia outperforms other subregions in control of corruption
    • 23013.6 Asia, including Asia-7, has underperformed the rest of the world in control of corruption
    • 24814.1 Mutual trust: From conflict to cooperation
    • 25014.2 Average GDP growth rates of selected Asian economies and subregions, 1958–2007 (%)
    • 25114.3a Evolution of intraregional trade shares: World
    • 25114.3b Evolution of intraregional trade shares: Asia and the Pacific
    • 25314.4 East Asian exports in sectors with increasing returns to scale
    • 25414.5 Parts and components trade in East Asia, 1990 and 2003
    • 25514.6 Evolution of South Asia's parts and components trade, 1992–2008
    • 25514.7 PRC's share of India's imports of manufactured goods, parts and components, 1995–2007
    • 25614.8 Intra subregional trade costs in Asia and other regions
    • 25714.9 Selected Asian countries in the tariff-freight plane
    • 27515.1 Asia's share of global GDP 1700–2050
    • 29316.1 Asian Century vs. Middle Income Trap
    • 29416.2 Population without access to improved water supplies
    • 29516.3 Increase in non-urban paved road network density, 2011–2050 (%)
    Annex 1
    • 299A1.1 Population changes in Asia's subregions, 2010 vs. 2050
    Tables
    • 343.1 The West currently accounts for the bulk of global middle class spending, 2010
    • 343.2 The Asian middle class will grow sharply over the next 40 years
    • 373.3 Internet usage is skyrocketing globally, picking up in Asia
    • 474.1 The Asian Century: Asia will account for more than half of global output in 2050
    • 747.1 Poverty reduction in selected Asian countries, 1980–1990 (percentage of population under the poverty line)
    • 757.2 Population living on less than $1.25 (PPP) per day (%)
    • 817.3 Rising inequality in Asia (Gini coefficients)
    • 867.4 Nutritional status of children in Pakistan (% of children below 2 standard deviations of mean)
    • 1359.1 Asia's urban population will nearly double by 2050
    • 15210.1 Global finance sector indicators, 2009 (% of GDP)
    • 15210.2 Global finance sector indicators, 2009 (% of assets)
    • 16610.3 Global capital markets, 2001 and 2008
    • 18311.1 Past and projected energy demand and supply in Asia
    • 18911.2 Past and projected oil demand and import dependency (million barrels per day)
    • 19011.3 Gas demand and import dependency
    • 19311.4 Asia's energy demand and supply scenarios
    • 20612.1 GEM cities feature prominently in the list of cities most exposed to half-meter sea-level rise
    • 21412.2 Nine of the ten cities with the worst air pollution (particulate matter) are in Asia
    • 21612.3 Substantial abatement opportunities that reduce costs are available
    • 21812.4 Climate change adaptation types and examples by sector
    • 22313.1 Analytic framework for governance and institutions
    • 23413.2 Working age population (%)
    • 23813.3 Pressures for governance and institutional transformation—domestic
    • 25414.1 Uneven economic integration in Asia and the Pacific to date
    • 29316.1 Economic 2050 outcomes in two scenarios—Asian Century and the Middle Income Trap
    Appendix 1
    • 3001.1 Population changes in Asia, 2010–2050
    • 3011.2 Projected growth of Asia's elderly population (number of people, age 65 and above, in millions)
    • 3021.3 Asia's differential-speed demographic inflection years
    • 3031.4 Projected GDP per capita (PPP) vs. share of aging population, 2050
    Appendix 4
    • 3194.1 Asia: GDP growth and TFP growth, 1970–2010
    • 3204.2 Asia: Composition of growth, 1970–2010
    Appendix 5
    • 3215.1 Fifth fastest growing cities in Asia
    • 3235.2 World mega cities with population over 10 million for 2010, 2030, and 2050
    • 3245.3 Rates of urbanization by country: 2010 and 2050
    Boxes
    • 393.1 Economists of consequence
    • 545.1 The Middle Income Trap: Unable to compete
    • 595.2 Conflict in Asia: Risk and deterrence
    • 777.1 Asia and the Millennium Development Goals
    • 827.2 The two faces of Asia
    • 907.3 Inclusive growth in policy planning: PRC, India, and Cambodia
    • 927.4 Vocational education and training
    • 957.5 Food security: Rising demands and shrinking resources
    • 1068.1 e-Choupal—building on a traditional platform
    • 1168.2 Asia's creative thinking deficit
    • 1198.3 PRC's rapid progress in tertiary education and research
    • 1238.4 Republic of Korea's transformation into a center of science and technology
    • 1329.1 Seoul 1970 and 2010
    • 1349.2 Jakarta 1970 and 2010
    • 1379.3 Vision for a successful Asian city of 2050
    • 1389.4 “Compact city” concept
    • 16910.1 Infrastructure finance
    • 17710.2 Supporting domestic capital markets
    • 22213.1 Evidence of the impact of governance and development outcomes
    • 23113.2 What is corruption?
    • 23213.3 Corruption and impact on the poor
    • 24814.1 Moving toward cooperation without conflict: learning the lessons of history
    • 25214.2 ASEAN: An example of constructive regional cooperation
    • 25914.3 Central Asia's triple integration opportunity
    • 27014.4 Regional cooperation and integration in South Asia
    • 27114.5 Proposals for new regional institutions
    • 29116.1 Avoiding the Middle Income Trap

    List of Abbreviations

    ABMIAsian Bond Market Initiative
    ADBAsian Development Bank
    AECASEAN Economic Community
    AFCAsian Financial Crisis
    AfPakAfghanistan–Pakistan
    AFTAASEAN Free Trade Area
    AIartificial intelligence
    AMFAsian Monetary Fund
    AMROASEAN+3 Macroeconomic Research Office
    APECAsia–Pacific Economic Cooperation
    APGASEAN Power Grid
    A*STARAgency for Science, Technology and Research (Singapore)
    ASEANAssociation of Southeast Asian Nations
    ASEAN+3ASEAN plus PRC, Japan, Republic of Korea
    ASEMAsia–Europe Meeting
    ASXAustralian Stock Exchange
    B2Bbusiness to business
    BAUbusiness as usual
    Bcmbillion cubic meters
    BCGBoston Consulting Group
    BIMSTECBay of Bengal Initiative for Multisectoral Technical and Economic Cooperation
    BISBank for International Settlements
    BOMCA-CADAPBorder Management Program in Central Asia–Central Asia Drug Action Program
    CARECCentral Asia Regional Economic Cooperation
    CCScarbon capture and storage
    CMDACalcutta Metropolitan Development Authority
    CMIChiang Mai Initiative
    CMIMChiang Mai Initiative Multilateralization
    CO2carbon dioxide
    CSPconcentrated solar power
    DACDevelopment Assistance Committee
    DMZdemilitarized zone
    ECAEconomics of Climate Adaptation (group)
    EEDenergy efficiency and diversification
    EFSFEuropean Financial Stability Fund
    EIUEconomist Intelligence Unit
    EMEAPExecutives' Meeting of East Asia and Pacific Central Banks
    ERPDEconomic Review and Policy Dialogue
    ESCAPEconomic and Social Commission for Asia and the Pacific (of the United Nations)
    EUEuropean Union
    FARfloor-area ratio
    FDIforeign direct investment
    FSBFinancial Stability Board
    FTAFree trade area
    GCCGulf Cooperation Council
    GDPgross domestic product
    GEGeneral Electric
    GEDGlobal Entrepreneurship and Development Index
    GEMG–20 emerging market (economies)
    GERDgovernment expenditure on research and development
    GFCGlobal Financial Crisis
    GHGgreenhouse gases
    GMSGreater Mekong Subregion Program
    GWgigawatts
    HIV-AIDSHuman Immunodeficiency Virus–Acquired Immune Deficiency Syndrome
    HNWIhigh net worth individual
    HVDChigh voltage direct current
    ICPInternational Comparison Program (of the World Bank)
    ICTinformation and communications technology
    IEAInternational Energy Agency
    IEOIndependent Evaluation Office (of IMF)
    ILSinsurance-linked securities
    IMFInternational Monetary Fund
    IMSInternational Monetary System
    IOSCOInternational Organization of Securities Commissions
    IPOinitial public offer
    ITinformation technology
    KEPCOKorea Electric Power Corporation
    KMDAKolkata Metropolitan Development Authority
    KWhkilowatt hours
    LEEDLeadership in Energy and Environmental Design
    LIHlife and health insurance
    LNGliquefied natural gas
    Mb/dmillion barrels per day
    MDBMultilateral Development Bank
    MDFMunicipal Development Fund
    MDGMillennium Development Goals
    MERmarket exchange rate
    MFSCMonetary and Financial Stability Committee (of EMEAP)
    MNCmultinational company
    Mtoemillion tonnes of oil equivalent
    NICnewly industrializing countries
    NIEnewly industrialized economies
    NSTBNational Science and Technology Board
    ODAOverseas Development Assistance
    OECDOrganization for Economic Cooperation and Development
    OTCover the counter
    P&Cproperty and casualty
    PFMpublic financial management
    PIIPhysical Infrastructure Index
    PISAProgram for International Student Assessment
    PM10particulate matter less than 10 microns in size
    PPPpurchasing power parity
    P-PPpublic-private partnerships
    PRCPeople's Republic of China
    RIA-FinRoadmap for Monetary and Financial Integration of ASEAN
    SAARCSouth Asian Association for Regional Cooperation
    SAFTASouth Asia Free Trade Agreement
    SASECSouth Asia Subregional Economic Cooperation
    SCOShanghai Cooperation Organization
    SMEsmall and medium enterprises
    SPRstrategic petroleum reserves
    TAGPTrans–ASEAN GasPipeline
    TAPITurkmenistan–Afghanistan–Pakistan–India
    Tcftrillion cubic feet
    TFPtotal factor productivity
    TWhterawatt hour
    UAEUnited Arab Emirates
    UNDPUnited Nations Development Programme
    UNODCUnited Nations Office on Drugs and Crime
    VETvocational education and training
    VoIPVoice over Internet Protocol
    WBESWorld Business Environment Surveys
    WEFWorld Economic Forum
    WHOWorld Health Organization
    WTOWorld Trade Organization

