˜ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDY

�ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDY

WORKING PAPER SERIES

Working Paper No: APFSOS/WP/49

REVIEW OF SOCIAL AND ECONOMICDEVELOPMENTS IN THE ASIA-PACIFIC REGION

WITH PROJECTIONS TO 2010

by

Mafa E. ChipetaSenior Forestry Officer

FAO Forestry Planning and Statistics Branch

Adrian WhitemanForestry Officer (Sector Studies)

FAO Forestry Planning and Statistics Branch

and

David J. BrooksEconomics ResearchUSDA Forest Service

Pacific Northwest Research Station

Forestry Policy and Planning Division, RomeRegional Office for Asia and the Pacific, Bangkok

Rome, May 1998

Chipeta, Whiteman & Brooks

Review of economic and social developments in the Asia-Pacific region with projections to 2010

The Asia-Pacific Forestry Sector Outlook Study is being undertaken under the auspices of theAsia-Pacific Forestry Commission.

This report comes under Workplan Number E24.2.

Asia-Pacific Forestry Sector Outlook Study Working Paper Series No: 49


TABLE OF CONTENTS

INFORMATION NOTE ON ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDY.................................................................................................................................................... I

SPECIAL NOTE: THE ASIAN ECONOMIC CRISIS ..................................................... IIISelected indicators of the crisis....................................................................................................................... iiiSummary of causes of the crisis ....................................................................................................................... vHow soon the crisis can be reversed................................................................................................................ v

EXECUTIVE SUMMARY ...................................................................................................... 1Contrasts within the region.............................................................................................................................. 1Population.......................................................................................................................................................... 2

Trends and current status ............................................................................................................................... 2Pressures on the land...................................................................................................................................... 3Future projections .......................................................................................................................................... 4

Economic development ..................................................................................................................................... 5Trends and current status ............................................................................................................................... 5The foundations for economic growth ........................................................................................................... 7Future projections .......................................................................................................................................... 8Resilience of economies................................................................................................................................. 8

Implications for the forest sector................................................................................................................... 10

INTRODUCTION .................................................................................................................. 11Aim of the study .............................................................................................................................................. 11Report structure.............................................................................................................................................. 12Countries and territories included in outlook study .................................................................................... 13

AN OVERVIEW OF THE ASIA-PACIFIC REGION ....................................................... 15Location and land area................................................................................................................................... 15Population........................................................................................................................................................ 19Economies........................................................................................................................................................ 21Regional collaboration.................................................................................................................................... 24

POPULATION DYNAMICS................................................................................................. 24Trends and current status .............................................................................................................................. 25Projections....................................................................................................................................................... 30

ECONOMIC DEVELOPMENTS......................................................................................... 36Trends and current status .............................................................................................................................. 36Development parameters................................................................................................................................ 41

Not all have achieved it................................................................................................................................ 41What growth rates have occurred? ............................................................................................................... 42Was the miracle spreading? ......................................................................................................................... 46What explained the miracle?........................................................................................................................ 49What of the miracle’s resilience? ................................................................................................................. 51

Driving Forces and Enabling Factors for Strong Growth - Regional Picture........................................... 54Trade............................................................................................................................................................ 54Savings and investment................................................................................................................................ 55Supportive policies and institutions ............................................................................................................. 59

Projections....................................................................................................................................................... 60General......................................................................................................................................................... 60



SOCIAL CHANGES.............................................................................................................. 63Urbanisation ....................................................................................................................................................63

Changes in magnitude of rural population ....................................................................................................63Agricultural dependency.................................................................................................................................66

Agriculture in the economy ..........................................................................................................................66Movement of the agricultural frontier...........................................................................................................68

Incomes and income distribution ...................................................................................................................72Prosperity, incomes and purchasing power...................................................................................................72

IMPLICATIONS FOR THE FORESTRY SECTOR......................................................... 74Relationship with state of forests and non-industrial goods and services ..................................................74Demand for industrial forest products ..........................................................................................................76

SOURCE DOCUMENTS ...................................................................................................... 79

ANNEX 1: IMPORTANT ASIA-PACIFIC REGIONAL ASSOCIATIONS ................... 83Asia-Pacific Economic Cooperation APEC...................................................................................................83South Pacific Commission - SPC....................................................................................................................83South Pacific Forum........................................................................................................................................84

ANNEX 2: BACKGROUND INFORMATION ON INDIVIDUAL COUNTRIES AND TERRITORIES ............................................................................................................ 85

A2.1 Advanced Industrial Economies (AIEs) ..........................................................................................85A2.1.1 Japan...............................................................................................................................................85A2.1.2 Australia .........................................................................................................................................86A2.1.3 New Zealand ..................................................................................................................................86

A2.2 Newly Industrialising Economies (NIEs).........................................................................................87A2.2.1 General ...........................................................................................................................................87A2.2.2 The Republic of Korea ...................................................................................................................88A2.2.3 Taiwan Province of China ..............................................................................................................89A2.2.4 Hong Kong SAR, China .................................................................................................................89A2.2.5 Singapore........................................................................................................................................90

A.2.3 North Asia .........................................................................................................................................90A.2.3.1 People’s Republic of China ............................................................................................................91A2.3.2 Mongolia ........................................................................................................................................94A2.3.3 Korea, D.P.R. .................................................................................................................................94

A2.4 Southeast Asia ...................................................................................................................................94A2.4.1 General ...........................................................................................................................................94A2.4.2 Indonesia ........................................................................................................................................96A2.4.3 Thailand .........................................................................................................................................97A2.4.4 Malaysia .........................................................................................................................................98A2.4.5 Vietnam..........................................................................................................................................98A2.4.6 Philippines......................................................................................................................................99A2.4.7 Myanmar ........................................................................................................................................99A2.4.8 Brunei...........................................................................................................................................100A2.4.9 Lao, PDR......................................................................................................................................100A2.4.10 Cambodia.................................................................................................................................100

A2.5 South Asia ........................................................................................................................................101A2.5.1 General .........................................................................................................................................101A2.5.2 India .............................................................................................................................................102A2.5.3 Pakistan ........................................................................................................................................104A2.5.4 Bangladesh ...................................................................................................................................104A2.5.5 Sri Lanka ......................................................................................................................................105A2.5.6 Nepal ............................................................................................................................................105A2.5.7 Bhutan ..........................................................................................................................................106



A2.5.8 Maldives ...................................................................................................................................... 106A2.6 Pacific Islands ................................................................................................................................. 106

A2.6.1 General ........................................................................................................................................ 106

ANNEX 3: ECONOMIC GROWTH - A LONG LOOK BACKWARDS....................... 109Selected determinants of economic growth................................................................................................. 109

ANNEX 4 : ASIA-PACIFIC CONTRASTS....................................................................... 111

ANNEX 5: CATEGORISATION OF COUNTRIES BY INCOME AND POPULATIONDIMENSIONS (ONLY COUNTRIES FOR WHICH INFORMATION CONVENIENTLYFOUND)................................................................................................................................. 113

ANNEX 6: DATA TABLES................................................................................................. 115



LISTING OF FIGURES AND TABLES

Figure 1: The Asia-Pacific share of World population in 1994................................................................ 2Figure 2: The Asia-Pacific share of World GDP in 1995.......................................................................... 5Figure 3: Land area of the major geographical regions of the World in 1994 ...................................... 15Figure 4: Land area of the five largest countries in the Asia-Pacific region in 1994............................ 16Figure 5: Distribution of land-uses in the major geographical regions in 1994.................................... 16Figure 6: Trends in crop, pasture and forest area in the major World regions ..................................... 18Figure 7: Population of the major geographical regions of the World in 1994 ..................................... 19Figure 8: The distribution of population in the Asia-Pacific region in 1994......................................... 20Figure 9: Population growth in the major regions of the World 1962-1996 .......................................... 20Figure 10: The Asia-Pacific share of World GDP in 1995...................................................................... 21Figure 11: The distribution of population in the Asia-Pacific region in 1994....................................... 25Figure 12: Changes in Asia-Pacific population 1961-1996 .................................................................... 26Figure 13: Rates of population growth in the Asia-Pacific region 1962-1996....................................... 27Figure 14: Average annual population growth in the Asia-Pacific region 1992-1996 .......................... 28Figure 15: UN medium fertility population projection for the Asia-Pacific region............................... 32Figure 16: Land to population ratio in 1994 and 2010 in selected Asia-Pacific countries.................... 35Figure 17: Asia-Pacific GDP in 1994....................................................................................................... 36Figure 18: GDP of the major Asia-Pacific economies in 1994 ............................................................... 37Figure 19: Changes in Asia-Pacific GDP 1978-1994 .............................................................................. 38Figure 20: Trends in GDP growth in the Asia-Pacific region ................................................................ 39Figure 21: Range of average GNP per capita in 1994............................................................................. 47Figure 22: GDP growth rates by country and territory in 1990 .............................................................. 48Figure 23: GDP growth rates by country and territory in 1995 .............................................................. 49Figure 24: Projected rural population changes from 1994 to 2025........................................................ 64Figure 25: Dominance of agriculture in some Asia-Pacific economies, 1995....................................... 67Figure 26: Asia-Pacific landuse: per capita arable land, 1994............................................................... 69Figure 27: Asia-Pacific agricultural frontier annual expansion/contraction rate (%), 1970-94.......... 71

Table 1 - Selected population statistics for the Asia-Pacific Region............................................ 3Table 2 - UN Population projections for the Asia-Pacific Region (medium fertility) ................. 4Table 3 - Trends in GDP in the Asia-Pacific Region.................................................................... 6Table 4 - Selected macro-economic statistics for the Asia-Pacific Region in.............................. 7Table 5 - GDP projections for the Asia-Pacific outlook study ..................................................... 9Table 6 - World GDP growth rates (%) summary1...................................................................... 22Table 7 - The size and growth of countries in the Asia Pacific region in 1994......................... 29Table 8 - UN population projections for countries in the Asia-Pacific region to 2010............. 33Table 9 - The projected size and growth of countries in the Asia Pacific region in 2010......... 34Table 10 - Per capita GDP and GDP growth in Asia-Pacific economies .................................. 40Table 11 - Asia-Pacific countries/territories - 1978-1998 Real GDP Growth (% per annum) . 43Table 12 - Average annual percentage growth of real GDP for 1966- ..................................... 45Table 13 - Average annual percentage growth rates of real per capita GDP for 1966-............ 45Table 14 - Summary information on external funding flows in Asia and the Pacific ............. 57Table 15 - Foreign direct investment in selected developing Asia-Pacific countries and

territories 1989-1994 ............................................................................................................ 57Table 16 - Alternative scenarios of GDP growth rate to 2010 (% pa)........................................ 62Table 17 - Projected Changes In Rural Population Between 1994 and 2025 ........................... 65Table 18 - Aspects of agricultural dependency and expansion .................................................. 70



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INFORMATION NOTE ON ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDY

At its sixteenth session held in Yangon, Myanmar, in January 1996, the Asia-Pacific Forestry Commission, which hasmembership open to all governments in the Asia-Pacific region, decided to carry out an outlook study for forestrywith horizon year 2010. The study is being coordinated by FAO through its regional office in Bangkok and itsHeadquarters in Rome, but is being implemented in close partnership with governments, many of which havenominated national focal points.

The scope of the study is to look at the main external and sectoral developments in policies, programmes andinstitutions that will affect the forestry sector and to assess from this the likely direction of its evolution and to presentits likely situation in 2010. The study involves assessment of current status but also of trends from the past and themain forces which are shaping those trends and then builds on this to explore future prospects.

Working papers have been contributed or commissioned on a wide range of topics. They fall under the followingcategories: country profiles, selected in-depth country or sub-regional studies and thematic studies. Working papersare prepared by individual authors or groups of authors on their own professional responsibility; therefore, theopinions expressed in them do not necessarily reflect the views of their employers, the governments of the Asia-Pacific Forestry Commission or of the Food and Agriculture Organization. In preparing the substantive report to bepresented at the next session of the Asia-Pacific Forestry Commission early in 1998, material from these workingpapers will be an important element but will be blended and interpreted alongside a lot of other material.

Working papers are being produced and issued as they arrive. Some effort at uniformity of presentation is beingattempted but the contents are only minimally edited for style or clarity. FAO welcomes from readers any informationwhich they feel would be useful to the study on the subject of any of the working papers or on any other subject thathas importance for the Asia-Pacific forestry sector. Such material can be mailed to the contacts given below fromwhom further copies of these working papers, as well as more information on the Asia-Pacific Forestry Sector Study,can be obtained:

Rome: Ms. Qiang MaForestry Officer (Econometrics)Policy and Planning DivisionForestry DepartmentFood and Agriculture Organization of

the United NationsViale delle Terme di CaracallaRome, 00100, ITALYTel: (39-6) 5225 3506Fax: (39-6) 5225 5514Email: <[email protected]>

Bangkok: Mr. Patrick DurstRegional Forestry Officer

FAO Regional Office for Asia and the Pacific Maliwan Mansion Phra Atit Road Bangkok 10200 THAILAND Tel: (66-2) 281 7844 Fax: (66-2) 2800445 Email: <[email protected]>



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SPECIAL NOTE: THE ASIAN ECONOMIC CRISIS

The draft of this working paper was completed just before the economic meltdown brought to anend what had come to be known as the “Asian Economic Miracle” with the currencies of keycountries like Thailand, Republic of Korea, Indonesia collapsing and economic growth in these andmany other countries coming to a halt or even regressing in some cases. At a stroke, the projectionsdeveloped in the draft working paper became obsolete and the paper needed major revision,sometimes reversal of assessments. It is dangerous to carry out such revisions while instabilityremains high, hence delay in revision till April 1998. The Outlook study which was to have usedthe economic projections in this paper, has had to use other conservative ones. The importance ofoffering projections in this paper has thus now diminished greatly and emphasis is placed insteadon qualitative presentation of the observed dynamics of development.

In this paper frequent reference will be made to the Asian economic “crisis”, “turmoil”,“dislocation”, or “meltdown”. Irrespective of the word used, these terms refer to the severeslowdown in performance of key economies of the region observed over a period but mostpronounced since around July 1997 when first Thailand, then Republic of Korea and laterIndonesia showed massive currency depreciation, loss of creditworthiness and other economicreversals including reported closure of considerable industrial infrastructure. The dislocationoccurred in other countries too, notably Malaysia and Philippines; particularly important at theglobal scale has been the dislocation and stalling/near reversal of the economy of Japan. Thestory of Asia’s economic dislocation is still unfolding and its negative ripples are reported dailywithin the region and far afield.

What follows is a quick profile of some indicators of dislocation. Analysis of its underlyingcauses is beyond the scope of this paper.

Selected indicators of the crisis

Not all the countries of the region produce their statistics early enough for the crisis to have beeneffectively monitored from all viewpoints as it evolved. Limited statistics are neverthelessavailable, even if sometimes delayed in time, to suggest the extent of dislocation. The tablebelow shows changes in US dollar exchange rate:



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Exchange rates for selected currencies 1996 - 1998

Country/territory National currency per $US1.00May1996

May1997

July1997

Sept.1997

Nov.1997

Jan1998

April1998

% devaluation

by April1998

Worstlevel

Australia 1.26 1.28 1.36 1.39 1.45 1.51 1.53 -18 -18Japan 107 114 116 120 128 128 131 -18 -18Republic of Korea 781 891 894 909 1035 17241 1375 -43 -55Singapore 1.41 1.43 1.45 1.51 1.60 1.75 1.59 -11 -19China 8.33 8.29 8.29 8.29 8.28 8.28 8.28 0 0

Taiwan Provinceof China

20.9 27.8 27.9 28.6 33.0 33.5 33.0 -37 -38

Indonesia 2328 2443 2478 2970 3510 11350 7950 -71 -7Malaysia 2.49 2.50 2.59 3.00 3.49 4.40 3.77 -34 -43Philippines 26.1 26.4 29.5 33.5 35.2 42.1 38.3 -32 -38Thailand 25.3 25.2 29.8 35.9 40.0 52.4 39.3 -26 -52India 34.9 35.8 35.7 36.4 37.5 38.8 39.7 -12 -12Source: The Economist (various issues - last week of reported months).

The most severe devaluations have occurred in Indonesia, Republic of Korea and Thailand, withMalaysian and Philippines devaluations also quite considerable.

Key elements to note include:

• in many cases value of currencies is beginning to regain lost ground;• while proportionately the devaluations have been most severe in the countries listed earlier, the

absolute total value loss of purchasing power (and increased trade competitiveness) representedby Japan’s 18% devaluation is of overwhelming importance at both regional and global levels.

Information about the effects of the slowdown on GDP growth rates is more difficult to obtain. Forthe same countries covered by Table 0.1, the worst slowdowns appeared to have been as follows:

• Thailand: 1996 growth 6.7% pa; 1997 estimate 0.4% pa;• Japan: 1996 growth 3.9% pa; 1997 estimate -0.7% pa;• Republic of Korea: 1996 growth 7.2% pa; 1997 estimate 3.9% pa;• Indonesia: 1996 growth 8.0% pa; 1997 estimate 6.6% pa.

With regard to industrial production data are behind time also for many countries. The worstdislocations (reported for April 1998 covering the last 3 months at annual equivalent) are:

• Thailand : -16.5%• Japan : -6.4%• China : -2.6%• Malaysia : -2.2%• Republic of Korea : -1.9%

1 Worst case for Republic of Korea was mid January at 1749 units.



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Philippines industrial production also declined sharply during 1997 and has recently grown sharply.In general, with the exception of Japan, the currency depreciation has not led to comparable loss ofproduction. Dislocation is often said to have been most marked for trade (exports) due to failuresof banking systems even to cover letters of credit for such trade.

Summary of causes of the crisis

Theories abound as to the trigger(s) and underlying causes of the crisis. The Thai Baht’s collapseseems to have been the spark which set off linked meltdowns elsewhere. In general, among the keyorigins of the crisis, the following are most frequently mentioned:

• rapid growth in, and poor supervision of, bank lending, partly using external funds forunperforming projects such as real estate. Consequently high levels of bad loans;

• failure of currencies to depreciate in line with erosion of price competitiveness of manyeconomies so reducing exports that were needed to drive economic growth;

• very rapid investment rates leading to upsurge in imports and deficit levels;• uncontrolled external commercial borrowing, including significant levels of short-term money

at rather high interest rates.

How soon the crisis can be reversed

This situation is still very fluid and open to debate, with no consensus emerging except around thefact that Japan’s emergence from recession is a precondition for all the other economies to revive. There is also near consensus that if China’s currency were to devalue, its boosted competitivenesscould severely undermine the one advantage which the severely dislocated former “tiger”economies now enjoy. The feeling that the “tigers” may not regain the double-digit growth ofrecent years is also widespread but it is expected that they can regain much of their performance -how long this will take is not agreed upon.



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1

EXECUTIVE SUMMARY

During a special seminar held at the 16th Session of the Asia-Pacific Forestry Commission held inYangon, Myanmar (15-20 January 1996), the FAO presented a proposal for a forestry sector outlookstudy for the Asia-Pacific region (FAO, 1996). Given the rapid growth of forestry activities in theregion, combined with the current prominence of forestry issues on the international scene, theCommission felt that a study of this type would be an important aid to decision-making on national,regional and global issues. The Commission gave full support to the proposal and recommended itsimplementation.

This paper is a contribution to that study. The objective of the paper is to analyse historical trends insocial and economic developments in the region, to provide a commentary on factors which appearto influence growth, and to highlight the implications of future development for the forestry sector.The paper concentrates on two main variables: population and gross domestic product (GDP). Italso examines wider issues thought likely to have an effect on the forestry sector, such as:population density; income distribution; the structure of economies; development planning;investment; trade and the prominence of the forest sector in the national economy.

Contrasts within the region

For the purposes of this study, the Asia-Pacific region extends from People’s Republic of China andMongolia in the North to New Zealand in the South and from Pakistan in the West to theInternational Date Line in the East. It covers just under one-third of the World’s land area andcontains over half the World’s population. Many of the countries in the region are similar in termsof the size of their populations and economies. However, given the vast size and range of thisregion, it is not surprising that it contains some extremes.

In terms of land area, People’s Republic of China is the third largest country in the World (coveringjust under 1 million km2) and is closely followed by Australia and India in sixth and seventh places.People’s Republic of China and India are also the World’s two most populous countries. Indonesia,Pakistan, Japan and Bangladesh join them in the list of the World’s ten most populated countries.

At the other end of the scale, half of the countries in the region cover less than 10,000 km2 each andadd up to about 1% of the region’s land area in total and the population of all the Pacific Islandsadded together comes to less than the population of most of the other countries in the region.

Another important variation is in the size and individual strengths of the economies in the region. Afew countries have large economies because of the size of their populations (e.g. People’s Republicof China, India and Indonesia) or high level of development (e.g. Japan and Australia). Other farsmaller countries however, have also developed large economies due to exceptional economicperformance (e.g. Singapore, China Hong Kong SAR, Taiwan Province of China and Republic ofKorea).

These extremes mean that it is often difficult or misleading to present averages for the region as awhole as if they characterise the condition or prospects of many of its inhabitants.



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Population

Trends and current status

Population is one of the most important social parameters which should be examined in any outlookwork for the Asia-Pacific region. Figure 1 shows that the region accounted for just over 55% of theWorld’s total population of 5.6 billion in 1994.

Figure 1: The Asia-Pacific share of World population in 1994

South Asia 1,203m (21.4%)

North Asia 1,211m (21.5%)

Southeast Asia 471m (8.4%)

Advanced IndustrialEconomies (AIE) 146m (2.6%)Newly IndustrialisingEconomies (NIE) 75m (1.3%)Pacific Islands 6m (0.1%)

Rest of the World 2 519m (44.7%)

Source: FAO (1997a)

Although the Asia-Pacific share of World population has remained roughly the same over the last35 years, the distribution of population within the region has changed over time. For example, in1950 Japan had a larger population than both Indonesia and Pakistan, but now that situation hasbeen reversed. This is due to historical differences in population growth rates in each of thecountries within the region. These are shown in Table 1 along with the trend (total absolute change)in growth rates over the last 35 years for each of the country groups.



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Table 1 - Selected population statistics for the Asia-Pacific Region

Country group Annual populationgrowth rate (%)

Land resources in1994 (ha per capita)

Rural population(% of total)

Agricultural population(% of total)

1994 trend1962-96

Allland

Agriculturalland

1994 trend1961-96

1994 trend1961-96

AIE 0.3 -1.1 5.7 3.3 21 -12 6 -5NIE 1.0 -2.1 0.2 0.0 17 -50 11 -21North Asia 1.0 -1.6 0.9 0.5 70 -13 71 -3SoutheastAsia

1.7 -0.9 0.9 0.2 67 -17 54 -7

South Asia 1.8 -0.5 0.3 0.2 74 -10 58 -10PacificIslands

2.2 -0.6 8.8 0.3 79 -11 69 -5

Asia-Pacific 1.4 -1.1 0.9 0.5 68 -12 59 -7World 1.4 -0.7 2.4 0.9 55 -11 46 -6

Source: FAO (1997a)

Population growth has fallen overall in the region to 1.4% pa, a decline of about 1.1% (in absoluteterms) over the last 35 years. The Advanced Industrial Economies have the lowest populationgrowth rate and this appears to have levelled-off in recent years. Population growth in the NewlyIndustrialising Economies and North Asia has fallen dramatically and is now at the levelexperienced in Advanced Industrial Economies about 20 years ago. Population growth has declinedonly slightly in the rest of the region, and in recent years has begun to increase again in the PacificIslands. The only very large country in the region which still has a high rate of population growth isPakistan (2.6% p.a. in 1994).

Pressures on the land

Another important social dimension for forestry is the location of population and availability ofland. A large rural population, especially if associated with low incomes and poor agriculturalproductivity may well be expected to suffer persistent loss of forests. The Asia-Pacific region hassome countries with such a profile but there are some which are entirely different.

The high density of population in the region is shown by the ratio of land area to population, whichstood at 0.9 ha per capita in 1994. This figure is less than half the World average. In terms ofagricultural land the region has about 0.5 ha per capita, slightly more than half the World average.Most of the countries in the region have fairly similar levels of population density, the exceptionsbeing: Australia, New Zealand, Mongolia, Papua New Guinea and New Caledonia (which aresparsely populated) and Japan, Maldives and the Newly Industrialising Economies, which have veryhigh population densities.

A major proportion of the population in the region still lives in rural areas and depends onagriculture as its main source of income. This is particularly the case in the countries of North Asia,South Asia and the Pacific Islands. The Advanced Industrial Economies and Newly IndustrialisingEconomies are much more urbanised and less dependent on agriculture. The Newly IndustrialisingEconomies and, to a lesser extent, countries of Southeast Asia have also changed remarkably overthe last 35 years from rural to urban societies. In contrast, the countries of North Asia and thePacific Islands have changed very little. Overall, the region is steadily urbanizing.



