As ASEAN, China and India already share a high volume of trade and have common borders, an integrated ACI (Asean, China, India) region might be able to contribute to a more balanced and resolute Asia, argues an expert.
Highlighting the immense economic potential of the ASEAN market and the fact that both India and China are poised to become major players in the regional economic framework, Dr. Biswa Nath Bhattacharyay, a renowned economic expect, explored the prospects of an integrated ASEAN, China and India (ACI) region at a talk organised by ORF Kolkata on ’Great Transformation of ASEAN, India and China: Prospects and Challenges’ on May 24th 2014.
Dr. Bhattacharyay pointed out that ASEAN, China and India already share a high volume of trade and also have common borders and therefore an integrated ACI region would be able to contribute to a more balanced and resolute Asia. He believes that the region needs to balance their dependence on exports and become socially and environmentally sustainable.
In a study conducted by the Asian Development Bank (ADB) and the Asian Development Bank Institute (ADBI), it was found that there will be unprecedented progress in improving the quality of life of people in ACI by 2030. 600 million people will be lifted out of extreme poverty, reducing it to less than 1% of the population by 2030, and 2.65 billion people in ACI will join the middle class by 2030 compared to 420 million in 2010. In China, India and the ASEAN region, 83%, 68%, and 65%, respectively, of citizens will form a large middle class which would help making the region the world’s leading consumers, producers, savers, investors, and financiers.
This boom will however pose certain serious challenges of which the primary one will be a surge in the demand for water and energy. The ACI region’s primary energy demand will double and dependence on imported oil and gas will grow significantly. The demand for annual water for China and India will increase by 61% and 58% and will exceed supply by 25% and 50% respectively. The study projected that further economic liberalization would contribute to deeper regional and global economic integration. It could add 5%-13% to the region’s income. But Dr. Bhattacharyay also acknowledged that unfavorable global political and economic developments could undermine growth.
The ACI region faces certain common challenges such as environmental concerns; reducing economic and social inequality; making the financial system resilient against domestic and external shocks; strengthening governance, accountability, and institutional effectiveness; raising productivity and fostering innovation in the light of demographic changes; and finally, resource scarcity and increasing competition. In order to address these common issues, the ACI framework needs to be able to enhance the quality of life of citizens through inclusive growth, and better governance. There needs to be Investment in human capital, technology, and R&D to foster a knowledge economy and society and achieve environmental sustainability through green growth focusing on comprehensive energy, water, and environmental policies. Additionally, the ACI would need to provide regional and global leadership to ensure freer trade and more secure financial flows. This would ensure that the transformation is harmonious and driven by pragmatic national policies supported by regional and global cooperation. The hard and soft connectivity within the region also needs to be strengthened. Dr. Bhattacharyay also drew attention to the fact that the development of clean energy in the form of nuclear energy was also essential to curb the pressure that is created on the environment with conventional energy.
Keeping in mind that the ACI structure would require specialized supporting institutions, Dr. Bhattacharya also spoke about six key regional institutions which can play an important role. These are the ASEAN+6 Free Trade Agreement, Asian Environment Fund (AEF), Asian Monetary Fund (AMF), Asian Regional Infrastructure Fund (ARIF), Asian Financial Stability Dialogue (AFSD), and an empowered and reformed ASEAN Secretariat.
Concluding his presentation, Dr. Bhattacharyay said that the while a regional transformation resulting in the ACI partnership may hold a lot of potential; it would be difficult to materialize if the challenges facing the region are not addressed. He stressed that Asia should not remain in the backseat when it comes to global decision making but work towards devising approaches best suited to their needs and available resources.
In her comments on Dr. Bhattacharyay’s presentation, Prof Lipi Ghosh spoke about the need to understand how historical factors can affect the ACI region because it is within the historical backdrop that contemporary transformations will take place. This is very important because the recent historical past of this region has led to the growth of elite groups which play a significant role in the policy formulation process. She observed that the most important part of Dr. Bhattacharyay’s presentation were his policy recommendations based on the findings of the ADB study. Prof. Ghosh also underscored the implications of deep rooted political and social tensions that exist in the countries comprising the region which could derail the integration process of the ACI structure. Other aspects which she believes need to be considered in light of the presentation include the question of cross-border terrorism, migration and the role of the diaspora in the region. In conclusion, she also raised the vital question of the interaction between the forces of globalisation versus the forces of Asian localization.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PREV