    Foreword

    The rapid rise of Asia during the last three decades of the 20th century is the most successful story of economic development in recent times. In the 21st century, Asia's rise has been equally impressive, notwithstanding the global financial crisis. Per capita income in developing Asia reached nearly $5,000 in purchasing power parity terms in 2010. Investment rates averaged 35 percent of GDP over the decade. The number of people living below the $1.25-a-day poverty line fell by 430 million between 2005 and 2010.

    Developing Asia's V-shaped recovery from the recent global financial crisis and recession further proved its economic prowess and resilience. These achievements accent the region's potential over the next four decades to reach the per capita income levels of Europe today. By the middle of this century, Asia could account for half of global output, trade, and investment, while enjoying widespread affluence.

    Many see the ascendancy of Asia—or “the Asian Century”—as being on autopilot, with the region gliding smoothly to its rightful place in destiny. But complacency would be a mistake. While an Asian Century is certainly plausible, it is not pre-ordained. When examining the region's economic and social prospects, one cannot help but notice its many paradoxes.

    The world's fastest growing region remains home to majority of the world's extreme poor. “Factory Asia” may be a global hub for manufacturing and information technology services, but vast numbers of its people are illiterate and unemployed. While parts of Asia are aging rapidly, others have booming populations. The region holds the largest savings pool globally, but urgently needs massive investment in infrastructure and social services. Its financial sector remains largely underdeveloped. Asia is urbanizing fast, but its cities are becoming unlivable. While Asia requires massive resources to maintain its rapid development, global stocks of resources are dwindling. The Asian paradox offers both major challenges and opportunities.

    Asia 2050: Realizing the Asian Century, a study commissioned by the Asian Development Bank (ADB), identifies these challenges and suggests ways they can be tackled. The book is candid in saying that Asian nations must act now—individually and collectively—to forge solutions. Delays and inaction will only make solutions difficult and costlier. Policies that worked when Asia was low-income and capital-scarce are less likely to work today and unlikely to work in the future. And, as an emerging global leader, Asia must embrace, promote, and advance global public goods—whether free trade, financial stability, climate change, or peace and security.

    The book reminds us that challenges and risks are not mutually exclusive. They could impact one another, generate conflict, or build new pressure points within Asia, jeopardizing regional economic growth, and financial stability and security. Asia's paradoxes are neither new nor easily resolved. Widening inequalities, environmental degradation, and the threat of falling into a Middle Income Trap can only be overcome by well-integrated strategies and policies, coupled with the required institutional reforms. Effective regional cooperation is the bedrock for Asia's peace and prosperity. Building trust to assure shared interest in trade, financial stability, and access to natural resources will happen gradually and require leadership at country and regional levels.

    These are long-term, generational challenges. Failure to meet them will deprive Asians from reaching potential affluence and greater well-being. We hope that political and economic leaders, the private sector, academia, development practitioners, and civil society will find this book useful when crafting long-term strategies and country-specific development programs.

    A study on this scale could only come out of intensive consultations and pooling of expertise from an array of experts. ADB's Office of Regional Economic Integration led this flagship project and many individuals contributed to the book. The book benefitted greatly from extensive country consultations. ADB's management team and I joined many of these. Feedback from the Governors' Seminar at ADB's 44th Annual General Meeting in May 2011 and the Asian Wise Persons' Group in June 2011 was particularly valuable.

    Asia's march toward prosperity and freedom from extreme poverty will require more than simply high growth. An Asian Century is plausible if Asia builds on its success and focuses on innovation, entrepreneurship, inclusion, sustainable development, and good governance. The Asian Century may well be a century of shared global prosperity. But future prosperity must be earned. I firmly believe Asia's leaders will take up the bold and innovative national policies needed—while pursuing greater regional and global cooperation—to make the Asian Century a reality.

    HaruhikoKuroda, President, Asian Development Bank

    Acknowledgments

    ADB President, Haruhiko Kuroda, provided vision and inspiration for the Asia 2050 study. His stress on intellectual rigor helped present a stimulating yet balanced perspective of the multigenerational challenges and opportunities facing Asia.

    ADB Managing Director General, Rajat M. Nag, gave conceptual shape to this study and provided overall guidance. Iwan J. Azis, Head of ADB's Office of Regional Economic Integration (OREI), brought in his intellectual strength to lead the ADB team.

    Important contributions were provided by ADB Vice Presidents, C. Lawrence Greenwood, Bindu N. Lohani, Ursula-Schaefer Preuss, Lakshmi Venkatachalam, Xiaoyu Zhao, and ADB Institute Dean, Masahiro Kawai.

    Harinder S. Kohli, President and CEO, Centennial Group, the principal author and study director, gathered an international team of experts and worked tirelessly to put together this study. He, together with his two co-editors, Ashok Sharma, Senior Director, OREI, and Anil Sood, COO, Centennial Group, guided the authors to shape the thematic chapters of the book. The three editors together produced the final manuscript. Ashok Sharma also managed the ADB staff team, comprising Jayant Menon, Principal Economist, and Sabyasachi Mitra, Senior Economist, who contributed significantly to this study.

    The core authors of the book are: Homi Kharas (Asia in the Global Economy in 1700–2010: Setting the Scene; and Asia in the Global Economy in 2011–2050: The Main Drivers of the Asian Century); Homi Kharas and Harpaul Alberto Kohli (Asia in the Global Economy in 2050: The Asian Century); Homi Kharas (Realizing the Asian Century: Mega-challenges and Risks); Harinder S. Kohli, Ashok Sharma, and Anil Sood (Introduction; Realizing the Asian Century: A Strategic Framework; and Conclusion: Cost of Missing the Asian Century); Jayant Menon, Sabyasachi Mitra, and Drew Arnold (Growth and Inclusion); Yasheng Huang and Y. Aaron Szyf (Driving Productivity and Growth); Anthony Pellegrini (A New Approach to Urbanization); Andrew Sheng (Transforming Finance); Hossein Razavi (Reducing Energy Intensity and Ensuring Energy Security); Cameron Hepburn and John Ward (Action on Climate Change in Asia's Self-Interest); Shigeo Katsu (Transforming Governance and Institutions); Johannes F. Linn (Regional Cooperation and Integration); and Harinder S. Kohli (Realizing the Asian Century: Asia's Role in the World).

    Other contributors to the study are Amitav Acharya, Vinod Goel, Ramesh Mashelkar, Natasha Mukherjee, and Hans P. Binswanger-Mkhize.

    The study benefitted from Jong-Wha Lee, former ADB Chief Economist, and Srinivasa Madhur, former Officer-in-charge, OREI, who helped in shaping the study during its formative period.

    Country consultations provided valuable insights and perspectives. The study team benefitted from the views of the following: Bangladesh: Abul Maal A. Muhith (Minister of Finance) and Atiur Rahman (Governor, Bangladesh Bank); People's Republic of China: Zheng Xiaosong (Director General, International Department, Ministry of Finance); India: Montek Singh Ahluwalia (Chairman, Planning Commission) and Kaushik Basu (Chief Economic Advisor, Department of Economic Affairs); Indonesia: Hatta Rajasa (Coordinating Minister for Economic Affairs), Armida Alisjahbana (Minister for National Development Planning), Mari Elka Pangestu (Minister of Trade), and Emil Salim (Chairman of Council of Advisors to the President and Former Minister of Environment); Japan: Takehiko Nakao (Director General, International Bureau, Ministry of Finance) and Tatsu Yamasaki (Senior Deputy Director General, International Bureau, Ministry of Finance); Republic of Korea: Yoon Jeung-hyun (Minister of Finance), Jong-ryong Lim (Vice Minister, Ministry of Strategy and Finance), and Sung-gul Ryu (Vice Minister, Ministry of Strategy and Finance); and Viet Nam: Nguyen Van Giau (Governor, State Bank of Viet Nam) and Tran Xuan Gia (Former Minister of Planning and Investment; Chairman, Asia Commercial Bank). The study team would also like to acknowledge the views offered by senior policy makers, eminent economists, private sector leaders, and civil society representatives during the country consultations.