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Future projections

UN population projections (1996 revision) have been used in this study (see Table 2). The mediumfertility scenario projections (considered by the UN to be the most likely) suggest that populationgrowth in the Asia-Pacific region will fall to just over 1% p.a. by 2005-2010. The region’spopulation is expected to grow in absolute terms by about 21% by 2010 to 3.8 billion, which willstill account for about 55% of total World population (forecast to reach 6.9 billion by the year2010). Projected growth is only slightly lower under the alternative low fertility scenario, with theAsia-Pacific population increasing to 3.7 billion by 2010 and the World population increasing to6.7 billion.

The same projections also predict that the rural population in the region will decline between1994 and 2025. After adjusting these projections to the period of the outlook study, it is estimatedthat the rural population in the region will decline by 22 million by 2010, equal to just over 1% ofthe rural population in 1994. Decreases in some countries will be offset by increases elsewhere. Thesmall overall reduction in rural population will, however, be accompanied by the growth of somemajor cities and Asia is likely to have many of the World’s largest cities by 2010.

Decreases in the rural population are expected to occur in the following major countries andterritories: Japan, People’s Republic of China and Hong Kong SAR, China, Indonesia, Philippines,Thailand and Australia. Another eight smaller countries also show this trend. Major countries wherethe rural population is expected to increase are: Nepal; Pakistan; Socialist Republic of Vietnam;Bangladesh; Myanmar and India. Another three medium-sized countries are also expected to changein this way. However, the overall proportion of the population living in rural areas is expected todecline in all countries in the region.

Table 2 - UN Population projections for the Asia-Pacific Region (medium fertility)

Country group Actual and projected population(in millions)

Totalincrease (%)

Rural populationin 1994

Rural populationin 2010

1994 2000 2005 2010 1994-2010millions

millions % oftotal

millions % oftotal

AIE 146 149 151 152 +4 31 21 25 17NIE 75 79 82 84 +12 9 17 6 9North Asia 1,211 1,279 1,325 1,365 +13 848 70 763 56Southeast Asia 471 518 556 590 +25 317 67 315 53South Asia 1,203 1,336 1,448 1,557 +29 888 74 962 62Pacific Islands 6 7 8 8 +39 5 79 6 67Asia-Pacific 3,112 3,369 3,570 3,758 +21 2,099 68 2,076 55

Source: UN (1996)



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Economic development


Despite the size of the Asia-Pacific region’s economy, the region is still relatively poor, it is a largeregion but currently accounts for only about a quarter of World GDP (see Figure 2). Half of the ruralpopulation live below the poverty line in eight of the countries in the region. However, a modestproportion of the population enjoys some prosperity and due to the size of the overall population,this translates into a major purchasing capacity in absolute terms.

Figure 2: The Asia-Pacific share of World GDP in 1995

Advanced IndustrialEconomies (AIE) 3,296bn (16.5%)Newly IndustrialisingEconomies (NIE) 577bn (2.9%)North Asia 576bn (2.9%)

South Asia 482bn (2.4%)

Southeast Asia 432bn (2.2%)

Pacific Islands 8bn (< 0.1%)

Rest of the World 14,595bn (73.1%)

Source: FAO (1997b) All figures are in US$ at 1987 prices and exchange rates

Japan’s economy accounts for more than half of the Asia-Pacific GDP and dominates the largeshare held by the Advanced Industrial Economies. In contrast, the Pacific Island economies are tinyand the other four regions share roughly equally the remaining regional GDP.

The current share of World GDP is a vast improvement on 40 years ago, when the region’s sharewas less than 5%. This increase has been achieved with an historical rate of economic growth in theregion about seven times higher than the World average. However, this dramatic growth has notbeen experienced everywhere in the region and can be mostly attributed to just a handful ofcountries of which only China and Indonesia are large.



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For roughly 30 years from 1945 onwards, Japan was the first country to demonstrate the potential ofthe region for dramatic and sustained economic growth. Japan’s growth record has yet to besurpassed, but the four Newly Industrialising Economies came close to repeating it in the 1970s and1980s and other countries are following in their footsteps if we assume that the severe economicdownturn of 1997 is only temporary.

Table 3 - Trends in GDP in the Asia-Pacific Region

Country group Real GDP at factor cost(in billion US$ at 1994 prices)

GDP per capita(US$ at 1994 prices)

Real GDP growth(average annual % growth)

1980 1985 1990 1994 1994 1980-84 1985-89 1990-94AIE 2,770 3,220 3,756 4,243 25,000 3.0 3.0 3.0NIE 315 429 586 750 10,000 6.0 6.0 6.0North Asia 213 323 491 749 620 8.0 8.0 10.0Southeast Asia 236 322 439 562 1,190 6.0 6.0 6.0South Asia 354 434 532 627 521 4.0 4.0 4.0Pacific Islands 8 8 9 10 1,666 2.0 2.0 2.0Asia-Pacific 3,896 4,736 5,813 6,941 2,230 2.4 2.5 3.0

Source: AsDB (1997a) and IBRD (1997)

Table 3 shows trends in GDP and economic growth over the last 15 years. In terms of economicgrowth and the size of their economies, the countries of the region fall roughly into 5 tiers:

1. The Advanced Industrial Economies. These economies have had modest growth rates for quite anumber of years, usually in the range of 2-4%. Per capita GDP is very high and this groupcontains the first and fourth largest economies in the region (Japan and Australia).

2. The Newly Industrialising Economies. Growth in these economies has slowed in recent years,

but is still generally well above average at about 7-8%. Per capita GDP is high and rising andthis group contains some of the largest economies in the region.

3. The third tier is mostly from Southeast Asia (Indonesia, Malaysia, Thailand and, very recently,

Socialist Republic of Vietnam) but also includes People’s Republic of China (the second largesteconomy in the region). These emerging economies have had sustained growth rates of over7% a level now maintained by China alone since the 1997 dislocation. Due to high populationsof a number of these countries, this group also contains some of the largest economies in theregion, but per capita GDP is currently moderate in most of these countries.

4. The fourth tier contains a mixture of countries from Southeast Asia (Myanmar and the

Philippines) and South Asia (Bangladesh, India, Pakistan and Sri Lanka). These countries arestarting to benefit from economic liberalisation and other reforms. Modest and variableeconomic growth rates of between 3-6% characterise this group. With the exception of India, thesize of the economies in this group fall into the middle of the range for the Asia-Pacific regionand per capita GDP is low.

5. All the other countries in the region (many in the Pacific) have economies which are generally

quite small. Some of these countries have quite high but often unstable rates of economicgrowth but most fall in the range 1-3%. Per capita GDP is also generally very low (with theexception of Brunei).



7

The foundations for economic growth

There are no miraculous explanations for the rapid growth rates which some of the countries in theAsia-Pacific region have achieved; they have arisen from sustained peace and political stability,high levels of economic and social discipline, hard work and what were seen as appropriategovernment policies before recent economic failures revealed weaknesses.

A major contributing factor has been that governments have developed macro-economic climateconducive to rapid growth (see Table 4). This is reflected by the high savings rates, low budgetdeficits, low rates of inflation and low levels of external debt in these countries.

Table 4 - Selected macro-economic statistics for the Asia-Pacific Region in

Country group Savingsrate

Budgetdeficit

Investment(GDFCF)

Exports Tradebalance

(% of GDP) (% of GDP) (% of GDP) (% of GDP) (% of GDP)AIE 28 -0.6 19 12 1NIE 36 2.7 31 81 -4North Asia 26 2.5 32 22 1SoutheastAsia

23 2.0 28 28 -2

South Asia 20 1.6 25 17 -15Pacific Islands 10 6.7 17 27 -35Asia-Pacific 24 2.5 26 37 13

Source: AsDB (1997a) and IBRD (1997)

Other contributing factors have been: effective population policies; focus on export growth; highrates of investment in both human and physical capital (with an emphasis on private-sectorinvestment) and pursuit of greater efficiency through improvements in factor productivity. Asia-Pacific countries have been open to foreign ideas and technology and have invested locally intechnological development. Their governments have also systematically intervened to ensure focuson the development of specific high-potential industries until comparative advantage has been wonor reinforced.

The best performers have also tended to promote equitable income distribution. Indeed, the majorsocial change currently influencing many of the economies of the region is the emergence of a largemiddle class. Before the 1997 economic turmoil struck, in addition to the roughly 80 million peoplein the region who can be considered seriously rich, a "middle class" of between 375 and 500 millionwas developing. A further 750 million people were also leaving their poverty behind and beginningto have significant spending power.

In the aftermath of the 1997 economic meltdown, it emerges that many had weak supervision oftheir financial sectors which became severely over-extended and could not support a dip in theregion’s exports. A major challenge facing the countries outside the two top tiers is to put in placesimilar policies to what helped achieve the “Asian Miracle” while avoiding the mistakes that led tothe 1997 collapse of several key economies.



8

Future projections

The initial major aim of this analysis - to present GDP projections for each country in the Asia-Pacific region to be used in the supply and demand analysis elsewhere in the outlook study - hasbeen superseded but projections of future GDP eventually adopted in spite of rapid recent changeand structural shifts are given in Table 5. There is very high uncertainty associated with theseprojections. Table 6 is an effort to give a more pessimistic “apocalypse” scenario for the regionespecially for the most affected countries but taking into account “pull-down” effects on the otherregional economies.

The projections presented in Table 5 are for the period till 2005 taken from the Compendium ofdemographic and macro-economic assumptions (FAO, 1997b) produced for the forthcoming study:Medium-term prospects for agricultural commodities: projections to the year 2005. The projectionsfor the years 2000-2005 in that study have been extended to the year 2010 for the purposes of thisstudy.

Resilience of economies

The pre 1997 growth rates presented for many of the developing countries in the region are quitehigh and a question that has to be faced is whether those rates are sustainable. Until the meltdown,conventional wisdom was that the growth rates would be maintained due to the resilience of manyof the economies in the region. It was often quoted, for example, that rates of economic growth of5-10% had been maintained in many of the developing countries in the region during the entiredownward cycle of the Japanese economy. Southeast Asia and South Asia showed the mostresilience, due to their relatively low reliance on primary commodities, the competitiveness of theirmanufactured exports, growing intraregional trade, low debt and continued access to externalfinancing (due to a good borrowing record). Because of the high savings rates in many Asia-Pacificcountries, much of the investment in the region was being financed from domestic savings ratherthan foreign investment and this was thought to protect it to some degree from external shocks.

However, the region has undergone a major crisis, with export growth rate far below normal. Itappears that provided the Japanese Yen is strong and Japan can import, the region is able to offsetweak demand from elsewhere in the world. However, if demand from elsewhere falters at the sametime as that from Japan, the region is left over-exposed and reveals great vulnerability. The stronglinkages among the region’s economies appears under these conditions to have been disadvantageous -far from offering resilience, it caused the entire set of economies to go down together.

Notwithstanding the current dislocation, the region’s economic prospects in the short to mediumterm are optimistic in view of expected healthy expansion of global and inter-regional trade in anenvironment of increasing post-Uruguay Round liberalisation and commitment to regional andPacific Basin economic agreements. The general perception is therefore, that the economies of theregion will resume a trajectory of rapid growth. Regarding how long it will take to regain growththere is no consensus.



9

Table 5 - GDP projections for the Asia-Pacific outlook study

GDP forecasts(in billion US$ at 1994 prices)

GDP Growth rate forecasts(annual percentage growth)

Baseyear

FAO (1997b) FAO (1997b) APFSOS downturnscenario (1998)

1994 2000 2005 2010 1994-2000

2001-2005

2006-2010

1994-2000

2001-2005

2006-2010

North AsiaJapan 4,222,622 5,071,474 5,879,228 6,815,637 3.10 3.00 3.00 2.10 2.50 2.90Korea DPR 11,257 12,677 13,996 15,453 2.00 2.00 2.00 1.40 1.60 1.80Mongolia 732 824 955 1,107 2.00 3.00 3.00 1.90 2.70 3.00The People’s Republic ofChina

540,492 862,469 1,226,710 1,744,780 8.10 7.30 7.30 7.00 6.80 7.10

- Hong Kong SAR, China 130,580 176,999 231,330 302,339 5.20 5.50 5.50 3.20 4.40 5.00- Taiwan Province of China 241,014 241,014 241,014 241,014The Republic of Korea 380,825 549,445 745,746 1,012,179 6.30 6.30 6.30 2.50 4.00 5.70Southeast AsiaBrunei 4,495 5,062 5,588 6,170 2.00 2.00 2.00 1.50 1.60 2.00Cambodia 2,376 3,371 4,511 6,036 6.00 6.00 6.00 3.80 4.80 5.70Indonesia 175,500 275,417 395,396 567,642 7.80 7.50 7.50 2.50 3.80 5.80Malaysia 74,146 117,661 170,495 247,052 8.00 7.70 7.70 4.40 5.90 7.30Myanmar 74,005 105,572 130,934 162,389 6.10 4.40 4.40 4.10 4.40 4.20Laos 1,515 2,030 2,717 3,635 5.00 6.00 6.00 3.30 4.50 5.50Philippines 64,114 87,403 113,153 146,490 5.30 5.30 5.30 3.10 4.10 5.20Viet Nam 15,478 21,956 30,081 41,214 6.00 6.50 6.50 4.50 5.20 6.30Singapore 69,516 103,741 141,468 192,915 6.90 6.40 6.40 4.70 5.50 6.20Thailand 143,177 205,410 288,098 404,072 6.20 7.00 7.00 1.70 3.30 5.20South AsiaBangladesh 26,034 34,888 47,352 64,269 5.00 6.30 6.30 3.60 5.10 5.60Bhutan 255 342 437 557 5.00 5.00 5.00 3.60 4.30 4.50India 272,527 390,982 523,222 700,189 6.20 6.00 6.00 4.80 5.20 5.20Maldives 241 342 457 612 6.00 6.00 6.00 4.70 5.20 5.20Nepal 3,786 5,103 6,670 8,717 5.10 5.50 5.50 3.90 4.60 4.70Pakistan 46,955 65,113 85,100 111,222 5.60 5.50 5.50 4.40 4.70 4.70Sri Lanka 11,719 16,436 22,519 30,854 5.80 6.50 6.50 4.40 5.50 5.80OceaniaAustralia 288,934 357,237 424,286 503,919 3.60 3.50 3.50 2.90 3.20 3.40Cook Islands 87 98 114 132 2.00 3.00 3.00 1.90 2.70 3.00Fiji 1,597 1,799 2,055 2,348 2.00 2.70 2.70 1.70 2.40 2.60Kiribati 38 43 47 52 2.00 2.00 2.00 3.20 3.60 4.00New Caledonia 894 949 1,022 1,101 1.00 1.50 1.50 1.0 1.40 1.50New Zealand 44,290 51,967 59,662 68,495 2.70 2.80 2.80 2.00 2.40 2.80Papua New Guinea 6,994 7,830 8,773 9,830 1.90 2.30 2.30 1.30 2.00 2.10Samoa 127 139 149 161 1.50 1.50 1.50 1.50 1.50 1.50Solomon Islands 186 249 326 426 5.00 5.50 5.50 3.90 4.80 5.30Tonga 135 161 192 227 3.00 3.50 3.50 2.90 3.30 3.50Vanuatu 193 211 233 258 1.50 2.00 2.00 1.20 1.80 2.00



10

Implications for the forest sector

The preceding summary of social and economic changes suggests that that the forestry sector in theAsia-Pacific region is faced with four major challenges.

Firstly, continued population growth, particularly in countries with large rural populations or highdependency on agriculture, is likely to continue to put pressure on the forest resource base. A fewcountries are witnessing a reduction in land under crops, but in most of the large countries in theregion the cropped frontier continues to spread. For example, in Pakistan (which has one of theregion’s fastest population growth rates) the area of permanent farmland is growing at such a ratethat it would double in only 14 years if present trends continued. Similar extrapolation would resultin the doubling of farmland in the Socialist Republic of Vietnam in 18 years and for Thailand andIndonesia in 19 years and 31 years respectively. In many areas of most countries this expansion mayinvolve the conversion of forest to agricultural land to a significant degree. This may consequentlyreduce future forest cover and consequently product supply potential if no yield-enhancing measuresare taken.

The other three challenges would all arise if the rapid rate of economic growth in the region isresumed shortly:

Fast growth in demand for forest products: Until the 1997 meltdown, some expectationswere that within 15 years, some 700 million people in China, India and Indonesia alonewould have an average income equivalent to that of Spain today. One source suggested thatif past rates of 6-10% economic growth continued, by the year 2010, the region (excludingJapan) could have spending power in the neighbourhood of 50% more than the United Statesof America has today. This great increase in domestic purchasing power in the region wouldcreate domestic markets far larger than have ever been seen before. In countries where thecontrol of access to forests is weak, this could lead to greater problems of illegal logging andpoor forest management. In countries with large forest products export sectors it may alsoplace the forests or exports (or both) under some strain.

Shift towards non-product benefits of forests: with prosperity, a greater interest in otherforest functions would develop, such as greater concern for the environment. One resultwould be a desire to divert forests away from wood production to conservation andrecreation uses - this could put other pressures on the future wood supply potential. It mightalso require a large redirection of forestry policy in some countries in the region.

Possible threat to sustainable forest management?: The final challenge concerns thereconciliation of high economic growth rates with sustainable forest management. Many ofthe most dynamic countries in the region are not particularly rich in natural resources (e.g.Japan, Singapore, Hong Kong SAR, China). However, wood products have been used as anengine for economic growth in some others (notably Malaysia and Indonesia). The forestrypolicy challenge facing many countries will be to repeat the experiences of Japan and someof the more successful countries in the region, but without depleting forest resources in theprocess. This will require better long-term planning in the forestry sector and probablystronger forest protection policies.



11

INTRODUCTION

During mid-1997, the media was full of stories expressing concern at the deteriorating situation ofthe Thai economy. Reports of a property crash and a general feeling that one of the prime miraclesin Asia was about to grind to a halt led to extensive currency speculation. Co-operation amongstsouth-east Asian nations to support the Baht had some effect, but other currencies followed the Bahtdown. Since then the malaise has spread and in Indonesia and Republic of Korea, the currencies andfinancial sectors have come close to collapse.

Turning to population, rapid shifts are illustrated by the following examples: in 1950, Indonesia hada population which was less than that of Japan. However, by 1961 Indonesia’s population hadsurpassed Japan’s and it has continued to grow until it now exceeds Japan’s by about 50%. In arepeat of this story, Pakistan, which had only half of Japan’s population in 1950, passed it in1991 and continues to grow rapidly. At the present rate of growth Pakistan has potential to catch upand even surpass Indonesia in population within the next century.

In addition to changes in the distribution of population between countries in the region, changes inthe location of population within countries are also taking place. In many countries people aremigrating to cities and the rural population may decline in a few of them, but in a majority ofcountries the rural population will continue to grow and be important for quite some time.

These elements are only some facets of a complex combination of economic and social conditionswhich are in a state of flux in the Asia-Pacific region and in respect of which there is much diversityamong the countries.

Aim of the study

The objective of the paper is to analyse historical trends in social and economic developments in theregion, present forecasts for the future and highlight the implications of future developments for theforestry sector. The paper concentrates on two main variables: population and gross domesticproduct (GDP). It also examines wider issues thought likely to have an effect on the forestry sector,such as: population density; income distribution; the structure of economies; development planning;investment; trade and the prominence of the forest sector in the national economy.

Work of this nature is only partly analytical; much “judgement” is involved. Among other things,judgement has to be exercised in assessing how resilient growth can be when it is so heavilydependent on external trade - a particularly unpredictable element but which has been the mainmotor towards prosperity for all the region’s high-performance economies.

Social and economic changes are key determinants of demand and, sometimes, also of supply forforest goods and services. For this reason, this paper reviews selected changes in these parameters,with a focus on population and economic growth. The review refers mainly to information collectedover the last three decades and looks at the future until the year 2010, the horizon of the outlookstudy. Occasional references are nevertheless made to periods outside this time frame.

Population and income have separate and joint effect on the demand for forest goods and servicesand on the other pressures exerted on forests. Population operates directly on forest product demand



12

by multiplying the consumption requirements of a country, i.e. at any given price and averageincome level, total consumption in a country will increase if the number of people there increases. Amore complex effect of population change is the pressure exerted on the forest from competingland-uses.

For many products and services, income has a strong effect on demand. Generally, as incomes risedemand for products increases, except for economically "inferior" goods (examples of possibleinferior goods in the forest sector, the consumption of which decreases as incomes rise - includefuelwood and some subsistence non-wood forest products. The much higher consumption levels formany industrial commodities observed for wealthy nations, relative to levels in developing countriesgive witness to the frequently stronger effect of income than of gross population in determining thecapacity to consume. In reviewing developments in these two parameters, this paper avoids derivingtheir mathematical correlations with forestry development.

This review lays no claim to original research but interprets the thorough work of many importantinstitutions such as the Asian Development Bank (AsDB), the World Bank (IBRD), theInternational Monetary Fund (IMF), and Organisation for Economic Cooperation and Development(OECD) which regularly carry out in-depth studies on Asia-Pacific development. The enormoushuman and financial resources the institutions mentioned apply to this task (as reflected in the richcollection of published material on this fast-growing region) cannot be improved upon for thepurposes of a sectoral study. All these sources have, of course, been proved wrong by the economiccollapse of 1997; some serious analysis has proved to have been an exercise in applauding what“has worked” and suggesting that others could copy it.

Making projections into the future is at best an inexact science; there is no certainty in outlookwork. So much is the "judgmental" element in outlook work that the Asian Development Bankroutinely organises seminars of experts from its member countries to discuss its biennial regionaloutlook so as to benefit from a diversity of perceptions. The AsDB also complements its rigorouseconomic analyses with polls of eminent business personalities regarding their expectations for thefuture of various national economies and reflects these in its "consensus" projections.

Report structure

The review starts by giving a brief description of the region in terms of it’s size and location and thesize of it’s population and economies compared with the rest of the World. This section alsodescribes current efforts at regional collaboration. This is followed by three detailed sectionscontaining the main analytical work and results of the review.

The first detailed analysis examines population in the region. The next section examines theeconomies of the region including analysis of trends, presentation of the current situation andanalysis of the factors behind economic developments in the region. Sets of economic growthprojections are presented here accompanied by a commentary on key features of each country’sdeterminants of growth.

The third detailed analysis examines social changes which have taken place in the region and maycontinue in the future. Issues examined here include: urbanisation; agricultural dependency; andincomes and income distribution.



13

The final section draws together the main results of the three previous sections and presents someimplications of these developments for the future of the forestry sector.

Countries and territories included in outlook study

For the purposes of this study, the Asia-Pacific region has been defined as the area roughly bounded byPakistan in the West, Mongolia in the North and the International Date Line in the East (see Map 1).

Map 1: Countries and territories included in the Asia-Pacific outlook study

All Asian countries and territories, except those of the former USSR and the Near East, have beenincluded in the study. Out of a total of 33 countries and territories in the Oceanic region, 10 have beenincluded in the study. About half of those excluded were to the East of the International Date Line andthe remainder were so small that it was though unlikely that data would be available for them.

A full listing of the countries and territories included in this study, along with the country groupingsused, is given in Box 1. Countries and territories in the region have been grouped according to theclassification used by the AsDB. Some countries included in this study however, are not members of

PR China -Taiwan Province of China - Hong Kong SAR, China

Mongolia

Australia

India

Pakistan

Nepal

Bhutan

Bangladesh

Maldives

Sri Lanka

Myanmar

Thailand

Singapore

Indonesia

New Zealand

Korea DPR

Rep. Korea

Japan

Cambodia

PDR Lao

SR Viet Nam

ThePhilippines

Malaysia

Brunei

16

8

24

9

3

75

The Pacific Islands

1: Cook Islands

2: Fiji

3: Kiribati

4: New Caledonia

5: Papua New Guinea

6: Samoa

7: Solomon Islands

8: Tonga

9: Vanuatu

Advanced Industrial Economies (AIEs)

Newly Industrialising Economies (NIEs)

Southeast Asia

North Asia

South Asia

Pacific Islands



14

the AsDB, so the groupings have had to be modified slightly to include non-member countries andterritories.

Box 1.1: GEOGRAPHIC DISTRIBUTION OF COUNTRIES AND TERRITORIES INCLUDED INTHE ASIA-PACIFIC FOREST SECTOR OUTLOOK STUDY

North Asia (NA) South Asia (SA)

Democratic People’s Republic of Korea BangladeshJapan (AIE) BhutanMongolia IndiaThe People’s Republic of China Maldives – Hong Kong SAR, China (NIE) Nepal – Taiwan Province of China (NIE) PakistanThe Republic of Korea (NIE) Sri Lanka

Southeast Asia (SEA) Pacific Islands (PI)

Brunei Australia (AIE)Cambodia Cook IslandsIndonesia FijiMalaysia KiribatiMyanmar New CaledoniaPeople’s Democratic Republic of Lao (Laos) New Zealand (AIE)Philippines Papua New GuineaSingapore (NIE) SamoaSocialist Republic of Viet Nam Solomon IslandsThailand Tonga

Vanuatu

Note: Recognising commonalities between countries and territories at different stages of industrialisation, thoselabelled AIE (Advanced Industrial Economies) and NIE (Newly Industrialising Economies) have been groupedtogether in the analysis.

Due to differences in their levels of economic development and importance to the forestry sector,People’s Republic of China, Taiwan Province of China and Hong Kong SAR, China have all beenanalysed separately in the study.



