Asia in Focus

1
Asia in Focus
The demise of the Asian Miracle
Before the Asian financial crisis, the fast
emerging economies in the region were held up as
shining examples of the successful application of
market driven development. The Asian crisis
revealed the inherent weakness of the economic
institutions in the affected countries and the
vulnerability of these economies to the
volatility of global financial markets.
2
Asia in Focus
The demise of the Asian Miracle
The flaw in the model of economic development
adopted by these developing countries was the
over-exuberance of governments and business in
responding to globalization and its promised
benefits by opening up and liberalizing their
economies ahead of adequate institutional
development, particularly in the financial sector
3
Asia in Focus
The prospects for recovery
The recovery that is taking place is threatened
by the prospect of a global recession The
employment prospects in Asia are dependent on how
severe the global recession will be and the steps
Governments in Asia are taking to prepare their
workforce for the future. Poverty is endemic in
Asia and Governments must make serious efforts to
generate employment among the rural poor if they
are going to be able to reduce poverty.
4
Asia in Focus
Employment creation for poverty eradication
The key to poverty eradication in Asia is through
active efforts by Governments to create
employment. Given the enormity of the task facing
many countries to create sufficient jobs to
aggresively attack this problem, employment
creation needs to be broad-based and pro-poor.
5
Asia in Focus
The extent of extreme poverty
In East Asia, poverty declined most rapidly
during the 1990s, led by sharp declines in
China But the declines in poverty in China were
accompanied by widening income inequality,
between the countrys poorer and more rural
western provinces and the more industrialized
east, which probably slowed the overall rate of
poverty reduction for the country
6
Asia in Focus
The extent of extreme poverty
In other parts of the region, poverty increased
in the aftermath of the 1997-98 financial
crisis In Indonesia, the incidence of poverty
increased substantially, doubling from its
pre-crisis level. Since early 1999, there have
been indications that poverty has declined
significantly In South Korea, urban poverty
increased from 8.6 to 15.7 per cent by the end
of 1998 In Thailand, poverty increased by less
than expected because the urban middle class
appears to have borne the brunt of the crisis
7
Asia in Focus
The extent of extreme poverty
In Vietnam, the incidence of poverty dropped from
58 percent in 1993 to 37 percent in 1998 In
Cambodia the incidence of poverty declined from
39 per cent to 36 per cent between 1993/94 and
1997, and rural poverty declined less than urban
poverty.
8
Asia in Focus
The extent of extreme poverty
In South Asia, the proportion of population
living below the poverty line declined moderately
through the 1990s, but the absolute number of
poor did not fall In Bangladesh, steady growth
reduced the incidence of poverty during the
1990s, but poverty fell faster rate in urban than
in rural areas Poverty reduction has slowed in
Pakistan In Sri Lanka there has been very slow
progress in reducing poverty despite adequate GDP
growth.
9
Asia in Focus
What needs to be done for poverty?
In order to make concrete progress towards
achieving poverty reduction, countries need to
embark, therefore, on strategies to reshape their
economies and, in many cases, reform their public
sectors to help them attain these goals This
implies particular attention by policymakers to
accelerating both economic growth and social
development, and improving the distribution of
income and wealth.
10
Asia in Focus
Accelerating economic growth

• Rapid economic growth is the most powerful means
  by which countries can achieve higher living
  standards and reduce poverty
• Governments will have to implement policies that
  simultaneously encourage growth and macroeconomic
  stability, encourage improved productivity and
  shift resources to more efficient sectors
• Economic growth needs be pro-poor
• Need to for many countries to emphasize a
  rural-based development strategy