    The study team gained from discussions with several think tanks and institutions. These included the Federation of Indian Chambers of Commerce and Industry; Central Institute for Economic Management, Viet Nam; Viet Nam Institute of Economics; Shanghai National Accounting Institute; Asia-Pacific Finance and Development Center, Shanghai; China Development Research Foundation, Beijing; Korea Institute for International Economic Policy; and Graduate School of International Studies, Seoul National University, Republic of Korea.

    The Governors' Seminar at ADB's 44th Annual General Meeting in May 2011, provided the invaluable views of eminent policy makers, including Abul Maal A. Muhith (Minister of Finance, Bangladesh); Christine Lagarde (Former Minister for Economy, Finance and Industry, France; and incoming MD, IMF); Pranab Mukherjee (Minister of Finance, India); Li Yong (Vice Minister of Finance, People's Republic of China); Nguyen Van Giau (Governor, State Bank of Viet Nam); and Motoyuki Odachi (Parliamentary Secretary of Finance, Japan).

    The study also benefitted from discussions of the Asian Wise Persons' Group in June 2011. The Group included Cesar E.A. Virata (Former Prime Minister and Minister of Finance, Philippines); Anand Panyarachun (Former Prime Minister and Minister of Finance, Thailand; and Chairman of the Board of Directors, Siam Commercial Bank); Emil Salim (Chairman of Council of Advisors to the President, and Former Minister of Environment, Indonesia); R.K. Pachauri (Chairman, Intergovernmental Panel on Climate Change; and Director General, The Energy and Resources Institute, India); Young-Hoon Kwaak (Professor, Jeju National University of Korea; and Founder/Chairman, World Citizens Organization); Phisit Pakkasem (Former Secretary General of National Economic and Social Development Board, Thailand); and Noritada Morita (Chairman and CEO, Asia Strategy Forum).

    The study team appreciates the valuable inputs of senior ADB staff including Philip C. Erquiaga, Klaus Gerhaeusser, Juan Miranda, Sultan H. Rahman, Kazu Sakai, Kunio Senga, Changyong Rhee, Robert F. Wihtol, and Xianbin Yao. The study team also acknowledges the inputs of several ADB and ADBI staff including Noritaka Akamatsu, Gambhir Bhatta, Biswanath Bhattacharyay, Sekhar Bonu, Richard Bolt, Jorn Brommelhorster, Giovanni Capannelli, Jin Cyhn, Jesus Felipe, Edimon Ginting, Rana Hasan, Paul Heytens, Zahid Hossain, Xinglan Hu, Abid Hussain, Kavita Iyengar, Hoe Yun Jeong, Thevakumar Kandiah, Jong Woo Kang, Hun Kim, Ayumi Konishi, Mario B. Lamberte, Werner Liepach, Carmela Locsin, Anouj Mehta, Hiranya Mukhopadhyay, Omana Nair, Kuniki Nakamori, Krishnadas Narayanan, Thiam Hee Ng, Cuong Minh Nguyen, James Nugent, Stephen Pollard, Ann Quon, Vivek Rao, Jason Rush, Lei Lei Song, Meriaty Subroto, Anil Terway, Woochong Um, Victor L. You, Shahid N. Zahid, and Juzhong Zhuang.

    The team of editors, Bruce Ross-Larson, Natasha Mukherjee, Richard Niebuhr, and Kevin Donahue worked together to give this report its final shape. Kathryn Grober of Centennial Group was responsible for putting together the final manuscript, with the help of Charlotte Hess in organizing, formatting, and checking the document.

    Kothandan Balaji, Nguyen My Binh, Sheila David, Lan Thi Tuyet Duong, Mohammed Easin, Keiko Hamada, Maruf Hossain, Meenakshi Jain, Keiko Kawazu, Ma. Criselda Lumba, Tanaka Miwako, Akiko Mochizuki, Ma Nan, Carol Ongchangco, Wilhelmina Paz, Ma. Rosario Razon, Ayun Sundari, Jennifer Tantamco, Meity Tanujaya, Pia Tenchavez, and Charisse Tubianosa (staff); and Michael Bon Albarillo, Santiago Martin Barcelona, Kevin Donahue, Layden Iaksetich, Ivan de Leon, Aldwin Mamiit, Carlo Monteverde, James Ong, Lilibeth Perez, and Theresa Robles (consultants) contributed variously to project administration and logistics, arrangement and coordination of workshops, and consultation seminars.

  • Appendix 1: Demographic Changes in Asia's Regions by 20501

    By 2050, Asia will constitute about 52 percent of the global population, a little smaller than its 57 percent share in 2010, but with roughly 822 million more people than today.

    Northeast Asia's share in all of Asia's population will have fallen from nearly 40 percent in 2010 to 31 percent in 2050. What is concealed in this general number is the fact that Japan and Republic of Korea's populations will continue to fall, and by 2050, will have fallen by 14 percent and 2 percent, respectively. New population projections, released by the United Nations Statistics Division, in May 2011, estimate that by 2050 PRC's population will have fallen by 3.4 percent, which represents 46 million fewer people than in 2010.

    Southeast Asia is expected to grow faster than the Asia average and to have added about 164 million people by 2050. In the period 2010 to 2050, Indonesia will have grown by 22 percent, adding 54 million people to its total, and Viet Nam by over 18 percent with 16 million more.

    Figure A1.1 Population changes in Asia's subregions, 2010 vs. 2050

    1 This appendix was written by Natasha Mukherjee.

    Table A1.1 Population changes in Asia, 2010–2050

    Central Asia will add around 78 million people by 2050. It will be growing from relatively smaller absolute numbers—but in percentage terms this sub-region, especially Afghanistan and Iran, will be growing dramatically. It is estimated that Afghanistan's population will skyrocket from its current 31 million to 76 million; Iran will add about 11 million to its total population.

    In 2050, Asia will be heavily influenced by the relative demographic weight of South Asia. South Asia (with India) is already more populous than Northeast Asia (which includes PRC). By 2050, just Pakistan will have added 100 million more people to the total Asian tally. The balance of Asia's population will shift further from Northeast Asia to South and Southeast Asia.

    The Asian population giants, PRC and India, will see very different demographic trends. PRC's population is estimated to have already peaked around 2029; in 2050, PRC's population will be nearly 1.3 billion, 45 million less than in 2010. By 2050, PRC will thereby represent a smaller share of the total global population than before. India, on the other hand, will have grown by 467 million people to a total population of nearly 1.7 billion people in 2050; its share of the total global population will have grown to nearly 20 percent.

    The demographic dominance of PRC and India notwithstanding, in the next decades the list of the largest countries in the world will continue to be dominated by Asia. Between now and 2050, there will be five additional Asian countries with the distinction of belonging to the ten most populous countries in the world: besides India and PRC, there will be, Indonesia (293 million), Pakistan (275 million), Bangladesh (194 million) and the Philippines (155 million) in the “top ten”.

    Table A1.2 Projected growth of Asia's elderly population (number of people, age 65 and above, in millions)
    Asia's Aging Trends

    The demographic figures for Asia in 2050 impress by the sheer numbers of its growing population: in 40 years from now, Asia will have nearly 5 billion people. Projections on how many of these people will be officially classified as ‘elderly’ are just as impressive: in 2050, more than 860 million Asians will be 65 years and older.

    What is especially striking about this phenomenon is the relative speed of the process of aging in Asia, and the fact that the ‘greying’ of Asia is occurring at all levels of the economic spectrum, i.e. even in low-income countries.

    Asia's 3-Speed Aging World

    In the context of demographics, it is tempting to borrow the differential-speed economic growth framework that is used in the economic model that underlies the book.

    The three-speed demographic taxonomy in Asia occurs around distinct groups: one, the aging countries in North East Asia (notably, PRC and the Republic of Korea; from now on referred to as Speed 1 or Old Asia), two, the countries in South East and South Asia that are approaching the demographic transition (called Speed 2 or Young Asia. This group covers a wide spectrum of countries such as Thailand and Indonesia that are relatively older, and other countries that are roughly 10 years further behind, such as India and Viet Nam), and three, the youngest countries in Asia that are still growing, much further away in their demographic transitions, such as Pakistan and Afghanistan, for instance—referred to as Speed 3 or Very Young Asia.

    By tracing the population figures for some of the major (already large) Asian countries, it becomes evident that PRC's population begins to decline around 2029, the Republic of Korea in 2026, Thailand will begin shrinking in 2033, Viet Nam in 2045. Japan's demographic descent has already begun; its population reached its peak in 2009; India's demographic inflection point occurs only after 2050; the same applies to Indonesia, Bangladesh, Pakistan and Afghanistan.