15

AN OVERVIEW OF THE ASIA-PACIFIC REGION

In terms of it’s land area and population, the Asia-Pacific region is one of the largest regions ofthe World. However, the economies of the region, with the exception of Japan, are relativelysmall compared with Europe and North America, but they are growing rapidly and are wellintegrated into the World economy. This section briefly describes the region as a whole andcompares it with the other major regions of the World.

Location and land area

The location and extent of the Asia-Pacific region has already been described (see Introduction).In terms of land area, the region is the second largest in the World after Africa and the Near Eastand covers about 2.8 bn ha or just under a quarter of the World’s total land area (see Figure 3).

Figure 3: Land area of the major geographical regions of the World in 1994

Asia-Pacific 2.8bn ha (21.8%)

Africa and Near East 3.7bn ha (27.9%)

Europe 0.5bn ha (3.6%)

North America 1.9bn ha (14.3%)

Latin America and Caribbean 2.0bn ha (15.5%)

Former USSR 2.2bn ha (16.8%)

Source: FAO (1997a)

However, within the region there is great variation. Five countries are larger than 100m ha(People’s Republic of China, Australia, India, Indonesia and Mongolia) and between them, theycover over 80% of the region (see Figure 4). People’s Republic of China is the third largestcountry in the World, closely followed by Australia and India in sixth and seventh places. Incontrast, 16 countries in the region are less than 10m ha in area and the total area of all thePacific Islands added together is less than the area of most other countries in the region.



16

Figure 4: Land area of the five largest countries in the Asia-Pacific region in 1994

People's Republic of China929m ha (32.6%)

Australia 768m ha (27.0%)

India 297m ha (10.4%)

Indonesia 182m ha (6.4%)

Mongolia 157m ha (5.5%)

Rest of Asia-Pacific 512m ha (18.0%)

Source: FAO (1997a)

Figure 5: Distribution of land-uses in the major geographical regions in 1994

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Asia-Pacific Africa andNear East

Europe NorthAmerica

L. A. andCaribbean

FormerUSSR

Region

Are

a (in

mill

ion

ha)

Other landtypes

Forest andwoodland

Permanentpasture

Permanentcrops

Arableland

Source: FAO (1997a)



17

Just over half of all land in the Asia-Pacific region is used for agriculture (permanent and arablecrops and pasture). The remainder is divided equally between forests and other land types2. OnlyEurope has a higher proportion of land in agriculture than the Asia-Pacific region. The Asia-Pacific region also has the second lowest proportion of land covered by forests (after Africa andthe Near East).

Due to its size and the large proportion of the area used for agriculture, the Asia Pacific regionhas the largest share of the World’s arable, permanent crop and permanent pasture land (seeFigure 5) with a roughly one-third share of each of these land uses. However, despite it’s size, theregion has the second smallest share of the World’s forest resources (16.7%) after Europe. Thisis still a significant share though and in terms of tropical forests the region is relatively moreimportant.

Figure 6 shows trends in the area of crops, pasture and forest in each of the major regions of theWorld from 1961 to 1994. The area of land used for crops and pasture has increased in the Asia-Pacific region over the period while the area of forests has declined. This pattern is repeated butto a lesser extent in the Africa and Near East and Latin America and Caribbean regions.

The area of crops in the Asia-Pacific region has increased by 11% or 43m ha (equal to about1.3m ha/yr). Similar increases have occurred in Africa and the Near East (+ 45m ha) and LatinAmerica and the Caribbean (+ 54m ha). The area of crops has remained about the same or fallenin the other three regions.

The area of land used for pasture in the Asia-Pacific has increased even more dramatically by14% or 124m ha (equal to about 3.6m ha/yr). This compares with increases of 22m ha in Africaand the Near East and 86m ha in Latin America and the Caribbean. Again, there has been littlechange in this variable in the other regions.

In terms of forest and other woodland, the Asia-Pacific region has shown the largest decline inarea over the period. In 1961 the region had 752m ha of forest (slightly more than North Americaat that time). This has declined by 7% or 54m ha (equal to about 1.6m ha/yr). Africa and the NearEast has lost 24m ha and Latin America and the Caribbean has lost 35m ha. In contrast, NorthAmerical has lost only 2m ha and the forest area of Europe has increased by 15m ha.

These figures give a brief picture of land-use in the region compared with other regions of theWorld. As later sections will show, they hide a considerable amount of diversity within theregion, so trends and proportions shown here should not be considered as typical for everycountry in the region.

2Mostly unproductive land such as mountain tops, deserts or tundra, but also including settlements and industrial land.



18

Figure 6: Trends in crop, pasture and forest area in the major World regions

050

100150200250300350400450500

1960 1965 1970 1975 1980 1985 1990 1995

Y ear

Cro

p ar

ea (i

n m

illio

n ha

)

A sia-P acific

A frica and N ear E ast

E urope

N orth A m erica

L . A . and C aribbean

Form er U S S R

0

2 0 0

4 0 0

6 0 0

8 0 0

1 ,0 0 0

1 ,2 0 0

1 9 6 0 1 9 6 5 1 9 7 0 1 9 7 5 19 8 0 1 9 8 5 19 9 0 1 9 95

Y ea r

Past

ure

area

(in

mill

ion

ha)

A sia-P acific

A frica and N ear E ast

E u rope

N orth A m erica


Form er U S S R

0

200

400

600

800

1000

1200

1960 1965 1970 1975 1980 1985 1990 1995

Y ear

Fore

st a

rea

(in m

illio

n ha

)

A sia-Pacific

A frica and N ear East

Europe

N orth A m erica


Form er U SSR

Source: FAO (1997a)



19

Population

The prominence of the Asia-Pacific region in terms of population is shown in Figure 7. Theregion contains over half of the World’s population and is far larger than the next largest region -Africa and the Near East.

Figure 7: Population of the major geographical regions of the World in 1994

Asia-Pacific 3,112m (55.5%)

Africa and Near East 934m (16.7%)

Europe 504m (9.0%)

North America 294m (5.2%)

L. A. and Caribbean 469m (8.4%)

Former USSR 293m (5.2%)

Source: FAO (1997a)

Population is even more unevenly distributed between the countries in the region than land area.Two countries, People’s Republic of China and India, account for nearly 70% of the region’spopulation (see Figure 8). These are the two most populated countries in the World. Four othercountries in the region have populations of over 100m and are in the World’s top ten. Togetherthese six countries contain over 85% of the region’s population.

The Asia-Pacific region’s share of World population has increased slightly from 52.8% in 1961.However, population growth has declined from 2% p.a. in 1962 to under 1.5% p.a. and is nowclose to the World average (see Figure 9). Of the large countries in the region, People’s Republicof China and Japan currently have below average population growth rates (1.0% p.a. and0.2% p.a. respectively in 1994) and India, Indonesia and Bangladesh are about average. Pakistanis well above average (2.6% p.a. in 1994) and, if current trends continue, may become the thirdlargest country in the region in terms of population in the middle of the next century.



20

Figure 8: The distribution of population in the Asia-Pacific region in 1994

People's Republic of China1,187m (38.1%)

India 913m (29.4%)

Indonesia 195m (6.3%)

Pakistan 133m (4.3%)

Japan 125m (4.0%)

Bangladesh 116m (3.7%)

Rest of Asia-Pacific 442m (14.2%)

Source: FAO (1997a)

Figure 9: Population growth in the major regions of the World 1962-1996

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1960 1965 1970 1975 1980 1985 1990 1995 2000Year

Popu

latio

n gr

owth

rat

e

Asia-Pacific

Africa andNear East

Europe

NorthAmerica

L. A. andCaribbean

FormerUSSR

Worldaverage

Source: FAO (1997a)



21

Economies

It is not easy to find a single source which gives economic information in a readily comparableform for both developed and developing countries. The now-discontinued World Tables of theWorld Bank (IBRD, 1995a) gave details for developing countries but no breakdown in thesummary tables for OECD countries other than Japan. The “Stars” Database of the World Bank(IBRD, 1997) is more detailed, but not always complete. The Asian Development Bank website(AsDB, 1997a) gives very detailed time-series information back to 1978 but only for developingmember countries. All three of these sources have therefore been used to build-up a picture of theimportance of the economies in the region.

In approximate terms, the World Tables and Stars Database information shows that the Asia-Pacific region’s share of World GDP rose from US$ 2,216 bn (20.4%) in 1975 (at 1987 pricesand exchange rates) to US$ 4,859 bn (26.3%) in 1993. Subsequent updating of this informationby FAO (FAO 1997b) suggests that this share had increased to US$ 5,370 bn (26.9%) by1995 (see Figure 10).

Figure 10: The Asia-Pacific share of World GDP in 1995

Asia-Pacific 5,370bn (26.9%)

Africa and Near East 1,098bn (5.5%)

Europe 6,142bn (30.7%)

North America 5,985bn (30.0%)

L.A. and Caribbean 954bn (4.8%)

Former USSR 425bn (2.1%)

Source: FAO (1997b) All figures are in US$ at 1987 prices and exchange rates

The Asia-Pacific share of World GDP is now just slightly behind the shares held by Europe andNorth America. However, this has not always been the case. The Asian share was once muchhigher, but dropped from 58.3% in 1820 to 19.3% by 1950 due to a long period of poor growthrelative to Europe and North America (Maddison, 1995).



22

For example, in 1820, China was the world's leading economy, and accounted for 28.7% ofWorld GDP (and 35.5% of it’s population) and India had 16.0% of World GDP (19.6% ofpopulation). Both of these countries have become much less important. In contrast, Japan's shareof World GDP and population were only 3.1% and 2.9% respectively in 1820, but Japan hassince become the World’s second largest economy and the most important in the region,accounting for 56% of Asia-Pacific GDP in 1994.

Table 6 - World GDP growth rates (%) summary1

Region or grouping 1966-73 1974-80 1981-90 1991-93 1994estimate

1995-96forecast

1995-04forecast

World average 5.1 3.4 3.2 1.2 2.8 3.2 3.3High-income countries 4.8 3.0 3.2 1.3 3.0 3.0 2.8Developing countries 6.9 5.0 3.2 0.8 2.0 4.0 4.9Developing countries2 6.2 4.9 3.3 4.6 4.6 4.8 5.2East Asia 7.9 6.8 7.6 8.7 9.3 8.1 7.7South Asia 3.7 4.0 5.7 3.2 4.7 5.0 5.4Source: IBRD (1995a) - extracted from Table 1-1.Notes: 1. All figures are percentage changes in GDP measured at market prices and expressed in 1987 prices and exchange rates.

Average growth rates have been computed using least squares regression.2. Excluding Eastern Europe and former Soviet Union

The recent recovery in the Asia-Pacific share of World GDP can be attributed to high economicgrowth rates. Table 6 compares South Asian and East Asian GDP growth since 1966 with therest of the World. This shows that rates of GDP growth in East Asia have been better thanaverage for a long some time. It also shows the recent emergence of the economies of South Asiaand the high hopes for these countries in the future. According to the World Bank (IBRD,1995a), the rapid rates of growth in some of these Asian economies (especially in East Asia) arenot particularly new, but built upon already respectable growth rates of national output andproductivity in earlier decades.

The increased economic importance of the Asia-Pacific region has helped to return manycountries to former prominence. For example, there have been references to the likelihood ofPeople’s Republic of China becoming the World's largest economy, surpassing even the UnitedStates as early as 2020 or at another date within the first half of the next century.

A large part of the recent growth in Asia-Pacific GDP can be attributed to growth in exports andthe region's share of World trade has grown even faster than it’s growth in GDP. It is therefore,useful to describe the linkages between the economies of the Asia-Pacific region and those of theother regions and report recent trends in those other regions.

The United States of America is the largest single external market for many Asia-Pacificcountries. The United States of America has retained modest performance as a result of prudentmeasures to avoid over-rapid expansion in an economy with already high rates of industrialcapacity and labour utilisation (OECD, 1996). Economic growth of 2.1% reported by the WorldBank for 1995 was the lowest level of growth since 1991 and future growth is expected to behigher.

Japan, although a smaller market than the United States of America, has possibly an even greaterinfluence on the economies of the region because of it’s close proximity particularly strong linkageswith countries in the region. According to the Asian Development Bank (AsDB, 1996), the



23

Japanese economy is emerging from its longest post-war period of low growth, with 1995 being thefirst year to show improvement; the economy was projected to grow by 2% in 1996 and to maintainmomentum to reach 2.5% growth in 1997. Since this assessment Japan’s situation has, if anything,gone worse and the possibility of zero growth in 1998 has begun to be mentioned.

Continuing weakness of the Yen into 1997 was expected to boost Japan’s exports but reduce it’scapacity to import from the region’s developing economies, whose currencies are generally peggedto the US dollar. This may be a major contributor to the current export malaise affecting all theregion’s export-driven economies. Recent major currency devaluations were expected to havechanged this picture somewhat by enabling Japan to import more even with a weakened Yen;however, financing exports has become difficult for the dislocated banking sector of the affectedcountries.

Europe is the third force with potential to affect economic development in the Asia-Pacific region.In the medium-term the main factor is likely to be some economic contraction in Europe asgovernments tighten fiscal discipline in order to meet and maintain compliance with the MaastrichtCriteria for a single European currency. For example, in 1996 economic growth slowed to1.6% from 2.5% in 1995.

In addition to Japan, several major economies of the Asia-Pacific region are themselves becomingmore important to the others in the region; similar bail out support was extended to Indonesia. Thisis shown by the recent tendency of the Asia-Pacific economies to depend more on each other andrelatively less on the G7 economies. For example, a large part of the money lent to Thailand in1997 after it’s efforts to support the Baht, came form other Asian countries. Recent regionalintegration initiatives also provide evidence of efforts to increase the importance of theintraregional market. However, the focus of most countries is likely to remain outside the region formany years to come.

At the present time, the Asia-Pacific region is not greatly affected by the performance of theWorld's other developing regions. In future, however, links which have the greatest potential forgrowth are with the countries on the other side of the Pacific Ocean in Latin America where someof the fastest growing economies are on the Pacific Rim - Colombia, Peru, Chile. Economicperformance there has recently suffered from a crisis of confidence resulting from the problems ofthe recent Mexican financial markets. There are, however, potentially dynamic economies such asChile, Brazil, Peru and Colombia which in the medium-term could have mutually beneficial linkswith the growing economies of the Asia-Pacific region. For example, some investments from Asiaare already flowing into Latin America (including several large projects in the forestry sector).

Also to be considered is the importance of Asia-Pacific dependency on trade on the resilience ofthese economies. Currently, the most advanced economies in the Asia-Pacific region are all havingto cope with a sharp drop in exports. The Asian Development Bank (AsDB, 1997b) reports that theslowdown started in late 1995, when the annual growth of merchandise exports from the top13 exporting countries in the region fell to 4.8% in 1996 from 22.1% in 1995 and 18.6% in 1994.This event has served to highlight the risks associated with the export-led growth strategies beingpursued. There are suggestions that the high reliance on electronics in the export mix and theimpact of Yen depreciation on countries linked to the US dollar have also been adverse factors.Analysis also suggests that the competitive advantage in labour-intensive manufacturing currentlyenjoyed by many countries in the region is starting to be eroded. The lessons of the slowdowncould, if properly captured and responded to, lead to greater strength and resilience in future.



24

Regional collaboration

A critical contributory factor to the long and uninterrupted period of rapid growth in the region hasbeen relative political stability and maintenance of peace. Some differences of opinion exist in theregion over issues such as human rights, democratic freedoms and the environment and, moreseriously, a number most of the countries in the region are in dispute over territory withneighbouring countries; these have potential to flare up in times of economic hardship. However,many analysts see few issues that could escalate into major military conflict. Indeed, self-interest inmutually achieving prosperity through a “prosper thy neighbour” policy within the region may bethe most important protection against conflict.

There are two main reasons why stability is likely to persist. The first is that the Asia-Pacific regionis relatively well endowed with regional or subregional economic and political groupings andinstitutions. Examples include institutions comprised of members from within the region such asASEAN and the South Pacific Forum and others with a wider geographical coverage such as theAsia-Pacific Economic Cooperation Forum (APEC) (see Annex 1 for profiles of the maincollaborative institutions in the region). These institutions fulfil not only economic goals, but alsoserve to reduce tension in the region by providing fora for discussion and conflict resolution.

The second is that the World’s other major powers continue to have a strong and stabilisingpresence in the region. They also have a vested interest in a peaceful and prosperous Asia as aprofitable partner in trade.

The most likely threat to future stability within the region may come from provinces with separatistdesires in some Asia-Pacific countries. Ironically, this may be exacerbated if the costs and benefitsof rapid economic development are not shared fairly. The governments of the region have however,a fairly successful record of dealing with such issues and it is unlikely that such conflicts, shouldthey arise in the future, would have a long or significant effect on the economic performance of theregion.

POPULATION DYNAMICS

Over half of the World’s population lives in the Asia-Pacific region which has only contains20% of the World’s land area (see Figure 3 and Figure 7). The population is also growing rapidly:the region’s population in 1994 was higher than the total population of the World in 1960. Thesheer size of this population, it’s relatively high density and it’s high rate of growth, makespopulation one of the most important social parameters to consider in regional outlook work for anysector.



25


The current distribution of population in the Asia-Pacific region is shown in Figure 11. Overthree-quarters of the region’s population live in the North Asia and South Asia sub-regions and afurther 15% live in Southeast Asia. The relatively more prosperous Advanced IndustrialEconomies and Newly Industrialising Economies account for less than 10% of the region’spopulation and the Pacific Islands account for less than 1%.

Figure 11: The distribution of population in the Asia-Pacific region in 1994

North Asia 1,211m (38.9%)

South Asia 1,203m (38.7%)

Southeast Asia 471m (15.1%)

Advanced IndustrialEconomies 146m (4.7%)

Newly IndustrialisingEconomies 75m (2.4%)

Pacific Islands 6m (0.2%)

Source: FAO (1997a)

However, as Figure 4 showed, most of the region’s population can be found in just six countriesand these countries also dominate most of the sub-regions. People’s Republic of China accountsfor nearly all of the population in North Asia. India, Pakistan and Bangladesh account for most ofSouth Asia’s population and Indonesia and Japan account for large shares of the population inSoutheast Asia and the Advanced Industrial Economies respectively.

The distribution of population within the Asia-Pacific region has also changed slightly over thelast 35 years. Overall, the region’s population has almost doubled (see Figure 12), but some sub-regions have grown more than others. From 1961 to 1996, the population of North Asia and theNewly Industrialising Countries increased by 80%, but the population of the Advanced IndustrialEconomies increased by only 35%. In contrast, the population of all the other sub-regions morethan doubled. Therefore in terms of population, these sub-regions (particularly South Asia andSoutheast Asia) are now more important than they used to be.



26

Figure 12: Changes in Asia-Pacific population 1961-1996

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1961 1966 1971 1976 1981 1986 1991 1996Year

Tota

l pop

ulat

ion

(in b

illio

ns)

South Asia

North Asia

Southeast Asia

Advanced IndustrialEconomies

Newly IndustrialisingEconomies

Pacific Islands

Source: FAO (1997a)

Figure 13 shows the rates of population growth experienced in each of the Asia-Pacificsub-regions over the last 35 years. This shows the remarkable success in reducing populationgrowth which has been achieved in the region in the last few decades. Overall growth hasdeclined by more than one percentage point from it’s peak in 1969, although some sub-regionshave been much less successful in reducing population growth than others.

Population growth has fallen the most in North Asia and the Newly Industrialising Economies,largely as a result of effective family planning policies in these countries. The reduction for thewhole Asia-Pacific region follows quite closely the trend in the North Asia sub-region becausethis region accounts for such a large share of the Asia-Pacific total.

Population growth has reduced by only a modest amount in South and Southeast Asia, so thesesub-regions are likely to continue to have greater shares of the region’s population in the future.Population growth has also hardly changed at all in the Pacific Islands, although the relativelysmall population of this sub-region means that this will have little effect on the region overall.



27

Figure 13: Rates of population growth in the Asia-Pacific region 1962-1996

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

1960 1965 1970 1975 1980 1985 1990 1995 2000Year

Ann

ual r

ate

of p

opul

atio

n gr

owth



North Asia

Southeast Asia

South Asia

Pacific Islands

All Asia-Pacific

Source: FAO (1997a)

Within the sub-regions, there is considerable variation between population growth rates indifferent countries (see Figure 14). For example, in South Asia, Sri Lanka’s rate of populationgrowth is well below the average; Bangladesh and India are close to the average, but Pakistan,Nepal and the Maldives are well above it. Similarly, in Southeast Asia, there is a two percentagepoint difference between the rate of population growth in Thailand and the rates in Cambodiaand the People’s Democratic Republic of Lao (more detailed information about population on anindividual country basis can be found in Annex 2). With one or two exceptions (most notablySingapore and Malaysia), the relatively more prosperous countries and territories in the regionhave lower population growth rates.

Population growth rate has actually increased over the last 35 years in a small number ofcountries and territories in the region. Countries and territories where this has occurred are:Cambodia; People’s Democratic Republic of Lao; Bhutan; Maldives; Nepal; Pakistan and theSolomon Islands. The majority of these countries are in South Asia.



28

Figure 14: Average annual population growth in the Asia-Pacific region 1992-1996

Taiwan Province of ChinaThailandSamoaJapanTonga

Rep KoreaSri LankaPR ChinaAustraliaCook IslandsNew ZealandHong Kong SAR, ChinaBangladeshIndonesiaKiribatiNew CaledoniaBhutanFijiDPR KoreaIndiaMyanmarSingaporeSR Viet NamMongoliaPhilippinesPapua New GuineaMalaysiaBruneiVanuatuPakistanNepalCambodiaPDR LaoMaldivesSolomon Islands

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

Countryor territory

Population growth rate

AIE NIE NA SEA SA PI

Source: FAO (1997a)



29

Table 7 combines the information on population size and growth rates for individual countries inthe Asia-Pacific region. Four of the large countries in the region: Thailand, Japan, People’sRepublic of China and Bangladesh have low rates of population growth and, with the exceptionof Bangladesh, low rates of fertility3. Three have medium rates of population growth and fertility:India, Indonesia and Socialist Republic of Vietnam. Pakistan and the Philippines have high ratesof population growth and, of the large countries, Pakistan is expected to take the longest to slowdown to replacement fertility growth rates.

Table 7 - The size and growth of countries in the Asia Pacific region in 1994

Average annualpopulation growth

Population size range in 1994

rate 1992-1996 Under 50 million 50-100 million Over 100 million0.0-1.0% Sri Lanka; Taiwan Province of

China; Rep. Korea; Samoa; Tonga.Thailand. Japan.

1.0-1.5% Hong Kong SAR, China; Australia;New Zealand; Cook Islands.

PR China;Bangladesh.

1.5-2.0% Kiribati; Bhutan; Fiji; NewCaledonia; Myanmar; Singapore;DPR Korea.

SR Vietnam. Indonesia; India.

over 2.0% Maldives; PDR Lao; Cambodia;Nepal; Vanuatu; Brunei; Malaysia;Mongolia; Papua New Guinea;Solomon Islands.

Philippines. Pakistan.

Source: FAO (1997a)

3Bangladesh has a high fertility rate but only a relatively low rate of population growth due to a high infant mortality rate.



30

Map 2: Population density in the Asia-Pacific region in 1994

Source: FAO (1997a)

Average population density in the Asia-Pacific region (expressed in hectares per capita) is shownin Map 2. Overall population density in the region is so high that land availability is only about0.9 ha per capita. This is less than half of the average for the whole World.

However, examination of the map shows that a large proportion of the population in the regionlives in areas which are even more densely populated than this. About 45% of the population inthe region live in the 11 countries with the highest population densities (less than 0.5 ha percapita).Australia and Mongolia are two of the least densely populated countries in the region andalso two of the largest. For the 99.5% of the population in the region who live outside of thesetwo countries, the population density gives a land ratio to 0.6 ha per capita. Despite having largetotal areas People’s Republic of China and India have very high crowding (0.8 ha per capita and0.3 ha per capita respectively).

Projections

Despite important successes in family planning, population in the Asia-Pacific region is stillgrowing rapidly in terms of absolute numbers due to the size and age-structure of the population

0 - 0.5 ha/cap 0.5 - 1 ha/cap 1 - 2 ha/cap 2 - 5 ha/cap 5 - 10 ha/cap over 10 ha/cap



31

built-up in earlier years. More than half of Asia’s population is currently aged 25 or less (incontrast, this age group accounts for only 19% of the total population in Europe and 22% inNorth America). As a result of this age-structure, Sanderson and Tan (1995) believe that asubstantial further increase in population in Asian countries in the next 40 or so years isunavoidable. The momentum inherent in such an age-structure would carry it forward even ifreplacement fertility were reached immediately. Coping with the demands of an increasingpopulation will therefore remain a key issue for economic development in the Asia-Pacific regionfor many years to come.