11
Asia in Focus
Improving the distribution of income and wealth
Governments need to also consider policies to
improve the distribution of income and wealth
because the benefits of growth for the poor may
be diminished if the distribution of income
worsens Some options for government actions to
influence asset and income distribution
12
Asia in Focus
Accelerating social development
Social indicators will benefit from improvements
in economic growth and income and wealth
distribution, but there is still room for
policies that target interventions that appear to
have a large impact on health and educational
outcomes Attention is also needed to the social
structures and institutions which affect
development. Gender inequality is a constraint
on growth and poverty reduction
13
Asia in Focus
Making the information economy a jobs economy
The new information and communication
technologies can create as well as destroy
employment But current trends are indicating
that ICTs carry a high employment creation
potential. The traditional tools of
macroeconomic policy should aim to ensure an
adequate level of aggregate demand, while a high
level of investment in ICT can trigger a virtuous
circle of economic growth
14
Asia in Focus
Making the information economy a jobs economy
The new information and communication
technologies can create as well as destroy
employment But current trends are indicating
that ICTs carry a high employment creation
potential. The traditional tools of
macroeconomic policy should aim to ensure an
adequate level of aggregate demand, while a high
level of investment in ICT can trigger a virtuous
circle of economic growth
15
Asia in Focus
Making the information economy a jobs economy
More integrated global markets driving more
efficient resource allocation could generate
jobs, but a high level of integration brings with
it a high degree of vulnerability. A world
economy integrated in real time carries ushers in
both advantages and new sources of
instability Interaction between national and
international policies should aim at smoothing
out the potential volatility inherent in more
integrated markets.
16
Asia in Focus
Making the information economy a jobs economy
The overall positive impact of the Internet
revolution on employment is the result of complex
dynamics at the sectoral level. Jobs are being
lost, in particular and paradoxically, in the
core ICT manufacturing sector, as productivity
soars. But very large numbers of jobs are being
created in the services sector. Appropriate
policies are nevertheless needed to cushion the
negative impacts of restructuring in certain
industries.
17
Asia in Focus
Making the information economy a jobs economy
Unemployment and social protection are necessary
for those made redundant after the introduction
of new technologies at their workplace and it is
usually the less skilled who bear the cost of
restructuring because they have the least
opportunity for retraining. Retraining schemes
are central to ensuring that those who lose their
job can catch up and find a new one. Such schemes
should be both internal to the firms and publicly
provided, especially for workers in smaller firms.
18
Asia in Focus
Making the information economy a jobs economy
Policies to encourage the development of small
services firms are needed. Support for small and
medium enterprises (SME) as well as for informal
sector firms is central to any employment
promotion policy as they are the main employment
creators. To facilitate the expansion of
e-commerce, a number of national policies will
have to be implemented rapidly. The existence of
a supportive and predictable legal framework is
an important prerequisite for enhancing trust in
e-commerce and thus promoting its development.
19
Asia in Focus
Making the information economy a jobs economy
Policies to encourage the development of small
services firms are needed. Support for small and
medium enterprises (SME) as well as for informal
sector firms is central to any employment
promotion policy as they are the main employment
creators.
20
Asia in Focus
Making the information economy a jobs economy
National action is required to ensure that local
enterprises (in particular smaller ones) can
actually use the tools of e-commerce to which
they have access. To facilitate the expansion
of e-commerce, a number of national policies will
have to be implemented rapidly. The existence of
a supportive and predictable legal framework is
an important prerequisite for enhancing trust in
e-commerce and thus promoting its development.
21
Asia in Focus
Making the information economy a jobs economy
The dynamics of employment creation and
destruction cannot be analysed solely at the
national level, since the new opportunities
brought by lower communication costs often lead
to the relocation of employment to geographically
distant production sites. The ILO World
Employment Report estimates that up to 12 million
service-sector jobs in industrialized countries
are contestable by developing countries.
22
Asia in Focus
Making the information economy a jobs economy
The potential for further international division
of labour is enormous in ICT-enabled services as
high-cost economies move up the value chain,
leaving lower value-added activities to be
contracted out to firms in lower-cost developing
economies. Remote-processing activities offer
good opportunities for developing country based
enterprises to enter international trade in
services the entry cost is low and, as a social
benefit, the employment potential is extremely
high.
23
Asia in Focus
Making the information economy a jobs economy
The global market for ICT offers a range of ICT
products and services which developing countries
can tap into based on their comparative advantage
e.g. teleworkers in India transcribing
prescriptions by doctors in the United States
24
Asia in Focus
Making the information economy a jobs economy
Appropriate and specific policy instruments
range from building an efficient ICT
infrastructure, investing in education and
training to build a skilled labour force,
promoting indigenous RD, and attracting foreign
direct investment in ICT production. Access to
the Internet on a communal basis can provide
access to technically disadvantaged local groups,
enable improvements in the business skills of the
informal sector, and have positive externalities
in the local economy
25
Asia in Focus
Making the information economy a jobs economy
Community-based facilities in developing
countries are critical sources of access to ICT
and employees express a preference for collective
or centre-based teleworking such as
telecentres, telecottages and satellite offices
for the social interaction that they allow.
Access to Internet facilities on a communal
basis is also likely to improve the business and
marketing skills of informal sector workers and
it is useful also for self-employed
professionals.
26
Asia in Focus
Making the information economy a jobs economy
Despite dynamic and rapid change, for most
workers in the information economy, employment
stability with a single employer for long periods
continues to be the norm. Instability has been
internalized within firms. This internal
flexibility gives rise to feelings of insecurity
as workers are asked to be more polyvalent and to
adapt rapidly to changing tasks and teams.
27
Asia in Focus
Making the information economy a jobs economy
Institutions and their social partners have a
role to play in ensuring that this increased
internal flexibility is secured in the interest
of both workers and employers. Social dialogue
on issues such as training is crucial to ensuring
that the employers have the best possible
workforce and the workers are equipped to perform
the tasks that are requested from them.