    Tracing the percentage of the total population that is of a working age (defined as 20–64 years of age) also reveals different and differently timed inflection points: for Speed 1 countries, the old countries of Asia, the working age population has already peaked and is now declining (as in Japan) or is about to do so (as in Republic of Korea). Working age populations in the Speed 2 countries (“Young Asia”) trail the Speed 1 countries by about 20–25 years (e.g., Indonesia, Thailand, Bangladesh). These inflection points are an important indicator of demographic windows of opportunity and potential demographic dividends that countries could exploit to their advantage.

    Table A1.3 Asia's differential-speed demographic inflection years
    Total populationWorking age population
    Speed 1: Old Asia
    Japan20091997
    Republic of Korea20262018
    PRC20292018
    Speed 2: Young Asia
    Thailand20332022
    Viet Nam20452035
    IndonesiaPost 20502038
    BangladeshPost 20502044
    IndiaPost 2050Post 2050
    Speed 3: Very Young Asia
    PakistanPost 2050Post 2050
    AfghanistanPost 2050Post 2050
    Source: Centennial Group International calculations based on data from United Nations Statistics Division, 2011.

    An important, valid concern is that a rapidly ageing population is antithetical to achieving high-income status. The fear that a country might become too old before it becomes rich enough has two elements: with high old age-dependency ratios, investments to achieve higher factor productivity are difficult to achieve; and meeting the needs of an elderly population will entail costly economic and social institutions that are needed to achieve income security, adequate health care, and other needs (Lee, Mason, and Cotlear, 2010).

    Table A1.4 Projected GDP per capita (PPP) vs. share of aging population, 2050
    GDP pc (PPP) in 2050Share of population (%) 65+ in 2050
    Afghanistan2,4564.1
    Nepal3,54811.5
    Myanmar5,27517.6
    Pakistan8,53010.4
    Tajikistan16,9139.0
    Bangladesh19,30015.9
    Iran, Islamic Rep.23,69623.5
    Philippines27,20810.7
    Mongolia30,14414.0
    Cambodia30,28012.8
    Sri Lanka33,38521.6
    Viet Nam34,13923.1
    Lao PDR37,87512.6
    India40,71513.4
    Bhutan41,92816.9
    Armenia42,16021.8
    Indonesia42,17619.2
    Azerbaijan52,17417.1
    PRC52,68125.6
    Kazakhstan60,84713.6
    Source: Centennial Group International Growth Model, 2011.

    Appendix 2: Model for Developing Global Growth Scenarios1

    This book estimates GDP as a function of labor force, capital stock, and total factor productivity for 185 countries between 2011–2050 under two different growth scenarios that we call the “Asian Century” and “Middle Income Trap”. This section offers an abbreviated description of the model; a more detailed exposition, in Kohli, Szyf, and Arnold (2012), is available on request.

    As seen in equation (1), a Cobb-Douglas function with constant returns to scale is assumed, with a equal to two-thirds:

    GDP figures are generated for three different measures: real GDP (constant 2010 prices); GDP PPP (constant 2010 PPP prices); and GDP at expected market exchange rates, which incorporates expected exchange rate movements and serves as this book's best proxy for nominal GDP.

    The model first estimates yearly real GDP growth for each country between 2012 and 2050. These estimates are applied to the previous values of real GDP, GDP PPP, and nominal GDP deflated by US inflation (on which GDP at market exchange rates is based) to derive the full series. Finally, to derive GDP at market exchange rates, real exchange rate changes are calculated and multiplied by nominal GDP (deflated by inflation) to obtain GDP at market exchange rates.

    Labor force growth stems from population growth and from changes in labor force participation rates. Population growth is based on the 2010 Revision of the UN's World Population Prospects, while labor force participation rates are projected separately, by gender, for seven age cohorts (15–19, 20–24, 25–29, 30–49, 50–59, 60–64, and 65+) to better capture cohort-specific trends. Male rates are projected directly; female rates are derived by projecting the difference between male and female rates for each age group. Labor force participation rates from 1980 through 2011 are taken from the International Labor Organization.

    The cross-country, cohort-specific equations to forecast male rates are simple autoregressions of the following form:

    where Mage is the percent of males in age group age who are active in the labor force and mage is a constant that varies for each age group.

    1 This appendix was written by Harpaul Alberto Kohli.

    The cross-country, cohort-specific equations to forecast the differentials between male and female participations rates are:

    where Dage equals the difference between the percentage of males in age group age in the labor force and the percentage of females in age group age in the labor force, and dage is a constant that varies by age group. In both male and female models, for certain cohorts, rough upper or lower bounds are incorporated to address outliers. Observations that begin in 2011 beyond these bounds are not governed by the regressions but instead gradually converge over time towards the bounds.

    Capital stock growth, based on an initial capital stock and yearly investment rates and depreciation, is defined as:

    where K is the capital stock, 0.06 represents the yea +rly depreciation of 6%, and It-1 is the capital investment from the previous year, which is defined as the previous year's GDP (measured in constant 2010 PPP dollars) multiplied by the investment rate as a share of GDP.

    The initial capital stock is calculated using the Caselli method (Kharas 2010b), with the following equation:

    where K0 is the initial capital stock, g is the average GDP growth over the subsequent ten years, 0.06 is the depreciation rate, and I0 is the initial year's investment. For I0, for each country, the earliest year for which there exists capital investment data (year y) is identified. The average of the investment rate values for year y and the two subsequent years is computed and treated as the initial investment rate. This smoothing out of fluctuations in the initial investment rate is necessary to yield better estimates for certain countries in which there is much volatility in the earliest investment rate values. This rate is then multiplied by the GDP in year y to determine I0. The earliest year possible is chosen for this estimate because the longer the timeframe before the projections commence the more the yearly depreciations will reduce the effects on the model of any initial imprecisions in capital estimates.

    The model is calibrated by calculating total factor productivity (TFP) for an initial year (2011) based on labor force, capital stock, and historical GDP, with GDP and capital stock measured in purchasing-power-parity dollars at constant 2010 PPP prices. For subsequent years, TFP is projected.

    For the TFP projections, we differentiate four tiers of countries: rich or developed; converging; non-converging; and fragile.

    All countries begin with a default TFP growth rate of 1.3 percent per annum derived from past studies (Kharas 2010b). This parameter is close to the 100-year TFP growth rate of the US, and is treated as the global standard. In our model, this is the fixed rate of productivity growth for non-converging, non-fragile countries.

    Research shows that some growth differences between developing countries can be successfully modelled by separating them into two groups: converging (Tier 2) and non-converging (Tier 3) countries (Gill et al 2007; Jones 2002; Kharas 2010a; Kharas 2010b; Wolfensohn 2007).

    A country is deemed to be converging if its per-capita income has rapidly converged over a 20-year period to that of best practice economies; the lower its productivity relative to the global best practice, the more quickly it converges. This convergence reflects technology transfers from richer innovating countries, technology leapfrogging, the diffusion of management and operational research from more developed countries, and other ways that a country can shortcut productivity-improvement processes by learning from economies that are already at the productivity frontier.

    In the model, the lower the country's productivity relative to that of the US, the larger the boost, and the quicker the catch-up.2 The productivity growth of rich (Tier 1) countries is treated the same as that of Tier 2 countries. On the other hand, non-converging (Tier 3) countries have only a 1.3 percent yearly productivity growth and no boost. The general equation for TFP growth is:

    where CB is the convergence boost benefiting “converging” countries and FP is the productivity growth penalty suffered by failing or fragile states.

    2 TFP is used in the convergence term instead of the per-capita income used by others for three reasons: first, if the equation were to use GDP per capita, over time the TFP of a converging country would not converge to that of the US but instead to other values. Also, since the convergence equation represents convergence of TFP, we use TFP in order to make the equation consistent with its purpose. Third, using the convergence coefficient from past research in tandem with an income-based convergence term yields large discrepancies with the recent historical data for TFP growth for many countries; using TFP yields a better fit.

    The convergence boost is defined as follows:

    where i is the country, 2.33 percent is the convergence coefficient (derived from historical data), TFP is the total factor productivity, and c takes a value between 0 and 1 and identifies whether a country is treated as a converger (c=1) or as a non-converger or fragile state (c=0), or in an intermediate state of transition between being a converger and non-converger (0 < c < 1).

    The failed-state penalty FP is defined as:

    where f plays a role analogous to that of c in equation (7) above. For each fragile (Tier 4) nation, f is set equal to 1, corresponding to a penalty in productivity growth of 1.8 percent, so that its yearly productivity is assumed to fall by 0.5 percent a year. The coefficient of negative 1.8 percent and the list of such fragile states is derived by identifying state failures and debilitating wars prior to the global financial crisis that lasted at least 2 consecutive years in 44 nations.

    The projections of GDP growth are concluded by applying the labor growth, capital deepening, and productivity changes to each country over the period 2012–2050.