In October 1996, the United Nations released a pre-final draft of its 1996 revision of populationprospects to 2050 (UN, 1996). The UN population projections are authoritative in that they involveperiodic in-depth consideration of the major developments affecting births and mortality as well asa thorough analysis of age-structures, family planning and health development prospects. The lastrevision even took into account probable rates of adoption and the effectiveness of family planningin countries at different stages of development. The high quality of analysis in these projectionsmeans that they can usually be taken to be the best available information for most regions andcountries in the World, with little need for further interpretation. They were therefore used for thisreview.

According to the revised UN population projections, World population grew initially at below2% p.a. between 1950 and 1965. Growth then increased to over 2% p.a. between 1965 and 1970but has since declined to about 1½% p.a. in the period 1990 to 1995 (1¾% p.a. in developingregions). A key element of this latest revision to the UN population projections is that the recentdecline has been faster than was previously expected. The population growth rate is expected tocontinue declining so that sometime before year 2009 it will start to take more time for the World’spopulation to increase by one billion. This would be a reversal of the current situation and wouldrepresent a turning point, signalling the start of steady progress towards a replacement-rate ofWorld population fertility.

Population growth in the Asia-Pacific region has broadly followed these global trends (see Figure13). The peak in growth was significantly higher and occurred slightly later (in 1969) than in therest of the World, but growth has also fallen by more since then (to 1.37% p.a. in 1996), such thatit is now below the World average.

The UN has produced three population projections based on assumptions of high, medium andlow fertility and the latter two have been used in this study. The medium fertility scenario isconsidered by the UN to be the most likely and should be used as the main point of reference. Itis considered highly unlikely that progress achieved so far in family planning either would orindeed could be reversed or significantly slowed. The high fertility projection is, therefore,considered very unlikely to occur and has not been used in this study.

The medium fertility projection of population in the Asia-Pacific region is shown in Figure 15and both medium and low fertility projections are given in Table 8. The projections suggest thatthe World population growth rate will fall to 1.27% p.a. in 2001-2005 and 1.20% p.a. in 2005-2010 (medium fertility). In the Asia-Pacific region, the corresponding growth rates will be 1.16%p.a. and 1.02% p.a.

Under the medium fertility scenario, the Asia-Pacific population is forecast to increase by about650 million people or just over 21% to 3.8 billion by 2010. The Asia-Pacific share of World



32

population will remain the same as at present at about 55% but of a World total growth to6.8 billion for 2010. The low fertility scenario produces projections which are only slightly lower(an increase of 550 million or 18% resulting in a 55% share of a projected World total of6.7 billion).

Over half of the increase in population in the region is projected to occur in South Asia (about150 million or an increase of 29% over current population levels in the sub-region). Thepopulation of North Asia will grow by about 150 million or 13% and Southeast Asia is forecastto grow by 120 million or 25%. In terms of population therefore, the sub-regions of South andSoutheast Asia will become relatively more important. The Pacific Islands are also projected togrow dramatically by 39%, but this will have little effect on the region overall due to theirrelatively small size.

Figure 15: UN medium fertility population projection for the Asia-Pacific region

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1997 1999 2001 2003 2005 2007 2009Year

Tota

l pop

ulat

ion

(in b

illio

ns)

South Asia

North Asia

Southeast Asia



Pacific Islands

Source: UN (1996)



33

Table 8 - UN population projections for countries in the Asia-Pacific region to 2010

Country Current and forecast population (in millions) Population growth forecasts (%)Base Medium fertility Low fertility Medium fertility Low fertility1994 2000 2005 2010 2000 2005 2010 96-00 01-05 06-10 94-00 01-05 06-10

AIE 146 149 151 152 149 150 150 0.35 0.26 0.14 0.31 0.20 0.03Australia 18 19 20 21 19 20 20 1.06 1.04 1.00 0.96 0.86 0.70Japan 125 126 127 127 126 127 126 0.22 0.12 -0.02 0.18 0.08 -0.10New Zealand 4 4 4 4 4 4 4 1.09 1.10 1.05 1.01 0.91 0.81NIE 75 79 82 84 79 81 83 0.89 0.69 0.54 0.83 0.58 0.39Hong Kong SAR, China 6 6 6 7 6 6 7 0.80 0.26 0.17 0.79 0.25 0.12Republic of Korea 45 47 49 50 47 48 49 0.86 0.72 0.58 0.77 0.60 0.42Singapore 3 4 4 4 4 4 4 1.50 1.04 0.70 1.42 0.90 0.48Taiwan Province of China 21 22 23 24 22 23 23 0.89 0.69 0.55 0.82 0.58 0.40North Asia 1,211 1,279 1,325 1,365 1,276 1,312 1,337 0.89 0.71 0.60 0.85 0.54 0.39DPR Korea 22 24 25 27 24 25 26 1.58 1.22 0.89 1.48 1.06 0.70Mongolia 2 3 3 3 3 3 3 2.10 2.00 1.83 2.04 1.86 1.61PRC China 1,187 1,252 1,297 1,336 1,250 1,283 1,308 0.85 0.70 0.59 0.80 0.53 0.38Southeast Asia 471 518 556 590 516 548 573 1.60 1.41 1.20 1.51 1.20 0.88Brunei <1 <1 <1 <1 <1 <1 <1 2.10 1.66 1.35 1.98 1.43 1.00Cambodia 10 11 12 13 11 12 13 2.23 1.86 1.76 2.19 1.79 1.64Indonesia 195 213 228 240 212 224 232 1.47 1.31 1.07 1.36 1.06 0.67Malaysia 20 22 24 26 22 24 26 2.04 1.74 1.51 1.95 1.57 1.25Myanmar 44 49 53 57 49 53 56 1.80 1.61 1.44 1.73 1.47 1.23PDR Lao 5 6 7 7 6 6 7 3.07 2.80 2.59 2.72 2.50 2.31Philippines 66 75 82 89 75 81 87 2.02 1.80 1.57 1.95 1.66 1.37SR Vietnam 72 81 87 92 80 85 89 1.75 1.51 1.21 1.62 1.25 0.82Thailand 58 61 63 65 60 62 63 0.76 0.69 0.61 0.58 0.48 0.37South Asia 1,203 1,336 1,448 1,557 1,331 1,431 1,521 1.74 1.61 1.45 1.67 1.45 1.22Bangladesh 116 128 140 151 128 138 148 1.64 1.73 1.64 1.56 1.57 1.41Bhutan 2 2 2 3 2 2 3 2.77 2.59 2.45 2.46 2.33 2.22India 913 1,007 1,082 1,151 1,003 1,069 1,123 1.61 1.44 1.26 1.52 1.27 0.99Maldives <1 <1 <1 <1 <1 <1 <1 3.44 3.22 3.01 3.09 2.91 2.74Nepal 21 24 27 31 24 27 30 2.53 2.39 2.26 2.14 2.31 2.49Pakistan 133 156 177 200 156 176 197 2.71 2.59 2.44 2.67 2.51 2.32Sri Lanka 18 19 20 21 19 19 20 0.97 1.07 1.10 0.56 0.68 0.72Pacific Islands 6 7 8 8 7 8 8 2.12 2.06 1.95 2.08 1.96 1.81Cook Islands <1 <1 <1 <1 <1 <1 <1 0.90 0.87 0.84 0.85 0.76 0.68Fiji 1 1 1 1 1 1 1 1.56 1.58 1.50 1.47 1.40 1.22Kiribati <1 <1 <1 <1 <1 <1 <1 1.90 1.96 1.96 1.84 1.88 1.84New Caledonia <1 <1 <1 <1 <1 <1 <1 1.48 1.34 1.15 1.36 1.09 0.77Papua New Guinea 4 5 5 6 5 5 6 2.24 2.15 2.01 2.19 2.07 1.89Samoa <1 <1 <1 <1 <1 <1 <1 1.13 1.60 1.91 1.05 1.46 1.71Solomon Islands <1 <1 1 1 <1 1 1 3.21 3.05 2.83 3.17 2.98 2.72Tonga <1 <1 <1 <1 <1 <1 <1 0.38 0.40 0.42 0.33 0.30 0.27Vanuatu <1 <1 <1 <1 <1 <1 <1 2.49 2.47 2.45 2.45 2.40 2.34Asia-Pacific 3,112 3,369 3,570 3,758 3,358 3,530 3,673 1.31 1.16 1.02 1.25 1.00 0.79World 5,607 6,090 6,487 6,886 6,069 6,413 6,730 1.37 1.27 1.20 1.28 1.11 0.97

Source: UN (1996)

Of the individual countries in the region, Pakistan stands-out the most. Pakistan’s population willgrow by nearly 50% by 2010 to 200 million and retain a growth rate of over 2% p.a. Bangladeshand Nepal will similarly grow by large amounts and retain relatively high population growthrates. India and People’s Republic of China will remain the largest two countries in the region,but will be growing much more slowly by the year 2010; India’s trajectory is heading towardsovertaking China as the world’s most populous country.



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Table 9 - The projected size and growth of countries in the Asia Pacific region in 2010

Average annualpopulation growth

Population size range in 2010

rate 2006-2010 Under 50 million 50-100 million Over 100 millionunder 1.0% Taiwan Province of China;

Singapore; Tonga; CookIslands; Hong Kong SAR,China; DPR Korea.

Thailand; Rep.Korea.

Japan; PR China.

1.0-1.5% Sri Lanka; Australia; NewZealand; Brunei; NewCaledonia.

SR Vietnam;Myanmar.

Indonesia; India.

1.5-2.0% Kiribati; Samoa; Fiji;Cambodia; Malaysia; Mongolia.

Philippines. Bangladesh.

over 2.0% Bhutan; Nepal; Vanuatu;Maldives; PDR Lao; Papua NewGuinea; Solomon Islands.

Pakistan.

Source: FAO (1997a) - for comparison see 1992-96 rates in Table 7.

Table 9 shows the projected size and population growth of countries in the region by 2010.Comparing this with Table 7, it can be seen that population growth will have declined in mostcountries by this time. The only countries where population growth is expected to increasesignificantly are Sri Lanka, Samoa, Bhutan and Bangladesh. Myanmar and the Republic of Koreaare expected to reach populations of over 50 million by this time

Over the longer-term future, it is expected that the demographic transition to low populationgrowth or replacement rate fertility will have occurred by 2015 for most of the Asia-Pacificregion. For example, a study by Sanderson and Tan (1995) examining 18 countries in the region,forecasts that 13 of them (including many of the large countries in the region) will have reachedreplacement level fertility levels by this time. The notable exception is Pakistan, which isexpected to continue growing for quite some time.

Figure 16 compares projected population density in 2010 with population density in 1994 formost of the countries in the region. Overall, the amount of land per capita falls from 0.9 ha percapita in 1994 to 0.75 ha per capita in 2010 (excluding Australia and Mongolia, the fall is from0.6 ha per capita to 0.5 ha per capita). Many of the countries likely to be affected the most by thischange are those which already have very high population densities, including: Nepal; Pakistan;Bangladesh and the Maldives.



35

Figure 16: Land to population ratio in 1994 and 2010 in selected Asia-Pacific countries

Solomon IslandsNew Zealand

VanuatuPDR Lao

BhutanFiji

BruneiCambodiaSamoa

MalaysiaMyanmar

Cook IslandsKiribatiIndonesiaThailand

PR ChinaTonga

NepalPakistanDPR Korea

SR Viet NamPhilippinesSri LankaIndiaJapan

Rep KoreaTaiwan Province of China

MaldivesBangladesh

0 1 2 3 4 5 6 7 8

Countryor

territory

Population density (ha per capita)

2010 1994Source: FAO (1997a)



36

ECONOMIC DEVELOPMENTS

Despite the size and population of the Asia-Pacific region, the region only accounts for about a quarterof World GDP (see Figure 10) and a large proportion of this is accounted for by just one country(Japan). Many of the economies in the region are therefore, quite small. However, in a number ofAsia-Pacific countries, economic growth has been dramatic. Until the economic turmoil of 1997 mostcommentators expected these high growth rates to be sustained and to spread to other countries in theregion. There is no consensus at present on how soon respectable growth rates can be regained.

This section of the review starts by describing the main trends and current status of the economies inthe region. It then discusses in some detail the main parameters which have contributed to the highrates of economic growth observed until recently for some countries in the region. While presentationof projections of future economic growth could have been done with some confidence till mid-1997, atthis time of continuing great uncertainty, the focus is instead on the nature and causes of economicchange.


The current size and distribution of GDP in the Asia-Pacific region is shown in Figure 17. As thisfigure shows, over three-quarters of production in the region is concentrated in the three AdvancedIndustrial Economies and the four Newly Industrialising Economies.

Figure 17: Asia-Pacific GDP in 1994

Advanced IndustrialEconomies 4,556bn (66.4%)Newly IndustrialisingEconomies 822bn (12.0%)North Asia 552bn (8.1%)

Southeast Asia 555bn (8.1%)

South Asia 362bn (5.3%)

Pacific Islands 10bn (0.1%)

Source: AsDB, IBRD and CIA All figures are in US$ at 1994 prices and exchange rates



37

Japan is by far the largest economy in the region, accounting for about 60% of regional GDP, butanother eight countries (see Figure 18) have economies of over US$ 100 billion (1994 prices andexchange rates). In contrast, the total GDP of all the Pacific Islands added together comes to only US$10 billion, less than the GDP of Sri Lanka.

Figure 18: GDP of the major Asia-Pacific economies in 1994

Japan4,223bn (61.6%)People's Republic of China540bn (7.9%)Republic of Korea381bn (5.6%)Australia289bn (4.2%)India273bn (4.0%)Taiwan Province of China241bn (3.5%)Indonesia176bn (2.6%)Thailand143bn (2.1%)Hong Kong SAR, China131bn (1.9%)Rest of Asia-Pacific460bn (6.7%)

Source: AsDB, IBRD and CIA All figures are in US$ at 1994 prices and exchange rates

Trends in GDP the last 16 years to 1994 are shown in Figure 19. Overall, the GDP of the region hasnearly doubled, in real terms, over the last 16 years (an increase of 95%). Two sub-regions have grownby less than this average: the Advanced Industrialised Economies and Pacific Islands (recording totalreal growth of about 70% and 50% respectively over the period). The top performer is North Asia,where GDP has increased by 325% from US$ 130 bn to US$ 550 bn. Nearly all of this sub-region isaccounted for by one country, People’s Republic of China, and this dramatic increase in GDP largelyreflects the economic successes which have been achieved with market reforms in that country.

Growth in the Newly Industrialising Economies has been no less dramatic, with these economiestripling in size over the 16 years (a total increase of 228%). All four of these economies have grown byroughly similar amounts.



38

Figure 19: Changes in Asia-Pacific GDP 1978-1994

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1978 1982 1986 1990 1994Year

GDP (in billion US$ at 1994 prices)..Pacific Islands

South Asia

Southeast Asia

North Asia



Source: AsDB, IBRD and CIA

The economies of Southeast Asia and South Asia have grown by 141% and 111% respectively overthe period. There has, however, been some variation in performance within these two regions. InSoutheast Asia, the relatively large economies of Indonesia, Thailand and Malaysia, along withSocialist Republic of Vietnam, have grown the most while other countries (e.g. Brunei) have grownonly slowly. In South Asia, some of the smaller economies, such as Bhutan and the Maldives, haveshown the highest rates of economic growth over the period, but the total growth of the sub-region hasbeen largely determined by economic growth in India and, to a lesser extent Pakistan, which havegrown more slowly.

In terms of the relative size of their economies, the importance of the Advanced Industrial Economieshas diminished from a 77% share of regional GDP in 1978 to a 66% share in 1994. With belowaverage economic growth expected to continue in these economies in the future, this trend is likely tocontinue. The relative importance of the Pacific Islands which account for well under 1% of theregional GDP has also diminished.

The relative importance of the North Asia sub-region has increased the most in the Asia-Pacificregion, from a share of under 4% to over 8% of regional GDP over the period. This share is now aboutequal to that of Southeast Asia. The share of regional GDP gained by the other sub-regions has beenonly modest, in the range of 2% to 3% for each of them.



39

Figure 20: Trends in GDP growth in the Asia-Pacific region

0%

2%

4%

6%

8%

10%

12%

1981 1983 1985 1987 1989 1991Year

GD

P gr

owth

rat

e (5

yea

r m

ovin

g av

erag

e)



North Asia

Southeast Asia

South Asia

Pacific Islands

All Asia-Pacific

Source: AsDB, IBRD and CIA

Figure 20 shows trends in GDP growth in the Asia-Pacific region over the period 1981-19924. Thisshows that economic growth has been in the range of 4-5% per annum over most of the period, with anaverage of about 4¼%. However, this average is greatly influenced by the slow growth of the matureJapanese economy. Excluding Japan, the average rate of growth in the rest of the region was morevigorous, being closer to 6¼%.

North Asia has shown the largest (but also most variable) rate of economic growth in the last decade,being generally between 6-12% per annum with an average of about 9½% per annum. Economicgrowth in the Newly Industrialising Economies has been close behind, and generally more stable,between 7-9% per annum with an average of about 7¾% per annum. Average annual growth rates of5¾% have been achieved in Southeast Asia. These rates of economic growth have not shown anyparticularly strong trends over the last decade at the sub-regional level.

Economic growth in South Asia has averaged 4¾% per annum, slightly above average for the wholeregion. In contrast, the Pacific Islands have grown much more slowly than the rest of the region (about2½% per annum on average). However, growth rates improved in both of these sub-regions betweenthe late 1980s and the crisis of mid 1997 were at about 6-7% per annum.

The Advanced Industrial Economies have also grown more slowly than the rest of the region (about3¼% per annum on average), but growth has slowed down in recent years and, in the case of Japan,has since the Asia economic turmoil started practically stalled.

By combining the information collected on the size and growth of the individual economies of theAsia-Pacific region, it is possible to classify them according to the stage of economic development 4For presentational purposes, five-year moving averages are presented in Figure 20, to smooth-out the effects of short-term changes ineconomic growth.



40

each of them have reached. This could be done in several ways and one attempt to do this, based onGDP per capita level and growth, is shown in Table 10. This sort of classification may be more usefulfor examining future developments in the forestry sector in the region than the sub-regions used in thisreport (which are based on geographical proximity as well as economic development).

Table 10 - Per capita GDP and GDP growth in Asia-Pacific economies

Average growth Gross Domestic Product per capita in 1994 (in US$ at 1994 prices and exchange rates)in GDP per capita

1979-19940-500 500-2,000 2,000-5,000 5,000-10,000 10,000-20,000 over 20,000

< 0% p.a. Kiribati VanuatuSamoaPhilippinesDPR Korea

New Caledonia Brunei

0-2½% p.a. MongoliaPDR LaoNepalBangladesh

SolomonIslandsPapua NewGuineaMyanmar

Fiji New ZealandAustralia

2½-5% p.a. IndiaPakistanCambodiaBhutan

TongaSri Lanka

Malaysia Japan

5-7½% p.a. Indonesia ThailandCook Islands

Rep. Korea Taiwan Provinceof China

Hong KongSAR, ChinaSingapore

over 7½% p.a. PR ChinaSR Vietnam

Maldives

Note: Countries with a GDP of less than US$ 10 bn are shown in italics

At the top-end of the development scale are the Advanced Industrial Economies and NewlyIndustrialising Economies. As Table 10 shows, these sub-regions are fairly homogenous in terms oftheir economic strength. The former is characterised by high per capita GDP and moderate to low percapita GDP growth, while the latter is characterised by moderate to high per capita GDP and high percapita GDP growth. Growth will probably remain at around 2-2½% in the long-run in the AdvancedIndustrial Economies.

At the third level of development are countries with low to moderate GDP per capita combined withmoderate to hitherto high rates of growth in GDP per capita. This level contains the group of countriesmoving towards the ranks of the Newly Industrialising Economies and comprises: Thailand, Malaysia,Indonesia, Sri Lanka, Socialist Republic of Vietnam and People’s Republic of China. The latter twocountries are not particularly wealthy, but have achieved incredible economic growth rates over thelast decade as they have begun to develop market economies and reduce central planning and control.People’s Republic of China is also the second largest economy in the region after Japan and has thepotential to match or even surpass Japan in the early part of the next century.

Countries with low GDP per capita combined with low to moderate GDP per capita growth aregenerally at the fourth level of development. Countries from the Asia-Pacific region in this groupinclude: India, Pakistan, Bangladesh and Myanmar. It can be expected that, given the right policyenvironment, these economies will grow faster and become richer in the future, although this mighttake some time. The economy of the Philippines should be considered as a member of this group.However, relatively low economic growth combined with it’s currently high rate of population growthhas resulted in a decline in per capita GDP in recent years, so it could be considered that this country issomewhat behind the others in this group.



41

Countries in the Asia-Pacific region not included in the four groups above are at various stages ofdevelopment but should probably be considered as a separate, more diverse group because of theirwidely varying and unusual circumstances. For example, all but two of the countries in this group haveGDPs of less than US$ 10 bn (at 1994 prices and exchange rates) and many rely on only one or twoproducts for most of their income (e.g. oil in Brunei; tourism and fishing in the Maldives; tourism andsugar in Fiji; and nickel in New Caledonia). Most of these countries have little scope to developdiversified for the foreseeable future. They cannot, therefore be generally considered as similar to theeconomies listed above.

The two larger economies in this group are also quite unusual of which the Democratic People’sRepublic of Korea is one of the few remaining truly centrally planned economies in the World and isquite isolated (in economic terms) from most of the rest of the region.

Development parameters

The popular press and even some analytical works tended till the post 1997 economic turmoil to treatthe Asia-Pacific region as if all economies were close to or could realistically achieve within a modesttime period the status of the high-performance economies of south-east Asia. Some contrasts arementioned below in order to illustrate the inappropriateness of generalising about the region. Someindicators of the skewed regional profile are illustrated in Annex 3.

From what follows, it emerges that a few countries have a driving role for Asia-Pacific: theirexceptional performance, the extreme magnitude of their contribution, or their size gives them a largeinfluence on regional totals and averages which can be misleading if not qualified. Secondly, amongthe most influential countries in economic terms are small ones with low populations (e.g. Singapore,Hong Kong SAR, China, Taiwan Province of China) so that overall regional averages or per capitanumbers are unhelpful in characterising the condition or prospects of many Asians. In brief, selectedcontrasts to illustrate the situation include the following:

Not all have achieved it

Until the mid 1997 economic turmoil caused reversal from praise to criticism and “I told you so”stances, an industry had developed, which showed few signs of flagging, to explain the "super-growth"phenomenon of a number of economies in Asia. There were endless references to a "miracle". Fullappreciation of the complex sets of variables which explain how and why any given country or groupof countries was developing so fast requires reference to the original analyses. Even these originalscannot provide the full story, nor can they be treated as gospel - controversy reigned and analysts didnot achieve consensus on the region's development. its determinants or at what pace it would continueto grow.

The earlier summary assessment of regional contrasts in Asia-Pacific suggests that it was nevermeaningful to talk of a miracle for all of Asia when the concerned countries were relatively few andsmall. The inclusion of China among the ranks of "miracle" countries lent them a regional significancewhich would otherwise be missing. As indicated earlier, there are many countries in the region whichwere never among the outstanding list, many of these had a significant share of Asia's populationrelative to the countries that were doing extremely well.



42

Notwithstanding the fact that it was only a handful of the Asia-Pacific which have grown very fast,they boosted the region's significance on the world stage so that the global economy no longer restsonly on North America and Europe but includes Asia as its third pole. Forbes (1997) reports that in1992, the GDP shares were 28.9% for Europe, 27.8% for North America and 22.9% for Asia. In 1993,Asian members of the Asia-Pacific Economic Cooperation (APEC) for 24.6% and 27.7% of worldimports and exports respectively.

What growth rates have occurred?

Table 11 shows the recent growth rates for all Asia-Pacific economies for which such informationcould be found in a comparable form. There is clearly a wide performance spectrum.

In his overview of current economic trends in the whole region, Edwards (1997) reports that the twodecades from 1974 to 1994 witnessed the developing economies of Asia and the Pacific sustain anaverage growth rate of about seven times that of the world average. East Asia led but South Asia,although slower, was also above the world average. China’s economy is reported to have doubled injust six years (Naisbitt (1996)). According to Hohol (1997), in the "four tigers" (Republic of Korea,Hong Kong SAR, China, Taiwan Province of China and Singapore) real GDP doubled every eightyears between 1960-1985. Republic of Korea, whose GDP per capita was in 1962 identical to Sudan’sat $110 and Taiwan Province of China, whose income at $160 was equivalent to that of the formerZaire in the same year, are now practically developed countries.

Thus, while forty years ago Asian economies produced less than 5% of global GNP, by 1990, thisshare had reached 25% and is still growing rapidly. Based on pre-crisis expectations, Hohol (1997)speculated that by the turn of the century, Asia’s economy was likely to be bigger than either NorthAmerica’s or western Europe’s while another ten years later, in 2020, Asia’s economy could be largerthan that of North America and western Europe combined. Hohol further speculated that “in thequarter-century after 1995, Asia will account for half the world-wide sales growth in the markets foralmost every product and service save the most advanced ...”.