    The measure of GDP at expected market exchange rates adjusts the GDP estimate by expected changes in the real exchange rate. First, an equation is derived to establish a theoretical relationship between a country's real exchange rate and its PPP income relative to that of the US. Then, the country's modelled exchange rate converges towards the value that corresponds to its income in this theoretical equation. These relationships are not linear, and the countries for which increases in GDP PPP per capita most appreciate their real exchange rates are the countries whose incomes are between a third and two-thirds that of the United States, and not the poorest or richest countries.

    The model also projects the sizes of the low, middle, and high-income populations, again following Kharas (2010b), by measuring the number of people in each country with living standards—in PPP terms—within a certain absolute range. An income distribution for each country is derived from the World Bank's International Comparison Program.

    The book makes separate projections for the Asian Century and Middle Income Trap scenarios. The difference between the scenarios is how countries are classified, either as converging, non-converging, or failed, and how countries gradually transition between classifications.

    For the first scenario (the Asian Century), the starting point is the countries' statuses in 2010: 38 countries (7 Asian) are rich, 31 (11 Asian) converging, 112 (29 Asian) non-converging, and 14 (2 Asian) failed.3 For 145 countries, the classification is taken from the “Four-Speed World” classification used by Kharas. The remaining 50 countries are classified using a similar analysis of recent historical data.4 The Asian Century scenario assumes the following: all eleven currently converging, middle-income economies in Asia will continue to converge; eleven Asian (and six non-Asian economies) will gradually also become convergers; and all failed states will gradually stop failing beginning in 2021 and fully graduate to the third group in 2025. The convergence of the six non-Asian non-convergers and the fact that all failing states eventually stop failing in this scenario results from the shared prosperity of the Asian Century scenario that benefits the entire world.

    The second scenario is the “Middle Income Trap Scenario”. Here, all currently converging Asian countries with a GDP PPP per capita in 2010 below $20,000 are assumed to fall into the Middle Income Trap. They gradually stop converging beginning at varying income-dependent points between 2015–2026, and remain non-convergers for the rest of the time-frame.

    In both scenarios, the transition of individual countries between converging and non-converging, or from failed to non-converging, is gradual. That is, countries are made to adopt an intermediate state between failed and not-failed, or between converging and non-converging, by varying the values of f and c in equations (7) and (8).

    3 Projections could not be made for 10 of these 195 countries because the required data is not available.

    4 However, unlike the Kharas classification, this book does not distinguish between middle income non-convergers and poor non-convergers. We argue that during the next forty years many poor or lower-middle income countries will graduate to middle income status.

    Appendix 3: Asia's Technology Landscape

    RameshMashelkar and VinodGoel
    Predicting the Future

    As the first decade of the 21st century draws to a close, it is interesting to ponder the future that lies four decades hence. To be fair, we would not have been able to predict today's technological landscape four decades ago. At the time, there was no Internet, no World Wide Web, no laptops, no mobile phones, no network of communications satellites, no iPods or iPads, and no stem cell technology; yet, today all of these items impact—if not dominate—our lives. Thus, it is a very difficult exercise to predict the technological landscape of Asia four decades from now. However, this note attempts a best guess as to what the future state of technology could look like and how such a picture might influence events in Asia. With the current pace of technological change, one can easily conceive of major technological breakthroughs appearing before 2050 (and beyond). As a result, the Asian Century may not only be marked by a shift of economic power to the region, but a shift that extends to technology as well.

    Rapidly Changing Asia

    In terms of technological innovation, Asia has progressed unevenly over the past 4 decades. Following the end of World War II, Japan raced ahead to become a technological superpower, joining the Organisation for Economic Cooperation and Development (OECD) in 1962. Within another one to two decades, the Republic of Korea and Taipei, China had achieved the status of technologically advanced countries due to an emphasis on and investment in higher education, science, and technology. Singapore eventually joined this club by carving out a niche in specific areas such as biotechnology and making innovative changes in public policy to welcome foreign nationals who had achieved eminence in science and technology elsewhere. In this way, Singapore avoided suffering from the disadvantage of having a small human capital base.

    India faced two adversities along its journey of technological innovation following independence in 1947. First, as a poor country lacking financial resources, India had to resort to “frugal engineering,” which meant creating more from less. Second, India lacked access to a variety of technology, ranging from satellites to nuclear power to supercomputers.

    The lack of competition in the Indian economy prior to liberalization, which did not begin in earnest until the early 1990s, resulted in technological development that was driven solely by a policy of import substitution. A closed economy also meant a lack of access to foreign direct investment (FDI) and foreign technology. Once it began pursuing a policy of liberalization starting in 1991, India made rapid gains in technological innovation.

    The People's Republic of China (PRC) opened its economy two decades earlier than India did and reaped huge benefits as a result. PRC remains ahead of India today in all areas of technology, with the exception of information technology services and computer software development. PRC's prowess in high-technology areas such as advanced space, aerospace, and nuclear technologies is well known, with achievements ranging from high-speed bullet trains and advanced fighter jets, to naval aircraft carriers and advanced nuclear reactors. Furthermore, massive investments in clean technology are already returning a rich dividend, and PRC has acquired the second position behind the United States in nanotechnology even after its late start. Meanwhile, PRC has taken a huge lead over India in supercomputers. The recently announced list of the world's top 500 supercomputers shows PRC topping the global list with 41 indigenously developed supercomputers, compared with four from India.

    Biotechnology

    It is widely agreed that the 21st century will be the century of biology just as the 20th century was dominated by information and communication technology (ICT). Together, these two technologies will have game-changing influence on human development over the next four decades. What will be Asia's position in this century of modern biotechnology? It is plausible that Asia could be a biotechnology leader by 2050 with a dominant position in a variety of frontier fields including stem cell technology, synthetic biology, and pharmaco-genomics.

    Stem cell technology has moved from preventive (vaccines) and curative (antibiotics) medicine, to predictive (gene therapy) and regenerative (stem cell therapy) medicine. Several Asian countries have taken an early lead in the development of stem cell technology. Today, the Republic of Korea and Singapore are considered among the leaders in this field of science. India and PRC are beginning to build on the promise of stem cell technology through judicious investments in human capital and infrastructure.

    More than 20 research centers in India are carrying out basic stem cell research to develop therapies for cancer, diabetes, heart disease, and brain disorders such as Alzheimer's disease. Although PRC has less than 10 major stem cell research centers, in Taizhou a spinoff of Beijing University known as Beike Bio Technology is already using stem cells to treat more than 250 patients for diseases ranging from cerebral palsy to optic nerve damage. Many of their patients come from the US, where therapies based on stem cell research are difficult to find due to legal restrictions.

    An early advantage has been gained by Singapore, Republic of Korea, PRC, and India, which have forged ahead through less restrictive policies concerning stem cell research. Asia has the competitive advantages needed to become a leader in stem cell technology and therapies. This unique positioning in regenerative medicine could have interesting consequences for medical tourism, with a potential explosion in the numbers of Americans coming to PRC seeking stem cell therapies.

    Asia could also lead the new age of pharmaco-genomics, or personalized medicine, in which physicians select the drugs that are most likely to help a specific patient, while at the same time ensuring the absence of unwanted side effects. There are two factors that favor Asia in this field: affordability and diversity. First, the costs of sequencing an organism's genetic material have plummeted dramatically; the dream of sequencing an individual's genetic makeup in as little as 15 minutes at a cost of only US$15 is not far off. Affordability can lead to ready access to such sophisticated technologies in learning centers across Asia.

    Second, Asia's vast genetic diversity aids research in pharmaco-genomics. Gene-based prevention, diagnosis, and treatment has the potential to revolutionize the treatment of HIV/AIDs, cancer, and other deadly diseases. Genetic sequencing may be particularly useful in combating infectious diseases through a process of reverse vaccinology, which refers to the design of vaccines based on computer analysis of a pathogen's genome. This approach has recently delivered success in the production of a vaccine against Group B meningococcus, which had escaped conventional vaccine production methods for over 40 years. Remarkably, the development of this vaccine took only 18 months, which was far faster—and at a cheaper cost—than previous techniques. The bulk of vaccine production is shifting to countries such as India. Aided by affordable advanced technologies, Asia could be a world leader in the research and production of modern vaccines.

    The field of synthetic biology is developing new ways to build living organisms. Simple bacteria can be made routinely by inserting synthetic genomes into empty cells. These organisms do not merely duplicate their natural predecessors but also incorporate whatever new traits their designers wish to include in them. From triggering an immune system response, to conveying new generic material into human cells, to repairing hereditary diseases, to carrying out industrially useful chemicals, the promise of synthetic biology is awesome. Although the US has a clear lead in this field, it would not be surprising if India or PRC took a leading position starting in 2010–2020.

    The replacement of traditional chemistry by processes that are modeled on biology will lead the way to bio-mimetic synthesis. Closely related to this is bio-manufacturing—the use of cells to produce medically and industrially useful compounds. Cells will be genetically engineered to deliver compounds that nature overlooked. Scientists have already produced universally acceptable blood from stem cells. Medical researchers have successfully altered complex organs in the human body such as the skin, liver, heart, and pancreas. By 2050, it is entirely possible that organs will be grown in a laboratory from the recipient's own tissue, after appropriate genetic repair and then inserted into the recipient's body.

    Another advance will come from combining knowledge of engineering and electronics with biology to make complex systems. One example is the recent work on creating artificial retinas for the blind that can link to the optic nerve and send messages to the brain. Other experiments involve using cells as the serving elements in detectors for pollution, bacteria, and nerve agents.

    Bio-genealogy, which is the study of the fundamental processes of ageing, could lead to considerable progress in preventing, delaying, or reversing the ageing process by 2050. Asia will see a dramatic extension in life expectancy as both economic conditions and sanitary standards improve, more effective treatments become available for infectious diseases, and as the results of a concerted effort to treat biological ageing as a preventable disease materialize.

    The following life-extending developments are expected to be available by 2050.

    • Almost everyone will have their own DNA sequence that can be compiled into a database comprising health risks, therapies, and best practices based on the characteristics of an individual's genes.
    • Mitochondrial DNA damaged by disease or ageing will be replaceable.
    • Most genetic disorders will be curable through gene therapy.
    • Immune systems weakened by age will be replaced using fresh cells grown from the patient's own bone material.
    • To replace diseased or failing organs, doctors will grow new ones from patients' own cells.
    • Tissue regeneration will take place without rejection by creating, manipulating, and transplanting pristine cells from another part of a patient's body.

    These and other anti-ageing therapies will make life spans of over 100 years commonplace. More importantly, based on animal-based studies underway at the moment, the “quality of life” will not suffer with ageing as it does today. This development could have a profound effect on the impacts of a “demographic dividend in some Asian countries.

    Information and Communications Technology

    In the 1960s, Gordon Moore predicted that computer power would double every year, which he later amended to a doubling every two years. Subsequent computer experts have so suggested that this uncannily accurate law may not survive beyond 2020 because transitions will have reached limits of miniaturization at the atomic level. While it took 42 years from 1959 to 2001 for computer speed to increase by a factor of 1 million, according to Denis Bushnell, Chief Scientist at NASA's Langley Research Center, computer power is only likely to grow by a factor of 100 between 2001 and 2030.

    Meanwhile, today's silicon chips will no longer be relevant by 2020. They will have been supplanted by newer, much faster technologies, including optical computers, molecular computers, bio-computers, and perhaps even quantum computers. Before the end of the first decade of the 21st century, IBM launched its petaflop machine, which is capable of performing 1 million billion floating point operations per second. But within a year, PRC announced that it was joining the race with a petaflop supercomputer of its own. By 2050, India may also have consolidated its position as a leader in supercomputing.

    An evolutionary change in human society in recent decades has been the proliferation of the Internet, facilitated by growing bandwidth. By 2020, it is predicted that a combination of fiber optics, satellite-based Internet backbone services, and universal high speed “last mile” connections will shift all electronic communications to the Internet. Traditional telephones will have been replaced by voice over internet protocols (VOIP). The use of natural user interface (NUI) technologies, which do not employ a keyboard but instead respond to gestures or touch, will bring further dramatic shifts. Similarly, early successes in conversational computing will occur in narrowly focused applications such as toys and pre-school computer tutors. Within 5 years, many professional and technical workers will likely be carrying a chatty cyber-assistant in their cell phones, capable of responding to a large number of routine verbal instructions and work-related requests. Conversational computers will commonly be used in customer service lines, tracing lost luggage, citizen complaints, public crime reporting, and warranty fulfillment. By 2050, humans can expect to have regular conversations with their cars, appliances, and houses, as conversational computer technology further improves with mature artificial intelligence (AI).

    Concurrently, the challenges of labor shortages in countries with ageing populations are being addressed through the use of robotic technology. The governments of Japan and the Republic of Korea are each promoting research and development (R&D) in the field of robotics for the specific purpose of reducing dependence on immigrant labor. Sectors such as agriculture, transportation, and healthcare are expected to rely heavily on robots in the future.

    Similarly, AI is now used on a limited but growing basis in specialized applications such as medical diagnostics, interpretation of photo-imagery, and student counseling. By 2050, AI-based systems will have displaced a range of technical and para-professional workers, whose jobs involve routine applications of normative and cognitive skills. The evolution of such systems has the potential to significantly reduce the amount of labor devoted to offshore routine customer support services and back office financial service operations, among other activities.

    It is conceivable that by 2050 integrated robotics, AI, and conversational computer capabilities will have measurably reduced labor requirements in agriculture, food processing, manufacturing, factory-built housing, transportation, and services. This job displacement will have two potential effects: (i) in mature industrial economies, it will free up scarce labor for high-value jobs; and (ii) in much of Asia, it will take away jobs from semi-skilled functionaries, thereby eliminating a comparative advantage that many Asian countries have enjoyed to date.

    The Changing Landscape of Science, Technology, and Innovation

    There are clear indications that the center of gravity of scientific research and technological innovation is shifting toward Asia.

    First, in recent years there has been a massive expansion of educational and research institutions in parts of the Asia, most notably in PRC and India.

    Second, in the past decade, there has been a steep rise in the level of the advanced economies' R&D funding in the rapidly expanding economies in Asia.

    Third, an abundant availability of scientific talent at a low cost in Asia has meant that international companies are setting up their R&D centers in countries like India and PRC. In India, over 760 international companies have set up R&D centers, employing around 130,000 scientists, engineers, and technologists. These centers have begun to generate significant amounts of intellectual property for their parent organizations.

    Fourth, with educational and employment opportunities expanding in leading Asian countries, the well-known phenomenon of “brain drain” is beginning to reverse itself. A significant number of employees of multinational R&D centers are returning Asians who have been trained in some of the best centers of excellence in scientific research in the world. Improved economic conditions in their native countries have led to the availability of more sophisticated equipment for R&D. Advances in ICT have also translated into more productive interactions with overseas peers.

    Finally, tighter intellectual property laws in most Asian countries are allowing scientists to create innovative products, such as entirely new drug molecules, rather than simply reverse engineering existing products.

    Exciting economic and social developments, as well as intellectually stimulating challenges, have reversed the process of brain drain from Asia to one of “brain gain.” Several governments have even adopted proactive strategies to facilitate the return of talented scientists. For example, Taipei, China was able to secure the return of Nobel Laureate Professor Y.T. Lee by making an extraordinary offer of employment and appointing him the Minister of Science and Technology. PRC has designed schemes to draw top minds back from overseas by creating special high technology facilities to maximize their talents and offering differentiated privileges and remuneration packages. Singapore has drawn some of the world's leading researchers by offering world class facilities and lucrative compensation packages.

    These and other proactive incentive schemes are helping to set the stage for Asia to become a leader in science, technology, and innovation by 2050.

    Potential Game-Changing Technological Breakthroughs

    Technological revolutions that have yet to be foreseen might also bring major changes to the lives of entire generations born in the Asian Century.

    One of the fundamental mega-challenges the world faces is ensuring a sustainable supply of energy, while at the same time mitigating climate change risks. Some progress is being made through incremental technological innovations, including increasing the cost effectiveness of solar thermal- and solar photovoltaic-based energy systems.

    The transport sector, a huge energy consumer and major producer of carbon emissions, has been the focus of research resulting in some progress on energy conservation. For example, by 2035, 50 percent of all vehicles are expected to run on either electricity or hydrogen. By 2050, it has been predicted, 30 percent of all transport will run on alternative fuels, compared with nearly total dependence on fossil fuels today, and 30 percent of all liquid fuels will be bio-fuels.

    These forecasts might even change dramatically in the face of innovations that are transformative rather than merely incremental. A research group at the Massachusetts Institute of Technology has already achieved a breakthrough in splitting water molecules at room temperature. Tata Motors from India is partnering with this group to examine the feasibility of on-board hydrogen generation by splitting water molecules, possibly to enable the world's cheapest car, the Tata Nano, to run on water!

    Meanwhile, the Nobel Prize winning research of J. George Bednorz and K. Alexander Müller from IBM labs in Zurich has raised expectations about superconductors that can function at ambient temperatures. If such a breakthrough were to occur, superconductors operating at room temperature could power levitating trains that would outperform any of today's high-speed trains.

    With regard to climate change, the environmental risks that emanate from the burning of fossil fuels can only be tackled through technological innovation. Physical carbon sequestration could be aided significantly by bio-sequestration, the process of using carbon dioxide-dependent microalgae to convert carbon dioxide, water, and nutrients into lipids through photosynthesis. The lipids, in turn, are converted into bio-fuels. The successful application of this technology could lead to coal-based power plants in which bio-sequestration produces a closed-loop system without any carbon dioxide emissions.