According to Naisbitt (1996), there are fundamental shifts occurring even within Asia as a group ofdeveloping countries in that region begin to catch up with the industrialised world: Japanese exports toOECD countries fell from 9% in 1986 to 7.7% in 1994. In the same period, the 10 emerging Asianeconomies (China, India, Taiwan Province of China, Republic of Korea, Hong Kong SAR, China,Indonesia, Malaysia, the Philippines, Singapore and Thailand) increased their share of the OECDmarket from 9.8 to 14.5%.



43

Table 11 - Asia-Pacific countries/territories - 1978-1998 Real GDP Growth (% per annum) Country/territory 1978-88 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Advanced Industrial Economies (AIEs)Australia 3.2 4.7 4.4 1.5 -1.1 2.3 3.5 5.4 3.2 3.6 2.2 2.9Japan 3.0 5.7 4.4 4.7 3.6 0.7 -0.1 0.3 0.7 4.0 3.2 3.7New Zealand 2.0 3.9 -1.4 0.1 -3.7 0.3 5.5 4.1 2.2 2.7 3.7 3.0Newly Industrialising Economies (NIEs)Hong Kong SAR,China*

8.3 8.0 2.6 3.4 5.1 6.3 6.4 5.4 5.0 4.7 4.7 5.3

Korea, Rep. of 7.7 11.3 6.4 9.5 9.1 5.1 5.8 8.6 9.0 9.0 7.0 6.9Singapore 6.9 11.1 9.6 8.8 6.7 6.0 10.1 10.1 8.9 8.8 7.0 8.0Taiwan Provinceof China

8.7 7.8 8.2 5.4 7.6 6.8 6.3 6.5 6.1 6.0 5.7 6.3

North AsiaChina, PR of 9.5 11.3 4.1 3.8 9.3 14.2 13.5 12.6 10.2 9.7 9.0 8.0Mongolia 6.5 8.5 4.2 -5.6 -9.2 -9.5 -3.0 2.3 6.3 2.6 3.5 4.5Korea, D.P.R. * n.a n.a n.a n.a n.a n.a n.a n.a -5.0 n.a n.aSE AsiaBruneiCambodia 9.9 3.5 1.2 7.6 7.0 4.1 4.0 7.6 6.0 6.4 7.0Indonesia 5.2 5.8 9.1 9.0 8.9 7.2 7.3 7.5 8.1 7.8 8.0 7.0Lao, PDR of 5.0 -2.1 9.9 6.7 4.0 7.0 5.9 8.1 7.1 6.9 7.2 7.4Malaysia 5.6 8.9 9.0 9.7 8.6 7.8 8.3 9.2 9.5 8.8 8.5 8.5Myanmar 3.8 -11.4 3.7 2.8 -0.7 9.7 5.9 6.8 7.2 6.0 .. ..Philippines 1.8 6.8 6.2 3.0 -0.6 0.3 2.1 4.4 4.8 5.5 6.0 6.5Thailand 6.4 13.3 12.2 11.6 8.1 8.1 8.3 8.8 8.7 6.7 6.1 6.6Vietnam 4.5 5.1 7.8 4.9 6.0 8.6 8.1 8.8 9.5 9.5 9.5 9.3South AsiaBangladesh 4.1 3.5 5.0 5.1 4.1 4.8 4.8 4.7 4.7 4.7 5.4 6.0Bhutan 7.8 1.1 4.7 6.6 3.5 4.1 5.7 6.0 7.0 6.4 .. ..India 4.5 8.7 7.4 5.9 1.7 4.1 4.2 5.7 6.8 6.8 7.0 7.0Maldives 9.5 8.7 9.3 16.2 7.6 6.3 6.2 6.6 7.2 6.5 .. ..Nepal 3.2 4.3 4.6 6.4 4.1 3.4 7.1 3.0 5.8 6.1 4.5 5.0Pakistan 6.5 4.8 4.7 5.6 8.2 5.0 0.8 3.8 4.5 6.1 5.2 6.5Sri Lanka 5.0 2.7 2.3 6.2 4.6 4.3 0.9 5.6 5.4 3.8 5.7 5.9Pacific IslandsCook Islands -0.3 6.4 10.5 0.4 0.4 .. .. .. ..Fiji 1.7 3.5 13.9 3.2 1.5 4.8 3.5 4.2 2.4 .. .. ..GuamKiribati -5.8 10.6 -2.2 -3.2 2.8 -1.6 0.9 1.8 2.5 .. .. ..Marshall Is. .. 5.1 -1.7 3.2 0.1 0.1 4.1 2.8 3.7 .. .. ..Micronesia. .. 3.6 -1.7 -2.7 4.3 -1.2 5.7 1.4 1.0 .. .. ..N. Mariana Is.New CaledoniaPNG 2.2 2.9 -1.4 -3.0 9.5 11.8 16.6 5.6 -4.7 .. .. ..Solomon Is. 2.6 1.3 4.3 1.0 2.0 12.3 4.0 5.8 6.9 .. .. ..Tonga -2.7 5.8 -0.4 3.1 4.1 1.6 .. .. ..Vanuatu 2.9 0.6 4.5 5.2 4.5 -0.7 4.4 2.6 3.2 .. .. ..Western Samoa 2.4 -1.5 6.4 -9.4 -2.1 -0.9 6.3 -7.8 6.7 .. .. ..Sources: For developing countries, Table A2, AsDB Outlook 1996-97 unless otherwise declared. For advanced industrialeconomies, IMF "World Economic Outlook", October 1996 & May 1997. 1996 - 1998 data from Table A1 of AsDB Outlook1997/98. * From World Factbook, US Govt. (CIA Website)



44

Taking into account a range of countries, the World Bank (1995a) reported 1994 Asian regionalgrowth at 9 to 10%, about the same as in 1993. It was associated with export growth's acceleration to16% (from 13% in 1993) and particularly fast growth of intra-regional trade. Table 2 summarisesrecent growth rates for total and per capita GDP. The variation among countries was considerable:Edwards (1997) reports that between 1965 and 1980, South Asia growth has averaged about1.4% compared with an average of 4.5% for the whole of Asia and the Pacific. By contrast, in the caseof PR China, growth has been so fast (accompanied by inflation in double-digits) that governmentsought to avoid overheating and was implementing an austerity programmes aimed at slowing downgrowth from about 14% to 11.5 to 12%. Very rapid growth in an economy of PR China's size can, ifsustained even for a few years, significantly raise regional totals and weighted averages.

In which countries did the most miraculous growth occur? How did the miracle happen; why did ithappen in the countries it did; what ingredients explain it? These are among the controversialquestions which challenge analysts today.

In an effort to solve the question, the World Bank embarked on a research project which has resultedin one of the most all-encompassing recent looks at the issue. The report states that from 1965 to 1990,the 23 economies of East Asia grew faster than all other regions of the world, most of the growth beingin the following eight economies: Japan, the four tigers (Hong Kong SAR, China, the Republic ofKorea, Singapore and Taiwan Province of China); and the three newly industrializing economies(NIEs) of south-east Asia, Indonesia, Malaysia, and Thailand. The World Bank called these eight"high-performing Asian economies" (HPAEs) but to them must be added PR China which has alsoregistered exceptional performance during the most recent decade but also maintained creditableperformance since 1978 when it adopted its socialist market economy principles.

The Bank reports that since 1960, the HPAEs grew over twice as fast as the rest of East Asia, roughlythree times as fast as Latin America and South Asia, and 25 times faster than sub-Saharan Africa. TheHPAEs share in world exports rose from 8% in 1965 to 13% in 1980 and 18% in 1990, withmanufactured exports providing most of this growth. The proportion of the absolutely poor droppedfrom 58% in 1960 to 17% in 1990 in Indonesia, and from 37% to less than 5% in Malaysia. TheHPAEs are the only group of developing economies in which savings exceeds investment, makingthem exporters of capital.



45

Table 12 - Average annual percentage growth of real GDP for 1966-1994 (at 1987 prices andexchange rates)

1993 GDP(US$ billions)

1966-73 1974-90 1991-93 1993 1994

World 18,688 5.1 3.0 1.2 1.3 2.8High-income 14,600 4.8 2.9 1.3 1.1 3.0Japan 2,965 9.9 4,0 1.8 0.1 0.8Low and middle income 4,028 6.9 3.5 0.8 1.7 2.0Asia 1,497 5.9 6.3 7.0 7.4 7.8East Asia and Pacific 1,067 7.9 7.1 8.7 9.4 9.3PR China 430 8.5 8.2 12.3 13.7 11.7Korea, Rep. 215 11.2 8.5 6.4 5.4 8.0Indonesia 112 6.6 6.1 6.5 6.4 6.6South Asia 431 3.7 4.9 3.2 2.9 4.7India 343 3.7 4.8 2.9 2.7 4.7

Source: Extracted from Table 1, World Bank (1995a)

Table 13 - Average annual percentage growth rates of real per capita GDP for 1966-1994 (at1987 prices and exchange rates)

1993 GDP* 1966-73 1974-90 1991-93 1993 1994World 3,500 3.1 1.2 -0.4 -0.2 1.2High-income 17,570 3.8 2.2 0.7 .05 2.4Japan 23,800 8.6 3.2 1.5 -0.2 0.6Low + middle income 850 4.5 1.5 -0.9 -0.5 0.3Asia 510 3.4 4.3 5.2 5.5 6.0East Asia and Pacific 615 5.2 5.4 7.2 7.8 7.6PR China 360 5.8 6.6 11.0 12.5 10.5Korea, Rep. 4,860 8.8 7.0 5.4 4.6 7.0Indonesia 580 4.1 3.9 4.7 4.2 5.1South Asia 360 1.3 2.6 1.1 0.7 2.7India 380 1.4 2.6 0.9 0.8 2.9

Source: Extracted from Table 2, World Bank (1995a). *(US$ per capita).

The commencement of accelerated growth and development seems to be occurring sequentially inAsia: a kind of "help thy neighbour" pattern of economic growth has been observed partly based oncultural and ethnic affinities and ties but clearly also benefiting form enlightened self-interest. TheAsian Development Bank (1996) has observed that since the second world war, a wave-like sequenceof growth acceleration, maturity, and deceleration has occurred starting with Japan, followed by thenewly industrialising economies (NIEs), and now by the rapidly-growing Southeast Asian economies -a sequence described as the “flying geese” pattern.

Already in line for rapid development in this sequential leaping pattern are the Philippines and severalSouth Asian economies which are capturing the benefits of liberalisation, key among them being India,Pakistan, Bangladesh, Myanmar and Sri Lanka. Other economies stand to gain as these also becomemore prosperous and create markets for or become sources of investment for their neighbours; thiscontinues the chain of causation.



46

Was the miracle spreading?

Leading the "miracle" and earliest in the process was Japan, which is alone in the first tier: Japan'spost-war record of growth is yet to be surpassed - it now has a mature economy with growth centredaround the G-7 rates of 2-3% annually but after 1997 much less. Yet Japan has already grown so muchthat even though by now it’s economy grows so much slower than for its neighbours, it still dwarfs theeconomies of its neighbours. The next tier in the pre 1997 miracle category comprised of the newlyindustrialising economies normally called the “Asian Tigers” - Republic of Korea, Hong Kong SAR,China, Taiwan Province of China and Singapore.

The third tier is a set of very rapidly industrialising countries - PR China, Malaysia, Thailand,Indonesia and very recently, Vietnam. A key element to note is that these countries have not onlyachieved very high rates of growth (other countries also have) but that until 1997 they sustained it forso long. All had growth driven by exports and high investment levels. While OECD markets andinvestment was important but these economies were increasingly buffered by their own markets andby investment from their own savings both within their own borders and in neighbouring Asiancountries. Apart from PR China, all countries in this group also happen to be members of ASEAN,which has been Asia's fastest-growing sub-region with a 1994 weighted GDP growth rate of7.47% according to ASEAN (1995).

A fourth tier of economies comprises those benefiting from liberalisation and other reforms. Theirgrowth rates accelerated in recent years even though they never achieved the rates of the "miracle"countries. This category includes economies of some populous countries: India, Pakistan, Philippines,Myanmar and Bangladesh but also of Sri Lanka and Laos. Taken together, the region’s countries andterritories show a graduation in levels of per capita income (figure 21) and in growth rate of theireconomies (Figures 22 & 23).



47

Figure 21: Range of average GNP per capita in 1994

0 5000 10000 15000 20000 25000 30000

Japan**

SingaporeHong Kong SAR, China

Australia**

New Zealand**

Taiwan, Province of China

Korea, Rep. of

Malaysia

Fiji

Thailand

Tonga

Papua New Guinea

Vanuatu

Western Samoa

Philippines

Maldives

Indonesia

Solomon Islands

Kiribati

Sri Lanka

Korea, D.P.R.*

China, P.R.

Pakistan

Bhutan

Lao

India

Myanmar

Bangladesh

Vietnam

Nepal

Income (US$)

Source: See Annex Table A2.



48

Figure 22: GDP growth rates by country and territory in 1990

Maldives

Thailand

Indonesia

Korea

Malaysia

Singapore

Bangladesh

Sri Lanka

Japan

Lao, D.P.R.,

Taiwan Province of China

Bhutan

India

Hong Kong SAR, China

Nepal

Fiji

Vanuatu

China, P.R.

Australia

Pakistan

Myanmar

Philippines

New Zealand

Vietnam

Cook Islands

Marshall Islands

Solomon Islands

Cambodia

Tonga

Papua New Guinea

Mongolia

Kiribati

Micronesia

Western Samoa

-10.0 -5.0 0.0 5.0 10.0 15.0% p.a




49

Figure 23: GDP growth rates by country and territory in 1995

China, P.R.Korea, Rep. of

ThailandVietnam

MalaysiaIIndia

Lao, D.P.R.Singapore

MyanmarIndonesia

Taiwan Province of ChinaCambodia

Sri LankaMongolia

AustraliaMaldives

Hong Kong SAR, ChinaPhilippines

BhutanNew Zealand

BangladeshTonga

FijiPakistan

JapanKiribati

Nepal

0.0 2.0 4.0 6.0 8.0 10.0

% p.a


What explained the miracle?

Reference to miraculous development tends to imply luck or chance in the process of development. In-depth research carried out by the many reputable institutions mentioned earlier reveals that where rapidand sustained economic and social development occurred it has benefited from sustained peace andpolitical stability and was a result of hard work, appropriate policies and even some sacrifices. What isnot stated but must have been important is high levels of discipline on the part of society at large andof leaders both in government and the private sector.

The key conditions for growth appeared to involve ensuring correct macro-economic fundamentals :high savings rates; low budget deficits; low inflation; low external debt; keeping appropriate exchangerates; maintaining low price distortions; responding quickly to macro-economic shocks. According tothe World Bank, private domestic investment and rapidly growing human capital were the principalengines of growth, both pursued in the context of aggressive export development. In addition, some ofthe earlier miracle economies (Japan, Republic of Korea and Taiwan Province of China) but to some



50

extent also the current ones took off when it was possible for developing economies to beprotectionist; they benefited from it. The above factors are fully compatible with the plus factorsassociated with economic growth observed by Maddison (1995) in the long term for the period 1820-1992 (see Annex 2 for details).

Without going into an exhaustive summary of the thesis of the World Bank, a listing of the key drivingforces and enabling factors could include:

• focus on export growth.• high rates of savings since the 1960s (this later became self-reinforcing, with high growth rates,

investment inflows and rapid demographic transitions permitting even more saving)5. Governmentpolicies are reported to have also encouraged (and sometimes compelled) increased savingsthrough a variety of means.

• high rates of investment (in both human and physical capital) - these alone reportedly accountedfor about two-thirds of HPAEs6 growth. The economies reported to be mostly investment-drivenincluded Indonesia, Malaysia and Singapore. PR China’s recent growth also appears to beinvestment-driven. Focusing such investment on key sectors until comparative advantage wasreinforced or created seems to have been an important contributor to success in the high-performance economies.

• capturing opportunities for greater efficiency: according to the World Bank (1993), the economiesof: Japan; Republic of Korea; Hong Kong SAR, China; China; Thailand and Taiwan Province ofChina are productivity-driven, with growth depending significantly on improvements in factorproductivity. There has been emphasis on dynamism and productivity in agricultural policies so asnot to tax the rural economy excessively.

• Openness to foreign ideas and technology (and local investment in technological development).For example, during the 1980s, both Republic of Korea and Taiwan Province of China increasedtheir formal R&D expenditures from approximately 1% to 2.5% of GNP. This has been a keycontributor to productivity-driven growth.

Although the region's population is generally young and dependency rates remain high, the proportionof people of peak earning age, who are able to save, is also growing rapidly as new births decline.

The World Bank estimated that a 10 percentage points increase in the rate of investment would raisethe growth rate of GDP per capita by 0.5%. The high-performance economies all offered generallyliberal treatment of foreign investment and generally also assured investors of secure property rights.Secure property rights and complementary public investment in infrastructure are reportedly the twoparticularly important conditions to investment. World Bank (1993).

The World Bank (1993) estimated that an increase of 10 percentage points in the primary or secondaryschool enrolment rate would raise per capita income growth by 0.3%. Primary education is reported tobe by far the largest single contributor to the HPAEs’ predicted growth rates followed by physicalinvestment and then by secondary school enrolment. Universal access to primary education is the normin the region. Ranis (1995) reports that in Taiwan Province of China, government educational 5There is a clear link between savings and GDP growth through investment. In a recent review of Central Europe, Lyons reports anEconomist Intelligence Unit estimate that to sustain GDP growth of 5% annually would require household savings rates of 20-25%.These rates are lower than those achieved by the high-performers in East Asia. "Mild Chile" Ronan Lyons. Business Central Europe, May1997.6 High Performance Asian Economies.



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emphasis shifted from compulsory primary to compulsory secondary education. Overall, expenditureson education rose from 2.1% of GNP (11% of the budget) in 1955 to 4.6% of GNP (20% of thebudget) in 1970:

• systematic government intervention to ensure focus on the development of specific industries (e.g.some industries were promoted and others not) but without the costs of intervention becomingexcessive.

• establishment of clear performance criteria for selective interventions and monitoring performance.• rapid growth with relative equity7.

A major background factor has been rapid demographic transition (i.e. population control). Somecountries have also benefited from historical factors - US assistance in rebuilding Japan after WorldWar II followed by major US economic assistance and military spending in the region throughoutthe cold war; Japanese colonial investments in basis infrastructure and human capacities in TaiwanProvince of China; US investments in Thailand at the time of the Vietnam war etc.

What of the miracle’s resilience?

The crisis of mid-1997, the dislocation of which remains amply in evidence nearly a year latershows that the “miracle” was neither permanent nor fully resilient. The atypically rapid growth insome of the Asian economies lasted very long and despite the meltdown, cannot be considered abubble phenomenon. Japan, the first example, grew fast uninterruptedly for practically all of thepost-war period. The IMF (1995) observed that the close correlation between growth in industrialcountries and that in developing ones may have broken down in the late 1980s. As a result, during1990-93, developing economies grew sharply in spite of marked slowdown of industrial economies.This evidence of resilience has not been reconfirmed during the mid-1997 crisis.

Yet notwithstanding this crisis, looking at the fundamentals and the enabling factors for growthshould be able to give pointers to future recovery and renewed growth. The next section does thisand explores factors such as domestic savings (which reduces dependence on outside funding);regional integration and trade growth (which diversifies away from heavy dependence on a fewdeveloped market economies); and supportive policies and institutions. These aspects are alsoreferred to as each subregion and country is reviewed.

The World Bank points to the existence of risks in any outlook and assesses how various regions oreconomic categories would fare. The World Bank simulations of "boom-bust" situations showedthat developing countries suffer market contraction but, in addition, those with weak policyperformance and heavy debt face a sharp drop in private capital flows.

East and South Asia show the most resilience during the bust; the former due inter alia to lowreliance on primary commodities, competitiveness of its manufactured exports, growingintraregional trade, lower debt and continued access to external financing (due to a good borrowingrecord - none have bad debts or over-heavy debt). For them, growth slips by only 1 percentagepoint. The World Bank speculates that, partly because of its lower dependence on exports, SouthAsia gains least in the boom but also suffers least in the bust. 7 Myers (1997) reports for Taiwan Province of China that in 1950 the top 20% households earned 15 times as much as the poorest 20%,by 1980, the ratio had fallen to 4.17 and by 1993 had risen a little to 5.38.



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According to Forbes (1997), a most remarkable characteristic of Pacific Basin economies (whichincludes East and South East Asia) was their high degree of inter-dependence that served to increaseresilience. In total, 66% of exports of APEC member countries in 1992 were destined for othermember countries (compared with 53% in 1981). Intra-regional imports accounted for 67.1% oftotal imports in 1992, and have been growing at a rate of 8.1% per year, considerably faster thanimports from outside this region. The APEC economies in 1992 accounted for 41.2% of total worldexports and for more than 50% of global GDP. For the future, Malaysia’s deputy Prime MinisterIbrahim (1996) acknowledges that nation states will remain but that “nevertheless the trend towardsregionalism is inevitable, with governments cooperating for mutual self-interest”.

The OECD outlook (1996) suggested that an important reason for resilience was that trade wasincreasingly within the buoyant region itself (much being among the developing countries), and soalso for the share of investment. The region also had the world's highest rates of domestic savingsand its surpluses provided a buffer against the vagaries of foreign direct investment. Indeed, theWorld Bank reported that national saving rates in East Asia rose by 2 percentage points in 1994 asinvestment inflows increased; they also boosted their foreign reserves and other external assets byabout 3% of GDP. As an additional factor towards resilience, the IMF (1995) considereddiversification of the export base beyond primary commodities into more stable-marketmanufactures important; by 1990, manufactures were already 74% of Asia’s merchandize exports.

Partial evidence of the region's buffering against overall world conditions came from the fact thatgrowth rates of close to 10% or, at any rate well over 5% were maintained in developing Asiaduring the entire downward cycle of the Japanese economy. The World Bank (1995a) reported thatduring the last (global) recession, East Asia’s contribution to world import growth rose to 30% fromless than 10% in 1984-90. Box 2 nevertheless shows that developments in the major industrialeconomies are still significant for Asia.



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Box 2: Continuing importance of industrial countries for Asia-Pacific prosperity

Asia well illustrates the growing intra-regional integration. Through ASEAN South East Asian countries,for example, have increased mutual interdependence and buffering from economic developments in thedeveloped world. However, the links with industrial economies are still strong enough to make adifference. Firstly, Japan remains a dominant economic power in the region; secondly, the cross-pacifictrade with the USA also remains quite important. ASEAN’s top trading partners are trade now as follows:

- Japan 19%- USA 17%- Intra-regional (ASEAN) about 17%- EU about 14%

For this reason, the presence of Japan and the US in APEC is important to economic stability for thedeveloping country members.

According to the ASEAN Secretariat:

• if there is a permanent appreciation of the Japanese Yen, exports from the ASEAN region to Japancan rise by an average of 25.25%.

• slowing down of growth in OECD countries will have repercussions for ASEAN economies sincemore than half of their exports go there. Simulation suggests that a 1 - 2 point deceleration in OECDgrowth leads to: (a) ASEAN exports to Japan shrink by 3.73%; to the US by 4.29% and to theEuropean Union by 4.12%, and (b) ASEAN investment declines by 2.43 %.

Philippine exports appear most sensitive (-9.55% to Japan and declines of over 6% to both the US andEU); Singapore investment appears most sensitive (-8.53%). To improve capture of the benefits frommutual complementarity, there have emerged sub-regional growth zones as part of the economicintegration in Southeast Asia. The Singapore-Raiu-Johor growth triangle is probably the oldest and mostsuccessful. New ones include Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA), the ASEAN northern growth triangle comprising parts of Indonesia-Malaysia-Thailand and theMekong River sub-regional development programme comprising parts of Cambodia, Laos, Myanmar,Vietnam, Thailand and PR China.

Source: ASEAN Secretariat (1996)

Nevertheless, according to Kinoshita (1997) “whatever the wisdom in seeking export-led growth .....Asian economies are still heavily dependent on exports and therefore extremely vulnerable toeternal factors”. Provided the Japanese Yen is strong and Japan can import, it appears able to offsetweak demand from elsewhere but coincidence with weak demand also from Japan can easily leavethe region over-exposed; this coincidence is in place now and it makes regaining growth difficulteven if other problems were resolved.

The region’s economic prospects in the medium term are optimistic in view of expected healthyexpansion of global and inter-regional trade in an environment of increasing derestriction andliberalisation in the context of post-Uruguay initiatives and regional and Pacific basin economicagreements. The general feeling is that the miracle Asian economies will be able to regain to a largedegree their trajectory of rapid growth; that notwithstanding a degree of resilience which provedunequal to needs in the 1997 crisis, Asia has internal strengths which make regaining sustainedrapid growth possible.



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Over-stretched financial systems burdened with non-performing loans, currencies too closely linkedto the US dollar, excessive borrowing on short-term markets explained the problems which spreadover most of Asia from mid 1997. The devaluation of currencies was expected to result in greatercompetitiveness but it later turned out that the banking system had nearly collapsed and had lost theability to finance external trade on which rapid recovery depended.

Driving Forces and Enabling Factors for Strong Growth - Regional Picture

From his OECD-sponsored research, Maddison (1995) identified four main "causal influences"which best explain long-term growth. Annex 2 gives some details on his findings, which can besummarised as: technology, physical capital accumulation, human skills and organising abilitydevelopment, and international integration of individual national economies through trade. Leftunsaid but obviously vital are several background factors, primarily the need for (a) an enablingmacro-economic and social policy framework to permit these factors to be effective and (b)adequate societal discipline. After acknowledging the importance of various macro-economic policystrengths, Hohol, (1997) for example, refers to the importance of Asian governments having beenable to resist pressures from special interest groups which could have de-railed progress. He alsosuggests that the Confucian ethic has made for ready acceptance of discipline and authority in manycountries so that it has been possible to take tough decisions even if they involved societal belt-tightening. Several analysts have referred to the rejection of the welfare state in most Asiancountries as a powerful force for encouraging hard work.

The full interlinkages of various factors and their specific interplay as it has affected Asia-Pacificdevelopment cannot be done full justice in this paper. Reference could be made instead to theresearch report of the World Bank (1993) and to annual Asian Development Bank outlook reviews,apart from those of the IMF and OECD which regularly cover this high potential region. For aglobal interpretation, Maddison (1995) is recommended.

Here, focus is on developments in trade, savings and investment, and policy and institutionalfactors, the precise combination of which, in addition to resource endowment and cultural or socialattributes and social discipline of a country must be right for sustained development to occur. ForAsia's "tiger" economies and for the next two tiers of development mentioned earlier, these factorsseem to be in place or are rapidly falling into place. The financial crisis started in mid-1997 has notpermanently destroyed the basic elements and, in some cases, reflects more a loss of confidence.

Trade

Trade is a major engine for development. Provided markets are liberalised (and there is a strongglobal and sub-regional trend in this direction) it offers opportunities for even small countries withlimited domestic markets to treat the world as their economic hinterland and so to captureeconomies of scale as easily as large countries. Maddison (1995) reports that between 1820 and1992, while population has grown 5-fold and GDP 40-fold, trade has expanded 540-fold. Kinoshita(1997) reports very sharp trade upturn after the second World War; world imports of US$130billion in 1970 had grown over 16-fold to nearly US$7 trillion by 1992, in only two decades. Japanas well as the rapidly industrialising developing Asian economies captured the benefits of thisexpansion by establishing industry to feed this international trade.



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Exporting has been the gateway to development in Asia's most successful countries and territories,starting with Japan after the second world war. To support further growth, the region has alsoincreased imports, initially of capital goods and of "knowledge" services but also of raw materialand consumer goods. In 1996, the Asian Development Bank (1996) reported that the volume ofworld trade continues to increase rapidly, particularly for developing countries. In Asia, rapidexpansion of exports has built upon improved competitiveness of domestic industries which haveoften proved adaptable in upgrading technology as they advance. Many countries in Asia tookmeasures during recent years to further liberalize their foreign trade.

In Asia, export volumes grew particularly strongly, with intraregional trade among developingAsian economies being especially vigorous. (see Box 3.) According to some, liberal trade mustremain a pillar of future policy if prosperity is to continue. Dr. Mahatir Mohamed (1997) says of thefuture “our Pacific era must also be built upon the firm foundation of reducing the obstacles to theflow of goods and services. This is to be open beyond the region. The Pacific community must notbe inward-oriented and discriminatory towards the rest of the world”.

Box 3: ASEAN - success in promoting trade among developing countries

According to the World Bank (1995a), intraregional cooperation initiatives will lead to progressive tariffreductions (as in the projected ASEAN Free Trade Area). In 1995, the World Bank projected exportgrowth over the next decade at 9.5% a year - similar to the 1980s (with imports also rising at nearly 10% ayear). ASEAN, a key contributor to the region's exports saw its total trade go up by 20% between 1993-94, with intra-regional trade even faster. In 1993, the level of intra-regional exports in ASEAN’s CommonEffective Preferential Tariff (CEPT) products among the Member Countries amounted to $32.8 billion.By 1994, the level of intra-regional trade of ASEAN countries in Scheme CEPT products had expanded to$49.8 billion with trade in CEPT products grown at 47%. The implementation of the tariff reductionprogramme under the CEPT thus contributed significantly to the growth in intra-regional trade.

For ASEAN alone, exports were forecast to grow by more than 20% to approach $304 billion in 1995with to total of ASEAN exports and imports in 1995 being nearly $600 billion so making the associationthe fourth-largest trading region in the world after the US, Japan and the European Union. Intra-regionaltrade meanwhile grew at 47% as in 1994, which, if continued, would make this component nearly a fifthof ASEAN trade.

Other initiatives are also promoting more liberal trade. For example, the Asia-Pacific EconomicCooperation (APEC) countries have committed themselves to achieve free and open trade and investmentby 2020; in parallel, investment regimes continue to be liberalized.

Source: Mainly ASEAN Secretariat (1996)

Savings and investment

The World Bank reports that higher investment and GDP growth in East Asia has been primarilydomestically financed. Foreign Direct Investment (FDI) has been a complement to domestic savingsand has tended to increase investment and reserves rather than consumption. World Bank (1995a)projections in 1995 were for 6% average annual growth in real gross domestic investment in Asia’sdeveloping countries in 1995-2004 with most of this, as in the past, to be financed by higherdomestic savings. The high domestic savings of developing Asia may well become even morecritical in future given that, according to the AsDB (1996), in the industrial countries outside Asia(sources of FDI), savings rates have been falling and will continue to do so with the ageing of their



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populations. This tendency is also emerging in Japan, a major source of external capital fordeveloping Asia. East Asia has maintained and even increased its national saving and investmentrates as foreign capital also increased.

It is private funding that is driving the region's economic development. In 1995, the World Bankestimated that total value of bonds, equity funding and other private foreign direct investment (FDI)to East Asia jumped from US$13 billion to US$66 billion between 1990 and 1993; FDI flows alonemore than tripled to US$36 billion, much of the increase going to PR China. The share ofinvestment in GDP rose by 3.5 percentage points. Table 14 gives summary information on fundingflows to the region; table 15 focuses on the FDI element of it.

East and Southeast Asia account for a major share of the FDI going to the South. Edwards (1997)reports that five countries in Asia took 38% of all FDI going to least developed countries (LDCs)between 1980 and 1990, to an annual average of US$16,000m. Key beneficiaries (with % of thetotal) were Singapore (12%), PR China (10%), Hong Kong SAR, China (7%), Malaysia (6%) andThailand (3%). In 1990, with only about 13% of LDCs’ population, East and south-east Asia(excluding PR China) attracted one-third of all 1990 FDI while South Asia (30% of the developingcountries' population), attracted only 3%. Major flows of private capital have been concentrated inEast Asia where foreign direct investment (FDI) has supplemented already high local investment ofdomestic savings.

Secretariat estimates (1996) are that within ASEAN, the increase in overall FDI jumped by 13.1%in 1994, much of the increase going to Indonesia where approved foreign investment tripled toUS$ 23.7 billion. Foreign investment approvals in Malaysia grew by 80%; in Thailand proposedinvestment projects grew 40%; and in Singapore foreign investment commitments increased by54%.



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Table 14 - Summary information on external funding flows in Asia and the Pacific (US$millions)

Beneficiary Private Funding Official FundingTotal As a share

of GDP(%)

Total Netdebtflows

FDI Portfolioequityflows

Total OfficialDevelopment

Assistance

Other

All developingcountries

209,400 4.66 157,656 45,708 65,141 46,807 51,744 41,428 10,316

Asia 84,940 5.45 68,426 10,971 37,322 20,132 16,515 11,022 5,493East Asia andPacific

73,569 6.11 62,783 8,194 36,481 18,107 10,787 6,644 4,143

South Asia 11,371 3.14 5,643 2,777 841 2,025 5,728 4,378 1,350PR China 41,235 10.54 36,261 8,183 25,800 2,278 4,975 1,977 2,998Korea, Rep. 8,534 2.58 8,674 2,129 516 6,029 -140 -191 52Malaysia 7,746 12.02 8,033 -18 4,351 3,700 -287 45 -332India 6,567 2.62 4,559 2,446 273 1,840 2,008 1,237 771Thailand 5,853 4.69 5,018 -499 2,400 3,117 835 624 212Indonesia 4,932 3.41 2,337 -1,504 2,004 1,836 2,595 1,542 1,053Philippines 3,347 6.19 2,143 298 763 1,082 1,204 934 270Pakistan 2,275 4.39 988 457 347 185 1,287 697 590Bangladesh 1,078 4.36 -14 -28 14 .. 1,092 1,099 -7Sri Lanka 513 4.90 109 -85 195 .. 404 423 -19Nepal 305 10.08 -6 -12 6 .. 310 310 0PNG 277 5.44 5 -445 450 .. 272 291 -19Myanmar 98 0.18 37 33 4 .. 61 61 -1Vietnam 82 0.64 83 -7 25 65 -1 57 -58Source: Table 7, World Bank (1995a)

Table 15 - Foreign direct investment in selected developing Asia-Pacific countries and territories1989-1994 ($ million)

1989 1990 1991 1992 1993 1994 TotalNIEsKorea Rep 1,118 788 1,180 727 588 809 5,210Singapore 2,887 5,575 4,879 2,351 5,016 5,588 26,296Taiwan Province of China 1,604 1,330 1,271 879 917 1,375 7,376China, PR 3,393 3,487 4,366 11,156 27,515 33,787 83,704South East Asia 4,688 6,399 8,038 9,304 9,499 8,223 46,151Indonesia 682 1,093 1,482 1,777 2,004 2,109 9,147Malaysia 1,668 2,332 3,998 5,183 5,006 4,348 22,535Philippines* 563 530 544 228 763 1,126 3,754Thailand 1,775 2,444 2,014 2,116 1,7226 640 10,715South Asia 580 455 454 805 1,155 2,140 5,589Bangladesh - 3 1 4 14 11 33India (Net FDI) 350 165 148 344 600 1,314 2,921Pakistan 210 244 257 335 346 649 2,041Sri Lanka 20 43 48 122 195 166 595Pacific Islands 232 258 258 382 101 112 1,343Fiji 8 80 15 50 49 69 272Papua New Guinea 203 155 203 291 1 4 857Solomon Islands 12 10 15 14 24 9 83Vanuatu 9 13 25 27 27 30 131* Philippines 1994 has FDI for the first half of year only. Source : Table 1.3 AsDB (1996)



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The combination of high national savings and external inflows has turned the "four tigers" intocapital-surplus countries some of which are exporting capital to neighbouring Asian countries andglobally even after the 1997 financial turmoil. Edwards (1997) reports, for example, that HongKong SAR, China is the main source of external investment in PR China, accounting for more thantwo-thirds of an estimated US$52,000m of FDI in PR China between 1988 and 1993. The WorldBank (1995a) reports that the largest inflow of 1994 FDI into ASEAN came from Hong Kong SAR,China (US$ 6.9 billion), closely followed by Japan (US$5.6 billion) then the United States (US$5.2billion). Altogether, intra-ASEAN investments increased in 1994 by 49% to US$3.3 billion, ofwhich Singapore alone provided US$2.5 billion (76%). Box 3 presents aspects of integration amongdeveloping economies of the region.

Until the crisis, the four "tigers" were investing heavily in economies such as Thailand, Malaysiaand Indonesia focusing on export-oriented manufacturing and services, where more labour-intensivetechniques can still be applied that are no longer feasible at home. Bernard (1996) reports thatTaiwan Province of China's investment is aimed at shedding labour-intensive industries andmaximizing cost-reduction; apparently its capital has over time sequentially shifted from Malaysiaand Thailand to lower-wage locations such as Vietnam. Thailand and Malaysia are themselvesreaching the stage where they must transfer labour-intensive industries to lower-income countries.

Box 4: Facets of intra-regional integration

The following are recent observations on regional integration among developing countries in the Asia-Pacific region:

• The Prime Minister of Malaysia, Dr. Mahathir Mohamed, said at the Pacific Dialogue held in Penang,Malaysia in November 1994 “It is time for us all to adopt a prosper-thy-neighbour policy....”

• A willingness to cooperate and work together in Asia is emerging. Much of the integration in Asiatoday happened in the marketplace. The Economist reported that by 1993, 43% of East Asia’s exportswere traded to other East Asian countries, up from 32% in 1983, and this is expected to increase to60% as further liberalization takes place.

• The ASEAN encompasses a population of 359 million people and an import market of $226 billion.With the joining of Vietnam, ASEAN market reached almost 450 million people.

Malaysian investment in Indonesia topped $603 million in 1994, more than 10 times the amount investedthe year before. Thai companies are starting various projects in the Indochina states of Laos, Cambodiaand Vietnam. Chinese companies have invested more than $200 million in Malaysia. Taiwan Province ofChina increased its investment in Malaysia by 215% to $1.02 billion in the first 10 months of 1994. During the next years 75% of new Japanese direct investment will be in Asia. In 1985 Japan exported a third more to the US than to Asia; now Asia buys one-third more than the USand almost three times as much as Europe. Japan now imports more from Asia than it does from the US orthe European Union, $60 billion from Asia in 1993 compared to $50 billion from the US and $24 billionform the EU.

Source: Naisbitt (1996)

In addition to having its own domestic investors, the Asia-Pacific region has till the crisis been veryattractive to industrial country investors, largely because (in the case of East Asia at least) of itshitherto good record of growth and better profitability. The OECD (1996) reports that Japan’s Asiainvestments were more profitable than those in the USA and Europe. For Japanese investors,



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Naisbitt reported: “Japan’s shift to Asia is driven by the higher profits that the region’s growthgenerates”. According to Fernandez-Arias and Montiel (1996), the combination of low interest rateson assets and recession at home has led to low rates of return on investments in industrial countries,particularly in the United States. Estimated average returns on US FDI in East Asia in 1990-93 weremore than twice the average world-wide return on US FDI. Such returns help to explain thewillingness of foreign investors to have equity participation - thus equity flows accounted for about55% of the total in East Asia compared to 45% in Latin America. This has provided an incentive forcapital outflow in search of higher-yielding assets - many of which were found in high-growthdeveloping countries of Asia which at that time had never suffered a debt crisis. It would appear thatthe full explanation for high capital flows is the combination of relatively poor prospects at homeand greater profitability in developing economies of Asia.

Future likelihood of sustained flows will therefore partly depend on how long lower interest ratesand other factors affecting returns on investment in the United States and other G-7 countries willlast. Furthermore, the region is known to have low inflation, real exchange rates, and reliable policy,legal and institutional environments with demonstrated ability to manage large capital inflows, andresilience to external shocks.

Even though in value it is less than investment from local savings, foreign capital has the vital roleof also bringing with it new technologies.

Official foreign aid plays relatively little part in Asia-Pacific development, except in a few countriesor territories with small economies. According to Edwards (1997), official aid to East Asia and thePacific and to South Asia amounts to only US$6 per head, compared with US$36 and US$9 perhead in Sub-Saharan Africa and Latin America respectively. In 1993, aid to less-developed Asia andthe Pacific was 33% of the total aid to all less developed countries although the region has half ofthe population of all such countries.

Supportive policies and institutions

In its 1993 research publication8, the World Bank arrived at a compromise formulation to ‘explain’the rapid and sustained economic growth in the region over the past four decades. Policies featurehigh among the positive factors, including those which make possible an enabling and stable macro-economic environment, encouragement of saving, open trading regimes, attention to human capitaldevelopment, and intervention to support high-potential areas for investment. Bernard (1996)explores the idea of a model to explain the Asian growth phenomenon and rejects the search for“the model”; he favours instead focusing on analysing the processes of change.

Before the post 1997 economic turmoil struck, reading the literature on Asian development gave thefeeling that because many countries there had succeeded so well, whatever they did was correct andthat their success had legitimised whatever policies and interventions were adopted. Thus, althoughcurrent orthodoxy favours non-interventionist policies and market supremacy, Bernard (1996)appears to suggest that the World Bank's research seems to endorse in retrospect even some stronggovernment interventions in Japan and later in the "tiger" economies to guide industry and trade intospecific areas. It also appears to endorse infant-industry and similar arguments for protection of

8World bank (1993). The East Asia Miracle - economic growth and public policy. Oxford University Press, New York.



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local investments behind tariff barriers until domestic comparative advantage was artificiallycreated for selected industries. Most interventions were assessed to have been "judicious".

Aggressive export thrust has in the past often been accompanied by import-substitution and infantindustry protection policy9. For example, according to Bernard (1996), Taiwan Province of Chinaresorted to state restrictions on imports of manufactures, a practice adopted also by post-warThailand where, according to the World Bank (1995a), Japanese industry reportedly sought to takeadvantage of the protected home market by getting inside the high tariff walls in the 1970s. Infuture, circumstances will have changed so much that countries will no longer have recourse to thenear-protectionist interventions available to the current successful countries. The post-UruguayRound era and emergence of tariff-reducing regional agreements cannot easily permit protectionismjustified on the basis of infant-industry and import-substitution arguments.

Ranis (1995) appears to feel that the central area of controversy in explaining Asian successes is onthe relative importance of government industrial policy, such as directed credit and other "marketsversus governments" issues. He reports that in the 1950s, East Asia initially chose importsubstitution but only in a mild and brief version. Agricultural development, for example, achievedenormous factor productivity gains mostly from rural infrastructure and government-supportedresearch and technology diffusion. On the whole, Ranis gives greatest importance not to any onepolicy but to the combination and, especially, to maintaining stability while being flexible inresponse to new opportunities.

Projections

General

In 1995, the overall GDP of Asia and the Pacific in 1987 prices is estimated to have beenapproximately US$5370 billions. No comparable world GDP estimate exists for that year in theWorld Bank's World Tables. A world total of around $20000 billions is reasonable, in which casethe Asia-Pacific region accounted for about a quarter of world economic product. Orders ofmagnitude for the Asia-Pacific sub-regions were shown in Figure 17.

Until recently, expectations ran high for developing Asia’s future development; for example,Edwards (1997) reports that the World Bank considered prospects for the next century to be“excellent” and suggests that over the decade to 2005, developing Asia could grow almost threetimes the world average.

Li (1997) reports that Singapore’s Senior Minister Lee Kuan Yew had stated that East Asia,adjusted for purchasing power parity, would account for half of the world’s economy in 20 years, upfrom 25% today. The World Bank predicted a continued growth rate of 8-9% per annum for thesame period. It may be noted that a prosperous future was most easily foreseen for countries andterritories which would have the capacity to effectively integrate into the global system of trade,

9 Hout (1996) has attempted quantitative analysis of effectiveness of import substitution, export orientation, FDI, social equality and otherpolicy-measures on economic growth. In general many results were inconclusive or slowed only weak links. Simple causal relationshipscould not be demonstrated between many policy measures and successful growth.



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manufacturing and services. Thus the future would tend to favour those countries which werealready ahead, were willing to aggressively reform and to open up to the global system.

Table 16 gives presents for each country in the Asia-Pacific region, the economic growth projectionto 2010 presented in the “Compendium of demographic and macro-economic assumptions” (FAO,1997b). These were used in the base-case modelling along with a more pessimistic assumptionabout future economic growth, reflecting the recent economic turmoil in the region.



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Table 16 - Alternative scenarios of GDP growth rate to 2010 (% pa)

GDP forecasts(in billion US$ at 1994 prices)

GDP Growth rate forecasts(annual percentage growth)

Baseyear

FAO (1997b) FAO (1997b) APFSOS downturnscenario (1998)

1994 2000 2005 2010 1994-2000

2001-2005

2006-2010

1994-2000

2001-2005

2006-2010

North AsiaJapan 4,222,622 5,071,474 5,879,228 6,815,637 3.10 3.00 3.00 2.10 2.50 2.90Korea DPR 11,257 12,677 13,996 15,453 2.00 2.00 2.00 1.40 1.60 1.80Mongolia 732 824 955 1,107 2.00 3.00 3.00 1.90 2.70 3.00The People’s Republic ofChina

540,492 862,469 1,226,710 1,744,780 8.10 7.30 7.30 7.00 6.80 7.10

- Hong Kong SAR, China 130,580 176,999 231,330 302,339 5.20 5.50 5.50 3.20 4.40 5.00- Taiwan Province of China 241,014 241,014 241,014 241,014The Republic of Korea 380,825 549,445 745,746 1,012,179 6.30 6.30 6.30 2.50 4.00 5.70Southeast AsiaBrunei 4,495 5,062 5,588 6,170 2.00 2.00 2.00 1.50 1.60 2.00Cambodia 2,376 3,371 4,511 6,036 6.00 6.00 6.00 3.80 4.80 5.70Indonesia 175,500 275,417 395,396 567,642 7.80 7.50 7.50 2.50 3.80 5.80Malaysia 74,146 117,661 170,495 247,052 8.00 7.70 7.70 4.40 5.90 7.30Myanmar 74,005 105,572 130,934 162,389 6.10 4.40 4.40 4.10 4.40 4.20Laos 1,515 2,030 2,717 3,635 5.00 6.00 6.00 3.30 4.50 5.50Philippines 64,114 87,403 113,153 146,490 5.30 5.30 5.30 3.10 4.10 5.20Viet Nam 15,478 21,956 30,081 41,214 6.00 6.50 6.50 4.50 5.20 6.30Singapore 69,516 103,741 141,468 192,915 6.90 6.40 6.40 4.70 5.50 6.20Thailand 143,177 205,410 288,098 404,072 6.20 7.00 7.00 1.70 3.30 5.20South AsiaBangladesh 26,034 34,888 47,352 64,269 5.00 6.30 6.30 3.60 5.10 5.60Bhutan 255 342 437 557 5.00 5.00 5.00 3.60 4.30 4.50India 272,527 390,982 523,222 700,189 6.20 6.00 6.00 4.80 5.20 5.20Maldives 241 342 457 612 6.00 6.00 6.00 4.70 5.20 5.20Nepal 3,786 5,103 6,670 8,717 5.10 5.50 5.50 3.90 4.60 4.70Pakistan 46,955 65,113 85,100 111,222 5.60 5.50 5.50 4.40 4.70 4.70Sri Lanka 11,719 16,436 22,519 30,854 5.80 6.50 6.50 4.40 5.50 5.80OceaniaAustralia 288,934 357,237 424,286 503,919 3.60 3.50 3.50 2.90 3.20 3.40Cook Islands 87 98 114 132 2.00 3.00 3.00 1.90 2.70 3.00Fiji 1,597 1,799 2,055 2,348 2.00 2.70 2.70 1.70 2.40 2.60Kiribati 38 43 47 52 2.00 2.00 2.00 3.20 3.60 4.00New Caledonia 894 949 1,022 1,101 1.00 1.50 1.50 1.0 1.40 1.50New Zealand 44,290 51,967 59,662 68,495 2.70 2.80 2.80 2.00 2.40 2.80Papua New Guinea 6,994 7,830 8,773 9,830 1.90 2.30 2.30 1.30 2.00 2.10Samoa 127 139 149 161 1.50 1.50 1.50 1.50 1.50 1.50Solomon Islands 186 249 326 426 5.00 5.50 5.50 3.90 4.80 5.30Tonga 135 161 192 227 3.00 3.50 3.50 2.90 3.30 3.50Vanuatu 193 211 233 258 1.50 2.00 2.00 1.20 1.80 2.00



63

SOCIAL CHANGES

Urbanisation

Asia is also the most rural among major continents: in 1990, only 30% of Asia’s population lived inurban areas, compared with over 70% in Latin America and nearly 35% in Africa. However,according to Williams (1997), UN projections suggest that the urban proportion of the Asianpopulation will have risen from about 17% in 1950 to nearly 53% in the year 2025. There would bemore than a doubling of the urban population from 1.086 billion at mid-1995 to 2.474 billion by2025 in eastern, southern and south-eastern Asia. By the year 2000, Tokyo will already have 27.85million people, followed by Mumbai (Bombay) at 19.81 million and Shanghai 17.2 million. Theseand another six Asian cities will be among the 15 most populous urban agglomerations in the world.Another four Asian cities will have more than 10 million people. Hohol (1997) reports that by 2015,PR China's current 28% urban population will have risen to 50%. Sanderson and Tan (1995) projecta 50% average expansion of the main Asian urban centres between 1990 and 2000. It is unclearwhether greater urbanization will mean less overall pressure on forests.

Changes in magnitude of rural population

In many countries of the Asia-Pacific region, the level of economic development in the period till2010 will remain low enough for rural populations to still be significant and for these to be directlydependent on agriculture. There will be an overall decrease in rural population by nearly 24 million,a negligible share (around 1% of the 1994 regional total) because the decreases are largely nullifiedby increases in other countries. In this connection, attention may be directed at the followingcountries where, if all else is unchanged, considerable rural population decrease gives goodprospects for reduction of direct pressure on rural vegetation (in descending order - see Figure24):

Korea Rep., Japan, New Zealand, Tonga, China PR (including Hong Kong SAR, China), Indonesia,Philippines, Cook Is., New Caledonia, Korea DPR, Malaysia, Thailand, Mongolia, Australia, andBrunei. However, for some countries, the rural population will increase.



64

Figure 24: Projected rural population changes from 1994 to 2025

Source: See Table 12.