    Technological revolutions might occur in other areas as well. For example, even with only incremental innovations between now and 2050, agriculture will become increasingly automated. Robots will appear on farms and in fisheries to replace human laborers. Sensor-based and electronic tagging systems can already monitor growth rates, nutrient levels, and circulation processes. The results produce models, which study plant structures from root to tip to determine their growth patterns. This technology will lead to continued productivity improvements in agricultural output that will help meet the demands of an ever-growing global population that is estimated to reach 9 billion people by 2050. Furthermore, as land and water become scarcer in the decades ahead, modern biotechnology will continue to make advances in crops that can be grown under saline conditions while using a fraction of the water and nutrients needed today.

    The most significant scientific discoveries and breakthroughs of the 20th century came exclusively from the developed economies of the EU, Japan, and North America. These included (i) integrated circuits, which led to the ICT revolution that has changed the world; and (ii) the discovery of the structure of DNA, which has led to recombinant DNA technology, a true game-changer for humanity. Given the evolving landscape of science, technology, and innovation today, the potential game-changing breakthroughs of the future may well come from Asia!

    Asia as an Inclusive Innovation Leader by 2050

    Despite the rise of Asia as an economic power, income inequalities and a lack of opportunity for a vast number of Asians remain important challenges. Asia must aim for inclusive growth and inclusive innovation. Enterprises have always sought to get more (performance) from less (resources) for more (profit). A new paradigm should seek to get more (performance) from less (resources) to meet the needs of more and more (people) at the bottom of the development pyramid. This new paradigm constitutes the essence of inclusive innovation.

    Examples of inclusive innovation comprise products and services such as the world's cheapest car, the Tata Nano, which is priced at only US$2,500; the world's cheapest mobile phone sets priced at US$20; mobile phone call rates just over US$0.01 per minute compared with US$0.08 in the US; cataract surgery that costs US$30 compared with US$3,000 in the US; and laptop computers costing just US$35. These are not dreams, but accomplishments that have resulted from ingenious innovations in technology, business processes, and work flow. Such achievements bode well for Asian-led inclusive innovation.

    Inclusive innovation is not only good for Asia, it is also good for the whole world through reverse innovation (Immelt et al 2009). For example, the General Electric (GE) medical team in India has developed a portable electro cardiogram machine at a fraction of the cost of a similarly performing machine in developed economies. Similarly, the GE medical team in PRC has developed a portable ultrasound machine at a fraction of the cost of a similarly performing machine in developed economies. GE has found that a market is emerging for these machines in the developed world, reflecting a reversal of the traditional paradigm in which researchers in advanced economies would develop an expensive medical machine and make it affordable to the developing world only after dropping certain high-cost features. There is widespread recognition that the old paradigm is now reversing itself as Asian countries such as PRC, India, and others are undoubtedly going to be sources of global innovation in the future.

    Whether it is reverse innovation or inclusive innovation that will shape the future, or a combination of both, it is clear that Asian businesses are well-positioned to lead. This evolving reality should form the cornerstone of the vision of Asia's technology and research landscape in 2050.

    Appendix 4: Driving Productivity and Growth

    Table A4.1 Asia: GDP growth and TFP growth, 1970–2010

    Table A4.2 Asia: Composition of growth, 1970–2010

    Appendix 5: A New Approach to Urbanization

    Table A5.1 Fifty fastest growing cities in Asia
    Table A5.1 Fifty fastest growing cities in Asia
    Table A5.2 World mega cities with population over 10 million for 2010, 2030, and 2050
    Table A5.3 Rates of urbanization by country: 2010 and 2050
    Economy20102050
    PRC46.9673.23
    Hong Kong, China100.00100.00
    Macao, China100.00100.00
    Dem. People's Republic of Korea60.2274.53
    Japan66.8380.08
    Mongolia62.0379.53
    Republic of Korea82.9690.83
    Afghanistan22.6047.00
    Bangladesh28.0756.41
    Bhutan34.7164.17
    India30.0154.23
    Iran70.7585.52
    Kazakhstan58.5175.87
    The Kyrgyz Republic34.5553.58
    Maldives40.1073.12
    Nepal18.6247.56
    Pakistan35.9059.37
    Sri Lanka14.3131.34
    Tajikistan26.3246.40
    Turkmenistan49.5071.60
    Uzbekistan36.2556.01
    Brunei Darussalam75.6587.21
    Cambodia20.1143.83
    Indonesia44.2865.95
    Lao People's Democratic Republic33.1868.03
    Malaysia72.1787.85
    Myanmar33.6562.87
    Philippines48.9069.36
    Singapore100.00100.00
    Thailand33.9659.96
    Timor-Leste28.1254.92
    Viet Nam30.3858.99
    Source: UN Population Divison.

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    About the Editors, Authors, and Contributors

    The Editors

    Harinder S. Kohli is the Founding Director and Chief Executive of Emerging Markets Forum as well as President and CEO of Centennial Group International, both based in Washington, D.C. He is the Editor of Global Journal of Emerging Markets Economies, and serves as Vice Chairman of the institution-wide Advisory Group of Asian Institute of Technology (Thailand). Prior to starting his current ventures, he served some 25 years in various senior managerial positions at the World Bank. He has written extensively on the emergence of Asia and other emerging market economies, financial development, private capital flows, and infrastructure. He is co-editor of “India 2039: An Affluent Society in One Generation” (2010), “Latin America 2040—Breaking Away from Complacency: An Agenda for Resurgence” (2010), “A Resilient Asia amidst Global Financial Crisis” (2010), and “Islamic Finance” (2011).

    Ashok Sharma is the Senior Director of Asian Development Bank's Office of Regional Economic Integration. He is the chair of the community of practice for regional cooperation and co-chairs the community of practice for finance of ADB. He also served as Senior Advisor of the South Asia Department of ADB and Director of Financial Sector, Public Management and Trade Division of South Asia Department. He has worked extensively on project and knowledge products on financial sector development, fiscal and governance reforms, infrastructure financing, and enabling public-private partnerships. He is the co-editor of “A Resilient Asia Amidst Global financial Crisis” (2010).

    Anil Sood is Chief Operating Officer of Centennial Group International. In his 30-year career at the World Bank, he occupied many senior positions including Vice President, Strategy and Resource Management, and Special Advisor to the Managing Directors. He has since advised chief executives and senior management of a number of development organizations including the African Development Bank, the Islamic Development Bank, the United Nations Development Program, and the United Nations Economic Commission of Africa, on matters of strategy and development effectiveness. He is the co-editor of “India 2039: An Affluent Society in One Generation” (2010), and “Latin America 2040—Breaking Away from Complacency: An Agenda for Resurgence” (2010).

    The Authors

    Drew Arnold graduated from Georgetown University in 2010 with an undergraduate degree in International Economics and an honors certificate in International Business Diplomacy. He is currently pursuing a master's degree in Applied Economics and a certificate in Forecasting Practice from John Hopkins University. He has been working at Centennial Group International since 2009, and currently works as an Economic Analyst. He has contributed to papers involving wealth lost during the 2008 financial crisis and the recent resilience of certain emerging market economies.

    Cameron Hepburn is a Director of Vivid Economics Ltd. and Senior Research Fellow at the London School of Economics (Grantham Research Institute). He is an expert in market economics, commercial strategy, and environmental economics and ethics. He has advised governments and international institutions on environmental and climate policy, and has worked with a range of private sector clients on environmental and climate strategy. He also holds Research Fellowships at Oxford University and serves as a member of the Economics Advisory Group to the UK Secretary of State for Energy & Climate Change, and as a member of the Academic Panel, UK Department of Environment, Food and Rural Affairs. He is an Associate Editor of the Oxford Review of Economic Policy.

    Yasheng Huang is professor of political economy and international management and holds International Program Professorship in Chinese Economy and Business at Sloan School of Management, Massachusetts Institute of Technology. He also holds a special-term professorship at School of Management, Fudan University and an honorary professorship at Hunan University. His previous appointments include faculty positions at the University of Michigan and at Harvard University. He is a member of MIT Entrepreneurship Center, a fellow at the Center for China in the World Economy at Tsinghua University, a research fellow at Shanghai University of Finance and Economics, a fellow at William Davidson Institute at Michigan Business School, and a World Economic Forum Fellow. Professor Huang has numerous publications to his credit, including Capitalism with Chinese Characteristics which was selected by The Economist magazine as one of the best books published in 2008.

    Shigeo Katsu is President of the Nazarbayev University in Kazakhstan and Chair of the USA Board of Restless Development, a UK-based youth-oriented international NGO. Prior to these ventures, he had a 30-year career at the World Bank, where he held many senior positions, including Vice President for Europe and Central Asia (ECA) and Special Advisor to the Managing Directors. He now also advises governments and a number of international organizations on different issues related to development.

    Homi Kharas is a Senior Fellow and Deputy Director of the Global Economy and Development program at the Brookings Institution in Washington, D.C., has been a member of the Working Group for the Commission on Growth and Development, chaired by Michael Spence, a nonresident Fellow of the Organization for Economic Cooperation and Development's (OECD) Development Centre, and a member of the National Economic Advisory Council to the Prime Minister of Malaysia. He spent 26 years at the World Bank. His research interests are now focused on the global middle class, Asian growth and development, and international aid for the poorest countries. He has numerous publications to his credit.

    Harpaul Alberto Kohli is the Manager of Information Analytics at Centennial Group International and Emerging Markets Forum, where he is responsible for all modeling, econometrics, databases, statistics, and technology management. He earned a degree with honors in Mathematics and Philosophy from Harvard University, where he served as co-president of both the Society of Physics Students and the Math Club. He earned his MBA at Georgetown University, with emphases on psychology and on financial markets and public policy. He is also a Microsoft Certified Technology Specialist.

    Johannes F. Linn is a Senior Resident Scholar at the Emerging Markets Forum and a Non-resident Senior Fellow at the Brookings Institution in Washington, D.C. During his 30-year career at the World Bank, he held many senior positions, including Vice President for Europe and Central Asia (ECA) and Staff Director of the World Development Report 1988. A collection of his speeches were published under the title ‘Transition Years—Reflections on Economic Reform and Social Change in Europe and Central Asia’ (World Bank, 2004). In 2004/5, he was the lead author of the United Nations Development Program's Central Asia Human Development Report. He recently edited (with Werner Hermann) the volume ‘Central Asia and The Caucasus: At the Crossroads of Eurasia in the 21st Century (Sage, 2011).

    Jayant Menon is Principal Economist in the Office for Regional Economic Integration at the Asian Development Bank. He was the co-task manager of the Asia 2050 study. Prior to joining ADB, he was Senior Research Fellow at the Centre of Policy Studies at Monash University in Melbourne, Australia. He has also worked at the University of Melbourne and Victoria University, and has held visiting appointments at the Australian National University, Institute of Southeast Asian Studies in Singapore, and American University in Washington, DC. He holds adjunct appointments at the Australian National University, University of Nottingham, and the Cambodian Institute for Cooperation and Peace. He is co-editor of the ASEAN Economic Bulletin, and serves on editorial boards of several academic journals. He is the author or co-author of more than one hundred academic publications, mostly on trade and development, and particularly as they relate to Asia.

    Sabyasachi Mitra is a Senior Economist in the Office of Regional Economic Integration (OREI) of the Asian Development Bank. He was the co-task manager of the Asia 2050 study and was also the task manager of the ADB flagship study ‘Institutions for Regional Integration: Toward an Asian Economic Community.’ He participates in ASEAN+3’s Asian Bond Market Initiative (ABMI) and other regional financial initiatives. In his current capacity, he is responsible for the ADB's research on local currency bond markets and works on financial market integration and regional cooperation issues. Prior to joining the ADB, he worked as an international financial journalist with Reuters for over ten years in London; Hong Kong, China; Malaysia; and India.

    Anthony Pellegrini is a partner and member of the Board of Centennial Group International. He is a former Director of Transportation, Water and Sanitation and Urban Development at the World Bank. Mr. Pellegrini is a past chairman of the International Advisory Board of Paranacidade, a Brazilian development fund that lends to local governments. Mr. Pellegrini has extensive international experience in the field of urban development and infrastructure. He chaired the Transportation, Water and Sanitation and Urban Development Sector Boards of the World Bank which brought together all regional sector managers in the Bank responsible for policy issues in these sectors. Mr. Pellegrini's recent clients have included the Asian Development Bank, the European Investment Bank, the International Fund for Agriculture Development, Japan Bank for International Cooperation, the World Bank, US Trade and Development Agency, USAID, and as well as private companies and governments.

    Hossein Razavi is the former Director of the Energy and Infrastructure Department of the World Bank. During his 25-year tenure at the World Bank he served a number of managerial and professional positions including the Chief of Oil and Gas Division, the Director of the Energy Department, and the Director of Private Sector Development. Dr. Razavi's main research interest is on structuring financial vehicles suitable to the energy sector. He trains government officials and oil and gas executives on the subjects of energy finance, private sector development, and infrastructure policy. His publications include several books and numerous papers on project finance, economic planning; and energy and environment. He serves on the editorial boards of the Energy Journal and Energy Economics.

    Andrew Sheng was Chairman of the Securities and Futures Commission, Hong Kong, from October 1998 to 30 September 2005. He has served in various positions with Bank Negara Malaysia, the World Bank, and the Hong Kong Monetary Authority. He has chaired/co-chaired the Working Party on Transparency and Accountability (one of the three Working Parties formed under the Group of Twenty-two Finance Ministers and Central Bank Governors), the Financial Stability Forum‘s Task Force on Implementation of Standards (1999), and the Technical Committee of IOSCO, the International Organization of Securities Commission (2003–2005). In May 2003, he was appointed Convenor of the International Council of Advisers and Chief Adviser to the China Banking Regulatory Commission. He became Chairman, OECD-ADBI Roundtable on Capital Markets in October 2005 and concurrently Adjunct Professor, Graduate School of Economics and Management, Tsinghua University, Beijing and Faculty of Economics and Administration, University of Malaya.

    Y. Aaron Szyf is a Policy Analyst at Centennial Group International where he focuses on analyzing projected debt sustainability and country risks for selected emerging economies. He graduated from the Fletcher School of Law and Diplomacy in Massachusetts with a Master of Arts in International Affair and concentrations in Development Economics (MALD) and International Business. In addition, Aaron holds a Master of Arts in Modern Jewish History from Yeshiva University in New York. He earned his Bachelor of Science in Finance Summa Cum Laude from the Sy Syms School of Business of Yeshiva University in 2003.

    John Ward is a Principal at Vivid Economics where he specializes in environmental economics, industrial organization, finance and the application of economics to public policy issues. He has led much of Vivid Economics’ work on climate change in developing and emerging economies and the advice that Vivid Economics provided to the African Development Bank on the UN High Level Advisory Group on Climate Change Finance. He has managed projects for a diverse portfolio of clients including numerous companies, government departments and regulatory bodies, as well as the European Commission, World Bank, IEA and UNEP.

    With Contributions from

    Amitav Acharya is Professor in the School of International Service, American University in Washington DC, and the UNESCO Chair in Transnational Challenges and Governance and Chair of the ASEAN Studies Center. Previously, he was Professor of Global Governance at the University of Bristol, Professor at York University, Toronto, and at Nanyang Technological University, Singapore, Fellow of the Harvard University Asia Center, and Fellow of Harvard's John F. Kennedy School of Government. His recent books include Whose Ideas Matter? (Cornell, 2009); Beyond Iraq: The Future of World Order (co-edited, World Scientific, 2011); Non-WesternInternational Relations Theory (co-edited, Routledge, 2010); and The Making of Southeast Asia (Cornell, 2011).

    Hans P. Binswanger-Mkhize is a development economist who has conducted research on a wide range of topics related to agriculture. In his 25 years at the World Bank, he was a manager in the World Bank's central Rural Development Department, as well as in the Latin America and Africa Regions. He assisted a number of countries in the development of agricultural and rural development strategies, and in the design of Community-Driven Development Programs and HIV/AIDS programs. He was the architect and writer of the 1997 Rural Development Strategy of the World Bank. He is a fellow of the American Association for the Advancement of Sciences and of the American Association of Agricultural Economists, as well as a recipient of the Elmhirst Medal of the International Agricultural Economics Association.

    Vinod Goel, a former World Bank official, is Head of Global Knowledge and Innovation Practice at Centennial Group International, and consultant for the World Bank and other international organizations. He is also the CEO and President of the Lagom Group. Mr Goel is a leading expert on private and financial sector issues and is well known in the international community for his pioneering work on higher education, technology and innovation, including publishing books on the subject. His global experience includes countries in Asia, Europe, Africa and Latin American Regions. He has a PhD and MBA from Cornell University, USA and Masters of Technology from National Dairy Research Institute, India.

    Natasha Mukherjee is the Deputy Editor of the Global Journal of Emerging Market Economies. She has held numerous positions in regional and international financial institutions (SADC, the Southern African Development Community, World Bank), academia (University of Zimbabwe) and non-governmental organizations (IFRPI, the International Food Policy Research Institute, Southern African Regional Poverty Network), and has worked on a variety of topics in the fields of agricultural, environmental, trade and development economics. She holds a Ph.D. in environmental economics from the Johns Hopkins University in Baltimore, USA.

    Ramesh Mashelkar is the President of the Global Research Alliance, a network of public research institutions globally. He is Chairman of the National Innovation Foundation and the Reliance Innovation Council in India. He serves on the boards of several companies and educational and research organizations. He served for 11 years as the Director General of the Council of Scientific and Industrial Research. He is a Fellow of the Royal Society (U.K.) and Foreign Associate of the National Academy of Science (U.S.), and Foreign Fellow of the National Academy of Engineering (U.S.). He lectures widely and consults for national and international organizations on innovation and restructuring public research and development (R&D) institutions worldwide. He has received more than 50 awards and medals including the Padma Shri and Padma Bhushan, two of India's highest civilian honors.


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