Solomon IslandsBhutanMaldives

MicronesiaVanuatu

SamoaPNGNepalLaos

CambodiaMarshall IslandsPakistan

KiribatiAmerican Samoa

Viet NamBangladeshPacific Islands

MyanmarIIndia

French PolynesiaGuam

FijiSri Lanka

NauruN. MarianasSingapore

BruneiAustraliaMongoliaThailand

MalaysiaKorea DPR

New CaledoniaCook Islands

PhilippinesIIndonesia

China, PRTonga

New ZealandJapan

Hong Kong, SAR ChinaKorea Rep.

Total

-80.0 -60.0 -40.0 -20.0 0.0 20.0 40.0 60.0 80.0

% change on 1994



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Table 17 - Projected Changes In Rural Population Between 1994 and 2025

COUNTRY 1994 rural popul'n Change in rural population 1994-2025'000 '000 %

Solomon Islands 305 220 70.8Bhutan 1514 1030 67.7Maldives 181 120 67.4Micronesia 88 60 62.5Vanuatu 134 80 56.7Samoa 134 60 47.8PNG 3540 1560 44.1Nepal 18563 8170 44.0Laos 3743 1630 43.5Cambodia 7969 3150 39.5Marshall 22 6 37.5Pakistan 90031 33220 36.9Kiribati 50 0 34.0Amer. Samoa 27 0 25.9Vietnam 57951 14060 24.3Bangladesh 96888 20810 21.5Pacific Islands 5 0 20.0Myanmar 33780 6030 17.8India 675084 87240 12.9Fr. Polynesia 94 0 8.5Guam 91 0 6.6Fiji 460 0 2.0Sri Lanka 14116 260 1.8Nauru 0 0 0.0N. Marianas 22 0 0.0Singapore 0 0 0.0Brunei 118 0 -0.8Australia 2724 -90 -3.3Mongolia 938 -40 -3.9Thailand 46696 -1870 -4.0Malaysia 9273 -640 -6.8Korea DPR 8292 -880 -9.6New Caledonia 68 0 -11.8Cook Islands 8 0 -12.5Philippines 31014 -4110 -13.3Indonesia 127590 -19360 -15.2China, PR 853244 -159020 -18.6Tonga 59 -10 -22.0New Zealand 501 -130 -26.9Japan 28052 -9650 -34.3Hong Kong SAR, China 299 -140 -47.2Korea Rep. 8918 -5490 -61.5Total 2122586 -23724 -1.1

Source: UN Department for Econ & Social Info. & Policy Analysis, 1996b

Attention needs to also be drawn to those countries in Figure 24 where significant rural populationincrease may significantly impact natural resources, among which the major ones are (in ascending



66

order of increase in rural population): India, Myanmar, Bangladesh, Vietnam, Pakistan, Cambodia,Laos, Nepal, Papua New Guinea, and Bhutan.

Many islands also face this possibility, Solomon being in the lead but increases in rural populationsbeing significant also for Maldives, Micronesia, Vanuatu, Samoa. The proportionate changes in ruralpopulation in Table 17 and Figure 24 can serve as potential indicators or alert signals as to whichcountries there is likelihood of continuing expansion of farming impacting on vegetation cover,including forests. The countries can be grouped as follows:

• Where rural population will grow over two-thirds (67%) between 1994 and 2025: SolomonIslands, Bhutan, Maldives. Total increase 1.37 millions (average increase of 60% for this groupover the 1994 population);

• Where rural population will grow between half (50%) and two-thirds between 1994 and 2025:Micronesia and Vanuatu. Two countries/territories - total increase 0.14 million (average63% increase over 1994 population);

• Where rural population will grow between one-third (33%) and half between 1994 and 2025:Papua New Guinea, Nepal, Laos, Cambodia, Marshall Islands, Pakistan, Kiribati. (Eightcountries/territories; total increase 47.79 millions (average 39% over 1994 population);

• Where rural population will grow between a sixth (15%) and a third (33%) between 1994 and2025: American Samoa, Vietnam, Bangladesh, Pacific Islands, Myanmar, India. (Fivecountries/territories: total increase 128.14 million (average 15% of 1994 population);

• Where some increase will occur (up to 15%) between 1994 and 2025: French Polynesia, Guam,Sri Lanka, Nauru, (four countries/territories; total increase 0.26 million (average 22% of 1994population);

• Where rural population will decrease or remain static between 1994 and 2025:i) zero growth: Nauru, N. Marianas, Singaporeii) decrease by up to 15%: Brunei, Australia, Mongolia, Thailand, Malaysia, Korea D.P.R.,

Cook Islands, New Caledonia, Philippines. (Ten countries/territories; 7.63 millions;average -8% of 1994 population);

iii) decrease by between 15 and 33%: Indonesia, PR China, Tonga, New Zealand. (Fourcountries/territories: 178.52 millions; average -18% of 1994 population);

iv) decrease by between 33 and 50%: Japan, Hong Kong SAR, China. (Twocountries/territories; 9.79 millions; average of -35% of 1994 population.

v) decrease by over 50%: Korea (Republic of): One country; 5.49 millions; a decline of61.5%.

Agricultural dependency

Agriculture in the economy

There is enormous variation in the foundations on which economies are based due to differinglevels of development. According to Edwards (1997), while only 2% of GDP in Japan is derivedfrom agriculture, the ratio in South Asia is about 29% of GDP. Between 1990 and 1994 agriculturaloutput grew by 2.7% per annum in South Asia; 3.6% per annum output growth was achieved in EastAsia and the Pacific - little being from an increase in the area under cultivation and most has beendue to increases in yields. In the past 25 years, the output of cereals has almost trebled in East Asia



67

and more than doubled in South Asia with over 85% of these increases being from higher yields. In1992 the East Asian and Pacific region reportedly used on average about four times as muchfertilizer per hectare of arable land as did Latin America and the Caribbean, and about 15 times asmuch as sub-Saharan Africa. This situation could change drastically if the current economic crisis isprolonged.

Figure 25: Dominance of agriculture in some Asia-Pacific economies, 1995

The contrasts in degree of reliance on agriculture were illustrated in Figure 1 and Figure 25. For thesignificant number of countries where agriculture remains very important, the availability orotherwise of land is important. From Figure 25, categorization could be as follows:

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Lao, D.P.R.

MyanmarCambodia

Nepal

TongaBhutan

VietnamBangladesh

Papua New GuineaIndia

Korea, DPR*.

PakistanMongolia

PhilippinesFiji

Sri Lanka

China PRMalaysia

Cook IslandsThailand

Korea, Rep ofTaiwan Province of China

Hong Kong, SAR China

Singapore

Agriculture as % of GDP



68

• very high agriculture dependency (more than 30% of GDP): Bangladesh, Vietnam, Bhutan,Tonga, Nepal, Cambodia, Myanmar, Lao;

• important dependency (20-29%): Papua New Guinea, India, Korea D.P.R., Pakistan, Mongolia,Philippines and Fiji;

• agricultural significant (10-20%): Sri Lanka, PR China, Malaysia, Cook Islands, Thailand;• unimportant in economy (less than 10%): Republic of Korea, Hong Kong SAR, China,

Singapore, Taiwan Province of China.

Movement of the agricultural frontier

A matching of this stratification with per capita availability of arable land (Figure 26) is expected tobe interesting, as is matching with rate at which the overall agricultural frontier is expanding (Figure27). However, Table 18 which is a matrix of these relationships, shows no particular trends.

In spite of major contrasts in rate of permanent cropland expansion (Figure 25) there is no clearrelationship between the significance of agriculture in the economy and a country/territory’s rankingin terms of agriculture frontier expansion. Also some of the most agriculturally dependent countries(e.g. Bangladesh, Bhutan, Vietnam) have the lowest per capita arable land availability. Figure 26shows some countries with reductions in cropland including India among the major countries.Pakistan, probably due to high population growth, leads in farmland expansion, with South EastAsia generally quite high. For 11 countries, the 1970-1994 trend shows reduction of agriculturalarea by as fast as over 11% annually (Singapore) and nearly 9% annually (Cambodia) while forthree countries, the agricultural land has grown at over 2% annually and for four others at over1% annually. The rate of area expansion for crops shows even greater contrasts. Pakistan leads witha rate equivalent to a 14-year doubling time. The approximate doubling time of crops for selectedcountries are:

Vietnam 18 yearsThailand 19 yearsLaos 24 yearsSolomon Islands 29 years

Of the very major countries, Indonesia has the equivalent of 31 yeas doubling time.

The combination of high agricultural dependency, low arable land availability, and recorded fastagriculture frontier expansion should however trigger concern at likelihood of great pressure onforests. In Table 18, countries in this situation include Laos, Cambodia, Nepal, Fiji, Thailand.Others with low arable land availability include already highly deforested countries such asBangladesh, PR China.



69

Figure 26: Asia-Pacific landuse: per capita arable land, 1994

AUSTRALIANIUE

MONGOLIANEW ZEALAND

CAMBODIASAMOA

THAILANDWORLDFIJIMYANMAR

IINDIALAOSTONGA

NEPALVANUATUSOLOMON ISCOOK IS

IINDONESIAMALAYSIAPHILIPPINESVIET NAMBANGLADESHBHUTANKOREA D P RPSRI LANKAGUAMKOREA REPNEWCALEDONIAJAPANBRUNEI DARSMMALDIVESHONG KONG, SAR CHINASINGAPORE

0 0.5 1 1.5 2 2.5 3

Ha.




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Table 18 - Aspects of agricultural dependency and expansion

Country/territory Agric % in GDP Per cap. arableland (ha)

Expansion (% p.a.)of permanent crops

Agriculture at 30 or more % of GDP:Laos 56.5 0.18 2.88Myanmar 46.1 0.21 0.69Cambodia 44.6 0.38 -8.75Nepal 41.9 0.13 1.48Tonga 38.9 0.17 0.57Bhutan 37.6 0.07 0.98Vietnam 33.9 0.08 3.87Bangladesh 32.8 0.07 0.5Agriculture 20-30% of GDP:PNG 30 na 0.63India 27.8 0.19 -0.81Korea PDR 25 0.07 0.3Pakistan 24 na 5.05Mongolia 23.1 0.56 naPhilippines 21.5 0.08 1.96Fiji 21.3 0.23 0.05Agriculture 10-20% of GDP:Sri Lanka 19.8 0.05 -0.44China PR 18.9 na 1.73Malaysia 13.9 0.09 2.19Cook Is. 13.7 0.11 -1.94Thailand 10.9 0.29 3.68Agriculture less than 10% of GDP:Korea Rep. 6.7 0.04 0.94Taiwan Province of China 3.1 na -2Hong Kong SAR, China 0.2 0 0Singapore 0.2 0 na



71

Figure 27: Asia-Pacific agricultural frontier annual expansion/contraction rate (%), 1970-94


FIJICAMBODIA

MALAYSIATHAILAND

VANUATUPHILIPPINESCHINA P R

PAPUA NEW GUINEANEPALLAOSINDONESIABHUTANKOREA D P RP

SOLOMON ISPAKISTANVIET NAMTONGASAMOAKIRIBATINEW ZEALANDINDIABANGLADESHSRI LANKAGUAMNIUEMALDIVESNORFOLK IS

MYANMARAUSTRALIA

TAIWAN PROVINCE OF CHINAKOREA REP

JAPANCOOK IS

MONGOLIA

NEWCALEDONIAHONG KONG, SAR CHINA

SINGAPOREBRUNEI DARUSALLAM

-12 -10 -8 -6 -4 -2 0 2 4%p.a



72

Incomes and income distribution

Prosperity, incomes and purchasing power

As stated in the introduction, wealth tends to confer a capacity to consume which is often far greaterthan that of mere population numbers. For any analysis which looks at future demand for servicesand goods, as much or more attention needs to be given to income changes as to gross population-number changes

A rich Asia

According to Hohol (1997), as recently as 1980, Asian society could be viewed as a pyramid wherethe top five percent were extremely wealthy and the remainder were living in poverty. The majorsocial change, which has major direct implications for consumption of all goods and services, is theemergence of large numbers of people in middle income categories. According to Hohol, the ordersof magnitude are as follows:

• people that are seriously rich probably number some 80 million across Asia;• those who can be labelled "middle class", including professionals, are expected to number

between 375 and 500 million by the year 2005;• those who are leaving their poverty behind and beginning to spend significantly on some

modern durables are expected to number some 750 million.

These estimates were derived before the economic turmoil which started in mid-1997; they probablyshould be reduced by anything up to 20% for the most dislocated economies. With or withoutadjustment for the turmoil, the numbers of rich and middle-income people are already high andcompare to those of industrial-country markets in Europe and North America. On the basis ofPurchasing Power Parity, the capacity of these Asian numbers to consume everything fromecotourism to consumer durables, construction material etc is enormous. Hohol illustrates this bysaying within the first decade of the next century there will be over a billion Asian middle-classconsumers which, according to him is "like having the equivalent of four to five US markets"; thismay be an exaggeration. The general perception is that a middle-class of phenomenal proportions isin the making. Other recent speculations are as follows:

In 1996, Jim McNeill, Chairman of the International Institute for Sustainable Development referredto a recent OECD report suggesting that if PR China, India and Indonesia continued to grow atcurrent rates, within 15 years, "some 700 million people in these three countries alone will have anaverage income equivalent to that of Spain today. That’s more people than the combinedpopulations of North America, the European Union and Japan."

Naisbitt (1996) reports that "A new middle class, the size of which the world has never before seen,is being created in Asia" and suggests that "Within five years or less as many as half a billion willbe what the West understands as middle class. That market is roughly the size of the US and Europecombined" ...Furthermore, he contended, "if Asian economies continue their 6 to 10% annualexpansion of the last decade, their middle classes will double or triple in the next decade. The Asianmiddle class, not counting Japan, could number between 800 million and 1 billion people by 2010,



73

resulting in a stunning $89 to $10 trillion in spending power. That’s in the neighbourhood of 50%more than today’s US economy."

To illustrate for individual countries: for Thailand, Naisbitt reports that the number of Bangkokhouseholds earning $10,000 a year has jumped from just 160,000 in 1986 to one million today. As aresult, economic growth is increasingly driven by internal momentum: in Thailand, once dependenton exports for economic expansion, domestic consumer spending now contributes 54% of its grossdomestic product, with exports contributing only 30%. For PR China, Naisbitt reports that morethan 80 million people earn between $10,000 and $40,000 a year and there are more than a millionmillionaires in PR China.

The above examples may not have identical numbers but the orders of magnitude are in agreement.In the aftermath of the post 1997 economic turmoil, there may be a temptation to discount all thesenumbers as entirely fanciful - this would be a mistake. Despite reduction of income in dollar terms,there still are in the Asia region very large numbers of people with middle class tastes and spendinghabits. It would take only a mild return to normality for their consumer power to be felt again.

Part of the particular efficiency of domestic purchasing power in Asia-Pacific to generate growthcomes from the low "overheads" of living in the region. Naisbitt reports that while in the UnitedStates, 45-50% of household income goes on rent, health, education and transportation, in PRChina, government subsidies reduce this proportion to only 5% so releasing earnings for othermarketed products and services. Naisbitt also reports IMF findings that in terms of purchasingpower parity (PPP), PR China produced $1.7 trillion worth of goods and services in 1992, fargreater than the $400 billion previously estimated, and that its 1992 per capita income was worth$1,600 rather than $370.

The perceptions of Hohol, McNeill and Naisbitt illustrate income changes of a size and momentumwhich has potential to rapidly transform the patterns of major global flows of goods and services inany sector, including forestry.

A poor Asia

Ignoring the dip caused by the post 1997 economic turmoil, the Asia-Pacific region’s share of theworld’s gross output has over only a quarter century grown rapidly from a sixth to a quarter. Withthis pace of growth, headlines have naturally focused on Asia's spectacular income improvementsand may have given the impression of generalised prosperity in that region. The fact of the matter,however, is that much dramatic growth has been in relatively small countries with limited totalpopulations, apart from PR China and Indonesia. Income levels in PR China, however, are still verylow (Annex Table A2 gives recent estimates of per capita GNP - it confirms the wide disparities andalso the fact that many countries are at low-income levels).

The continuing prevalence of low incomes is clear from the fact that, although Asia still accountsfor nearly 60% of the world’s population, it has only about a quarter of the world’s income.Edwards (1997) reports that Asia and the Pacific is still home to a disproportionate share of the poori.e. of those whose local purchasing power is less than US$1 a day.

The International Fund for Agricultural Development (IFAD) reported in 1995 that if PR China andIndia are excluded, Asia has 262 million rural poor; if they are included, Asia's share is two thirds ofa billion poor, although their numbers were, until recently declining rapidly. Without going into any



74

detail, the sections of society which are poor tend to be predominantly (a) smallholder farmers,pastoralists, and small/artisanal fishermen, (b) the landless, (c) tribal/ethnic populations, and (d)displaced persons. A disproportionate share among these categories are women.

An IFAD ranking exercise shows the following categorisation according to rural poverty10

in 1990:

• Countries with more than 50% of the rural population in poverty: Bangladesh, Bhutan, Laos,Nepal, Papua New Guinea, the Philippines, Vietnam and Western Samoa.

• Countries with rural poverty incidence between 25 and 50%: India, Indonesia, Iran, Maldives,Myanmar, Pakistan, Sri Lanka and Thailand.

Bangladesh in particular, is singled out as displaying a very high incidence of poverty, in spite ofconsiderable progress made in the 1980s; this is reflected in its continuing significant reliance onfood aid. Associated with poverty is Asia's vulnerability in food security. IFAD (1995) reports thatout of 113 food insecure countries in the world, there are 23 in Asia, 12 of them in the high foodinsecure category. However, the food self-sufficiency ratio has increased and only few countrieshave significant resort to food aid (Annex Table A21).

Environmental awareness and demand for leisure are suppressed when poverty is widespread;conversely, concern for conservation and desire for leisure in natural environments tends to growwith prosperity. Therefore, the pace of development in general , reduction of poverty and growth ofthe middle class will be factors to watch with regard to implications for forest resources.

IMPLICATIONS FOR THE FORESTRY SECTOR

It is not intended in this section to derive or report even approximate mathematical correlationsbetween economic and social changes and the forestry sector's development. Instead, the intention is tomention the broad areas of linkage, with anecdotal reference to some key impact areas.

Relationship with state of forests and non-industrial goods and services

The relationship of both income and population with state of forests is complex and not fullyunderstood. Studies underway attempt to link forest loss or degradation with population density orgrowth but so many other factors are also important. The patterns of land use, including manner ofland clearing for agriculture or other purposes is important. Annex 5 tabulates countries or territories(stratified by income) for which information was readily available in terms of population growth rate,expected changes in rural population, significance of agriculture and observed rate of change in thearea under permanent cropping. No clear evidence of correlations or patterns emerge.

The table nevertheless reveals certain countries for which the coincidence of circumstances requiresparticular attention to the possibility of rapid forest loss. Examples include Pakistan, Bangladesh,Vietnam, Solomon Islands, Laos, Papua New Guinea, Bhutan, Cambodia, Nepal, Myanmar andPhilippines. In the case of Pakistan, population growth over 2% annually; Rural population expected

10 It should be noted that it is possible to have a low national average incidence of poverty but higher rural poverty rates.



75

to grow over 30% between 1994 and 2025; Highly agriculture-dependent (over 20% of GDP inagriculture); annual increase in permanent crops over 3%. For Bangladesh, there is over 1.5% p.a.population growth rate; rural population increase over 10%; agriculture over 30% of GDP;agricultural frontier expanding at over 3% annually. In Cambodia, the deforestation threat existsdespite earlier contraction of permanently farmed land - probably due to war. In the Philippines,rapid rural depopulation may stabilize forest loss especially if prosperity also group rapidly.

The large population of Asia can be expected to exert considerable pressure on land and other naturalresources unless more economic activities that are not based on the land can emerge to offeralternative livelihoods. Productivity gains have so far been high due to greater fertilizer and irrigationuse for some major countries. In the remaining countries, productivity gains in agriculture may notincrease as fast and since population growth in some remains high, there could be location-specificexpansion of the farm frontier into forests. Such an eventuality would be made more likely by the factthat Asia is (at present at least) the most rural major continent: in 1990, only 30% of Asia’s populationlived in urban areas, compared with over 70% in Latin America and nearly 35% in Africa.

According to FAO (1997), in broad terms, Asia and the Pacific shows a forest area reduction between1980 and 1995 of 6.4% compared to reductions of 10.5% and 9.7% for Africa and LatinAmerica/Caribbean respectively. Developing countries together had a forest loss of 9.1% for theperiod while developed ones gained 2.7% with Europe gaining 4.1%. It can be said that, in spite ofheavy consumption of industrial forest products in developed countries, wealthy countries somehowseem to have the capacity to maintain or increase their forests while developing ones do not yet haveit. In broad terms, the same may be said at Asia-Pacific level but there does not appear to be a clearlink according to gradation of income among the developing countries. Also, as shown in Table 18, noclear links are apparent between level of agricultural dependency and apparent speed of agriculturalfrontier expansion.

No focused research is known about the relationship between degree of urbanisation and demands onforests. One could speculate that high urbanization may reduce direct need for land clearing but urbanpopulations may still exert indirect demand for forest clearing if agriculture remains poorly productive.Similarly, demands for many forest products do not lessen merely by being concentrated in cities -some may rise or decline, if urbanisation is associated with income changes.

Other considerations of possible implications of Asia’s income and population change for forestrycould include:

• The actual decrease (overall for the region and in specific countries) of rural population or slowincrease which would tend to reduce the direct subsistence-farming induced pressures on forests.This may not mean reduced overall pressure since there could be compensatory increase in landclearing for industrial agriculture.

• Edwards (1997) reports that over the past 25 years or so energy consumption per head ha morethan trebled in less-developed East Asia and more than doubled in South Asia. In spite of this, in1994 energy consumption per head in South Asia was less than 5% and in East Asia less than13%, of the average of the high-income countries. Asian prosperity will tend to close this gapbut fuelwood, while remaining important in rural areas, is unlikely to be an important player atnational level in the fast-growing economies. In Republic of Korea, post-war fuelwoodplantations are now redundant for the original use and are ending up being potentially divertedto industrial fibre use or for amenity. PR China expects a similar drift away from fuelwood.



76

• The emergence of mega cities may also make the economics of provisioning withfuelwood/charcoal unfeasible, even in poor cities. Rapid urbanization could thus reduce therelative significance of fuelwood in overall energy and wood products end use mixes except incountries (Thailand appears to be an example) where charcoal is in great demand.

• Prosperity brings demand for recreation in natural, semi-natural or in any case “green”environments. This is bound to influence the end-use profile for the region’s forests.

Demand for industrial forest products

The most direct effort to link the rapid economic growth to forestry is that of Hohol (1997) whofocused on implications for potential forest products consumption. Hohol asked what the implicationsfor forest products demand both industrial (pulp and paper, building materials) and fuelwood could beif the following speculations by The Economist could come to pass: that PR China could replace theUnited States as the world’s largest economy by 2020; that India could replace Germany in fourthplace; and that developing countries’ share of world output could grow to 62% of world output by2020. Hohol noted that in 1991, the world’s economy used 2.5 times as much wood as it did in 1950and one-third more per person and that recent growth had taken place largely in developing countries.

FAO's own analysis (1997) shows that a combination of population growth and income growth has ledto considerable change in forest products consumption; it may be noted that for some products,volumes have declined while both population and income have grown11. Using 1970 (= 100) as base,the level of 1994 production for selected forest products (which, at world level, approximately equalsconsumption) was:

Product Developing Developed WorldFuelwood & charcoal 170 102 160Industrial roundwood 200 98 136Sawnwood 204 84 100Wood-based panels 567 144 180Pulp for paper 500 143 167Paper & paperboard 633 180 213

Source: FAO (1997) State of the World’s Forests 1997 (Tables 4, 5)

Totalling all developing countries masks the far more dramatic changes for Asia alone but neverthelessgives a glimpse of the important shifts that may lie ahead.

Looking at the paper industry, Hohol (1997) suggests that Asia will account for half of the world-widesales growth for all paper and paperboard grades over the next 25 years; for 45% of total world-widegrowth in printing/writing paper consumption between 1995 and 2010. He shows that consumption ofprinting/writing papers in Asia (excluding Japan) grew at 11.2% annually and has nearly trebled in thedecade 1985-95 from 4.8 million metric tons to 14.0 million metric tons and could treble again to 41million metric tons by the year 2010. Human capacity development necessary for rapid economic

11 Substitution and efficiency gains are part of the reason why the increase in consumption of some products has been slower thanpopulation and income growth would otherwise lead one to expect.



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development will include primary level literacy upgrading and this is certain to continue boostingdemand for cultural paper in the newsprint or printing and writing grades.

Rapid economic growth also in most cases involves fast expansion of manufacturing and ofinfrastructure, including that induced by urbanization-related housing construction. Bothdevelopments can drive demand for forest products - manufacturing requires wood or wood-fibrebased packaging; infrastructure development demands construction materials such as sawnwoodand panels.

Working on only one country, PR China, Buongiorno et al (1996) looked at the influence of economicand demographic changes on demand. They projected that by the year 2010, the needs of PR China inroundwood equivalent would correspond roughly to the total current US production, in spite of itsmuch lower consumption per capita. They reported already significant acceleration in demand forwood and derived products in PR China from the combination of a booming economy and teemingpopulation; consumption of wood-based panels grew fastest since the reforms of 1978 (14% p.a. in the24 years before 1978, and 24% after). Paper and paperboard consumption and production have grownat 12% per year for the last 40 years. By 1992, PR China had become the third largest producer ofpaper and paperboard, surpassing Canada, and following the US and Japan. It was tenth in the early1970s. In one year alone, from 1991 to 1992, PR China’s paper and paperboard consumption grew23%, more than any other country In 1992, PR China also surpassed Japan to become the third largestproducer of total pulp, after the US and Canada if one includes production from recycled fibres.

The information produced by Buongiorno et al gives evidence of the joint importance of both incomeand population for consumption: with per capita GNP in PR China only 5% of that of the US in 1993,the per capita consumption of paper and paperboard, 14 kg in 1991, was also only 5% of that for theUS and 6% of Japan's. Mainland China had per capita consumption levels of only about 8% of thepaper consumed by those with much higher income living in Taiwan Province of China and HongKong SAR, China. The rapid economic development explains the fast increase in PR China’sconsumption - although per capita levels remain low in line with its incomes. The large totals thusarise only because the low consumption levels are multiplied by the country’s big population.



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ASEAN Secretariat, 1996. ASEAN macro-economic outlook, 1995-1996. Jakarta

Asian Development Bank, 1995. Economies in Transition - The Asian Experience. Annual report1995, Manila

Asian Development Bank, 1996a. Asian Development Outlook 1996/1997. Oxford University Press(China), Hong Kong SAR, China

Asian Development Bank, 1996b. Economic Developments in DMCs. Asian Development BankAnnual report 1995, Manila

Asian Development Bank, 1997. Asian Development Outlook 1997 and 1998. Oxford UniversityPress (China), Hong Kong SAR, China

Baru S. (based on an earlier article by Pramit Chaudhuri), 1996. India - Economy. The Far East andAustralasia 1997, Twenty-Eighth Edition, Europa Publications Limited, London

Bernard, M. 1996. States, social forces and regions in historical time: toward a critical politicaleconomy of Eastern Asia. Third World Quarterly 17 (4). London

Demaine, H., (with revisions by Cribb, R.,), 1996. Indonesia - Physical and Social Geography. TheFar East and Australiasia 1997, Twenty-Eighth Edition, Europa Publications Limited, London

Department for Economic and Social Information and Policy Analysis (United Nations), 1994.World Population Milestones. Gopher of the United Nations Population Division.

Department for Economic and Social Information and Policy Analysis (United Nations), 1996.World Population growing more slowly but could still reach 9.4 billion by 2050. Gopher of theUnited Nations Population Division, November 1996

Department for Economic and Social Information and Policy Analysis (United Nations), 1996.World Urbanization Prospects: the 1994 Revision. Gopher of the United Nations PopulationDivision

Diplomatic World Bulletin, 1997. Investing in Asia now! Interview report for panel moderated byR. Holman with panel members D. Krueger, J. Aver, C. Thompson, and B. Shi. April/May1997, New York

Edwards, C., 1996. Current economic trends in Asia and the Pacific. The Far East and Australasia1997, Twenty-Eighth Edition, Europa Publications Limited, London

Europa Publications Limited, 1996: (a) South Pacific Commission - SPC. (b) South PacificForum.(c) Asia-Pacific Economic Cooperation - APEC. The Far East and Australasia 1997,Twenty-Eighth Edition, London



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Europa Publications Limited, 1996. China (Taiwan Province of China) - Physical and SocialGeography. The Far East and Australasia 1997, Twenty-Eighth Edition, London

Far Eastern Economic Review, 50th Anniversary Issue, 1996. Telling Asia’s Story. Far EasternEconomic Review, 50th Anniversary Issue, Hong Kong SAR, China

Fernandez-Arias, A., & Montiel, P.J., 1996. The surge in capital inflows to developing countries: ananalytical overview. World Bank Economic Review 10(1), Washington DC

Food and Agriculture Organisation of the United Nations (FAO), 1997. State of the World’s Forests1997. Rome

Forbes, D., 1996. Towards the “Pacific Century”: Integration and Disintegration in the PacificBasin. The Far East and Australasia 1997, Twenty-Eighth edition, Europa Publications Limited,London

Hohol, R., 1997. One billion consumers: why Asia is the next frontier. Papertree Letter, January1997. San Francisco

Hobohm, S.O.H., 1996. Indonesia - Economy. The Far East and Australiasia 1997, Twenty-EighthEdition, Europa Publications Limited, London

Hout, W. 1996. Development strategies and economic performance in Third World countries 1965-92. Third World Quarterly 17(4). London

Ibrahim, A. 1996. The Next 50 Years, The Pacific Century - Asia’s Turn. Far Eastern EconomicReview, 50th Anniversary Issue, Hong Kong SAR, China

International Fund for Agricultural Development (IFAD), 1995. The State of World Rural Poverty -A Profile of Asia. Rome

International Monetary Fund, 1995. World Economic outlook - 1995. Washington D.C.

International Monetary Fund, 1996. World Economic Outlook, October 1996. (IMF site, WorldWide Web)

Kinoshita, T., 1997. Japanese and American Corporate Activities in Asia: Status and Outlook. AsiaPacific Economic Review (APER) website, World Wide Web

Li., David K.P. 1996. PR China in 2046. Far Eastern Economic Review, 50th Anniversary Issue,Hong Kong SAR, China

Li, Richard. 1996. Take Risk and Forge Ahead, Far Eastern Economic Review, 50th AnniversaryIssue, Hong Kong SAR, China

Lyons, R. 1997. Mild Chile. Business central Europe, May 1997, London



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MacNeill, J. (Chairman, International Institute for Sustainable Development, Secretary General ofthe World Commission on Environment and Development), 1996. Keynote Address. Workshopon financial mechanisms and sources of finance for sustainable forestry, Pretoria, 4-7 June 1996

Maddison, A. 1995. Monitoring the World Economy 1820-1992. Development Centre Studies,Development Centre of the Organization for Economic Cooperation and Development(OECD), Paris

Mohamad, Mahathir Bin, 1997. The Pacific Era - A vision for the Future. Malaysia site, WorldWide Web)

Myers, R.H., 1996. China (Taiwan Province of China) - Economy. The Far East and Australasia1997, Twenty-Eighth Edition, Europa Publications Limited, London

Naisbitt, J., 1995. Megatrends Asia - the Eight Asian Megatrends that are changing the world.Nicolas Brealey Publishing, London

Organization for Economic Cooperation and Development, 1996a. OECD economic outlook -December 1996. Paris

Organization for Economic Cooperation and Development, 1996. China in the 21st century. Long-term global implications. OECD, Paris

Ranis, G., 1995. Another look at the East Asian Miracle. The World Bank Economic Review 9(3),September 1995, Washington DC

Sanderson, W.C., & Tan J.P., 1995. Population in Asia. Regional and sectoral studies, World Bank,Washington DC

The Economist, 1997a. The fall of Thailand? May 24, 1997

The Economist, 1997b. The Baht spills over. May 24, 1997

The Economist Intelligence Unit, 1996a. Country Profile - Indonesia 1995-96. London

The Economist Intelligence Unit, 1996b. Country Report -Indonesia. 4th quarter 1996, London

United Nations Population Division, 1996. World Population Prospects: the 1996 Revision. UnitedNations, (October 1996 draft)

Wanandi, J., 1997. Partners should nudge Burma. International Herald Tribune, European Edition,Paris. (25 June 1997)

Williams, M., 1996. Population in Asia and the Pacific. The Far East and Australasia 1997, Twenty-Eighth Edition, Europa Publications Limited, London

Website of the US Government, 1997. Statistics office (www.stat.usa.gov) and CIA(www.ocdi.gov), Washington DC



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World Bank, 1993. The East Asian Miracle - Economic Growth and Public Policy. World BankPolicy Research Report, Oxford University Press, New York

World Bank. 1995a. Global economic prospects and the developing countries. The World Bank1995 Washington D.C., USA

Zhang, Y., Buongiorno, J., & Zhang, D., 1996. China’s economic and demographic growth, forestproducts consumption and wood requirements: 1949-2010. Unpublished manuscript, Universityof Wisconsin at Madison, Department of Forestry, Madison



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ANNEX 1: IMPORTANT ASIA-PACIFIC REGIONAL ASSOCIATIONS12

Asia-Pacific Economic Cooperation APEC

Members: Australia, Brunei, Canada, Chile, China People’s Republic, Hong Kong SAR, China,Indonesia, Japan, Korea Republic, Malaysia, Mexico, New Zealand, Papua New Guinea,Philippines, Singapore, Taiwan Province of China (Admitted as Chinese Taipei), Thailand, USA

APEC was initiated in November 1989 in Canberra, Australia, as an informal consultative forum ofthe six ASEAN members and their six dialogue partners in the pacific. Its aim is to promotemultilateral economic cooperation on issues of trade and investment.

APEC was intended to be a forum for informal discussion within the region and, in particular, topromote trade liberalization in the Uruguay Round of negotiations, which were being conductedunder the General Agreement on Tariffs and Trade (GATT). The objectives are:

• to sustain the growth and development of the region;• to enhance the positive gains from increasing economic inter-dependence;• to develop and strengthen the open multilateral trade system; and• to reduce barriers to investment and to trade in goods and services among participants.

APEC supports “open regionalism” to encourage trade liberalization throughout the worldeconomy, as well as amongst its members. In September 1992 APEC ministers agreed to establish apermanent secretariat. In November 1994 the meeting of APEC heads of government adopted theBogor Declaration of Common Resolve, which endorsed an Eminent Persons Group recommendedtimetable for free and open trade and investment in the region by the year 2020.

South Pacific Commission - SPC

The Commission, which is based in New Caledonia, was established by an agreement signed inCanberra, Australia, by the governments of Australia, France, the Netherlands, New Zealand, theUnited Kingdom and the USA in February 1947, effective from July 1948. (The Netherlandswithdrew in 1962; The United Kingdom withdrew from 1 January 1996). The Commission is a non-political organization, which provides technical advice, training and assistance in economic, socialand cultural development to 22 countries of the Pacific region.

Its main areas of activity cover agriculture, fisheries, community health, socio-economic andstatistical services, and community education services. It serves a population of about 6m., scatteredover some 30m sq km, more than 98% of which is sea.

Members: American Samoa, Australia, Cook Islands, Fiji, France, French Polynesia, Guam,Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, New Caledonia, New Zealand,

12 Source: Europa Publications (1996).



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Niue, Northern Mariana Islands, Palau, Papua New Guinea, Pitcairn Islands, Solomon Islands,Tokelau, Tonga, Tuvalu, USA, Vanuatu, Wallis and Futuna Islands, Western Samoa.

South Pacific Forum

Members: Australia, Cook Islands, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia,Nauru, New Zealand, Niue, Palau, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, Vanuatu,Western Samoa.

The South Pacific Forum is the gathering of Heads of Government of the independent and self-governing states of the South Pacific. Its first meeting was held on 5 August 1971, in Wellington,New Zealand. It provides an opportunity for informal discussions to be held on a wide range ofcommon issues and problems. Decisions are always reached by consensus, it never having beenfound necessary or desirable to vote formally on issues. In October 1994, the Forum was grantedobserver status by the General Assembly of the United Nations.

From 1989 onwards, each Forum was followed by “dialogues” with representatives of othercountries that were influential in the region. In 1995 “dialogue partners” comprised Canada, thePeople’s Republic of China, France, Japan, the United Kingdom, the USA, the Republic of Koreaand the European Union.



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ANNEX 2: BACKGROUND INFORMATION ON INDIVIDUAL COUNTRIES ANDTERRITORIES

A2.1 Advanced Industrial Economies (AIEs)

This group includes Japan, Australia and New Zealand. In 1994, the group's total GDP at 1987prices was US$3255.3 billions, equivalent to about 63% of the Asia-Pacific total. Figure 8 showsthe real GDP growth rates observed for the period since 1978, with the AsDB projection for 2005.

Figure A1: AIEs real GDP growth

Real GDP growth

-4.0-3.0-2.0-1.00.01.02.03.04.05.06.0

1978-88

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Year

%p.

a

AustraliaJapanNew Zealand


Japan, the world's second largest economy, led the group by a very wide margin, the descendingorder of gross GDP being as follows:

Japan (US$2964.1 billion) 91%Australia ($249.6 billion) 8%New Zealand ($41.6 billion) 1%

A2.1.1 Japan

Japan alone accounts for about 58% of the Asia-Pacific GDP. According to the InternationalMonetary Fund (1995) Japan has recently gone through one of its most serious economic post-warslowdowns due to successive financial shocks such as the collapse of real estate prices in the late1980s and the sharp appreciation of the yen. There has since been some decline to more realisticlevels. The economy is said to need structural reforms and significant deregulation to achievegreater responsiveness to world competitive forces.

The OECD (1996) considers Japan's growth important for the whole region because it affectsJapan's capacity to import from Asia and its capacity to invest in the region. Output from overseasJapanese firms now represents 10% of their total production compared with 4% in 1986. “Reverse



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imports” from Japanese affiliates abroad now account for 14% of total imports compared with 4%in 1992. Most of new Japanese FDI has been in Asia (which now accounts for 16% of Japan’s totaloutstanding FDI abroad), and sales to Japan by Japanese affiliates located in Asia represented 32%of Japan’s total overseas production in 1992 - about the same share as for affiliates located in theUnited States.

High rates of Japanese FDI in Asia will continue to influence Japan’s trade patterns over themedium term, with consumer goods dominating exports to Japan and capital equipment andexpertise in reverse.

As an already very large and mature industrial economy, Japan can no longer achieve its earlierspectacular growth rates of the post-war period. Growth in the range 2-3% annually may be the newnorm. Before the 1997 economic crisis, the OECD (1996) indicated that following the prolongedrecent slowdown and subsequent mild turnaround in 1996, growth should start accelerating againand from 1998, the economy may regain autonomous expansion, provided that interest rates remainlow during 1997. Things have since got worse. Li (1997) reports that among the areas of concern forJapan must be the country's heavy debt - Japan reportedly has one of the largest debt-to-GDP ratiosin the world.

A depreciating Yen continues to make importing from the weakened Asian economies difficult andreinforces the regional depression.

A2.1.2 Australia

Australia has a mature economy. Like other mature OECD economies, its growth rate is modest.According to official statistics from the government website, GDP in 1995/96 grew 6.7% at nominalrates but 2.7% at 1989/90 prices. In 1996, the OECD (1996) projected that output growth wouldease from 4% pace to 3-3¼% over the next two years and growth and then slow to about 3% by199813.

The economy is reported to be working at close to capacity and rising profits and strong businessconfidence are expected to attract further large increases in investment. Australia has a significantpublic debt but this is expected to fall from 85 to about 70% of GDP by 1998. Net foreign debt in1995/96 was significant at 38.6% of GDP.

With a significant part of exports dependent on emerging Asia, prospects will remain poor if theseeconomies remain dislocated.

A2.1.3 New Zealand

New Zealand has become a byword for comprehensive structural economic reform. It has becomeone of the most liberalised economies and regained some competitiveness although not on the scaleonce achieved by the dynamic emerging economies in the Asia region. However, following initial

13 The Australia national profile for this Asia-Pacific outlook study quotes Woffenden et al (1997) that the economy “grew by 4.3% in1995-96 ... and is expected to show 3.2% in 1996-97 before strengthening to 3.7% in 1997-98”. It is then assumed to grow at 3.5% toyear 2000.



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sharp recovery as a result of the reforms, recent growth has not been satisfactory. The OECD (1996)reports 1995 real GDP growth at a four-year low of 1% annually with fixed investment also slowed.New Zealand has a very high debt to GDP ratio (76% according to the OECD). The country isreported to have an adverse foreign balance and currency appreciation is a problem. The IMF (1995)reports that the economy is working close to capacity and unemployment has fallen considerably butso far with little pressures for higher wages although OECD (1996) expects these to rise.

Expected to be significantly affected by Asian economic dislocation because important markets arethere.

A2.2 Newly Industrialising Economies (NIEs)

A2.2.1 General

Apart from Singapore, all countries and territories in this category are in East Asia; they areRepublic of Korea, Taiwan Province of China and Hong Kong SAR, China. They are located in theworld’s most economically dynamic region. Before the 1997 turmoil, the World Bank has predicteda continued growth rate of 8-9% per annum.

In 1994, the total GDP at 1987 prices for the Newly Industrialising Economies of Asia (the "fourtigers") was US$532.7 billions, which represents around 10% of the Asia-Pacific total. Figure A2shows historical real GDP growth rates, with AsDB projections to 2005.

Figure A2: Real GDP growth rates for Asia-Pacific newly industrializing economies

NIEs real GDP

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1978-88

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Year

%p.

a

Hong-Kong*Korea, Rep. ofSingaporeChina, Taipei

Source: See Table 4; 1997 and later figures are pre-crisis estimates in this and later subregional charts.



88

Republic of Korea leads the group, the descending order of which in 1994 was as follows in grossGDP terms:

Korea Rep. (US$231.6 billion) 43%Taiwan Province of China ($194.0 billion) 36%Hong Kong SAR, China ($70.4 billion) 13%Singapore ($36.8 billion) 7%

For decades now, the four have maintained rapid growth; during 1995, the Asian DevelopmentBank (1996a) reported exceptionally good performance for the Republic of Korea and Singapore.The average GDP growth rate in 1995 was 7.6% compared to 7.5% in 1994 although Hong KongSAR, China’s GDP growth weakened to 4.6% from 5.4% due mainly to weaker domestic demand.Inflation in the NIEs moderated to 4.8% from 5.7%.

An important feature of the NIEs is that due to their high savings rates combined with high rates ofFDI, they have for long been capital-surplus countries. This distinction has remained after theeconomic crisis mainly for Taiwan Province of China and for Singapore.

A2.2.2 The Republic of Korea

In October 1996, the Republic of Korea became a member of the OECD, the second Asian countryafter Japan in that Organization. Republic of Korea has been transformed from a poor, rural agrariansociety into an industrialised modern economy in only a generation. During the past 30 years, therehas been a twelvefold rise in output, with economic growth averaging 8.5% annually. By 1995,Republic of Korea's share of world exports was almost 2.5% and the country ranked eleventhamong OECD exporters.

Republic of Korea's development has been driven by exports supported by massive investment ofboth local savings and external capital. Government intervention has permitted focus on key sectors,sometimes in areas where comparative advantage has had to be created. Earlier protectionism is,however eroding and Republic of Korea has, according to the OECD (1996) cut average tariff ratesfrom 18% in 1986 to 6% in 1994 and plans to abolish all but eight import quotas by July 1997.

According to the AsDB, Republic of Korea grew by 9.2% in 1995, its fastest growth rate since 1990and its unemployment fell to a record low of under 2% of the labour force. Since then there was firsta slowdown to near 7% due mainly to a weak semi-conductor market in 1997 the currency collapsedexports were in disarray and the over-extended banking sector was unable to effectively supportexport growth to take advantage of devaluation. High exposure to international short-termcommercial debt threatens creditworthiness and hardly any growth in the economy is expected in1998; many analysts expect contraction instead.



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A2.2.3 Taiwan Province of China

According to Myers (1997), the economy has grown rapidly after the second World War primarilydue to good infrastructure inherited from 50 years of Japanese colonial rule and governmentcommitment reflected in the promotion of exports and abandonment of import-substitutionindustrialization policies. US economic and military assistance is an additional factor which aidedrapid capital formation. In spite of rapid population growth of 3.5% per year in the 1950s, incomeper capita grew 3.6%, 7% and 6.5% respectively during the 1950s, 1960s and 1970s. After 1964unemployment rarely exceeded 2% of the work-force and in 1995, this ratio was about 1.8%.Between 1990 and 1995, real income per capita grew by an average of 6.6% per year and itsdistribution became more equal; the richest 20% of households had only about 5.39 as much as thepoorest 20% in 1993.

Economic growth in 1995 declined to 6.3% from 6.5% in 1994; according to the AsDB (1996a), theeconomy was expected to grow by close to 6.4% in 1996 and at 6.3% in 1997. The AsDB revisedestimates downwards to 5.7% in 1996 and 6.2% in 1997 with projection of 6.3% for 1998. Thedriving forces are mainly exports and investment of both domestic and foreign capital. Exports roseby close to 21% during 1995 and they increasingly go to developing Asian destinations; exportshave recently faltered as in other Asian high-performers. Hong Kong SAR, China is the maindestination - between 1987 and 1995 this destination’s share grew from 7.7% to 23.4% of TaiwanProvince of China's total exports; in 1995 Hong Kong SAR, China replaced the US as the largesttrading partner.

Domestic investment was 24.5% of GDP in 1995 and savings rates are around 26% of GDP. Thesurplus of savings over investment was 1.9% of GDP in 1995 (down from 7.5% of GDP in the late1980s). This capital surplus status permits the territory to invest abroad, reportedly principally in thesouth-east of mainland China (via Hong Kong SAR, China) but also elsewhere in Southeast Asia.

Prudent borrowing and a sound banking sector have enabled Taiwan Province of China to weatherthe economic turmoil better than perhaps all the “tiger” economies. An area of uncertainty for thefuture is mainland China’s policies towards Taiwan Province of China and the possible effect ofHong Kong SAR, China's reabsorption on its gateway function for trade and investment on themainland. Until this latter uncertainty is resolved, estimation of long-term future growth rates isdifficult.

A2.2.4 Hong Kong SAR, China

On July 1, 1997 Hong Kong SAR, China was reabsorbed as a Special Administrative region intomainland China. Hong Kong SAR, China has a mature and almost post-industrial economy, withservices being a strong complement to manufacturing. Its major comparative advantage is locationat a gateway to the enormous hinterland - it channels trade and investment in both directionsbetween PR China and third parties and is a major re-export territory.

For a long period, Hong Kong SAR, China has achieved economic growth at or close to doubledigits. The AsDB reports (1996) that growth has become more moderate - since the 6.3% of 1993, ithas declined steadily and was only 4.6% in 1995; the AsDB (1997) revised these estimates



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marginally but growth remains below 6%. The re-integration into PR China in 1997 is a milestoneevent; it was followed early on by currency speculation which heavily drew down its reserves and itfacing some economic slowdown. For example, unemployment reached a ten-year high in 1995.Based mostly on savings, investment has continued to be high and surplus have been investedabroad, much in PR China but also further afield in the region. There is a permanent worry aboutHong Kong SAR, China’s overvalued real estate which if it were to come under attack, couldundermine economic growth prospects further.

Future growth will depend on how Hong Kong SAR, China manages its transition into PR China -whether it will retain a highly liberalised market-driven economy able to facilitate as in the pasttwo-way interaction with many countries on behalf of PR China. Many investors are waiting to seehow well PR China will fulfil its intention to have a “one country, two systems” approach, withHong Kong SAR, China retaining its highly liberal economic system after re-integration. Dependingon this, the closer integration into PR China may well enhance the economic performance of theterritory, given the rapid development of the immediate hinterland.

A2.2.5 Singapore

Singapore has a well-earned reputation for remaining on the front line in development, continuouslyrenewing its economy and moving seamlessly from basic manufacturing to high technology andservices. It has maintained GDP growth at or little below double digits since independence and hasexploited to the full its location at a shipping cross-roads. It has complemented this with becoming atelecommunications and air-routes hub in the region.

Trade in both goods and services remains Singapore's lifeblood. According to the AsDB (1996a)Singapore’s economic vigour remained unabated, but at 8.9% GDP growth in 1995 was slower thanthe 10% average for the previous two years. While the 1996 and subsequent slump in Asianelectronics exports hit many countries hard, Singapore’s performance was cushioned somewhatbecause it manufactures disc drives which proved more stable. Singapore remains a capital-surpluscountry even after the Asian financial crisis; it is a major investor in ASEAN, PR China and furtherafield. Its economic health therefore has implications well beyond its borders while its earningsfrom overseas investments are a factor in its future prosperity.

In the medium term, Singapore is expected to maintain its place as one of the world's mostcompetitive economies.

A.2.3 North Asia14

In 1995, the combined GDP (at 1987 prices) for PR China and Mongolia was US$488.73 billion,which is some 10% of the total Asia-Pacific GDP; 99% is accounted for by the People's Republic ofChina. For a number of years now, the economy of Mongolia has, in fact been shrinking and onlyfrom 1994 did it start recovering as it started reaping the benefits of painful structural reform andeconomic liberalisation. Figure A3 shows how closely (but time lagged) the Mongolian economyfollows that of PR China in growth pattern cycle. 14Korea D.P.R., about which relatively little is known or publicized, is not normally grouped with any other country and is, in this case,placed in this group for convenience. Its GDP estimate for 1994 was $6.5 billion or 0.1% of the Asia-Pacific regional total.



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Figure A3: GDP growth in North Asia

PR China, MOngolia, Korea DPR real GDP

-10.0

-5.0

0.0

5.0

10.0

15.0

1978-88

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Year

% p

.a. China, PR of

MongoliaKorea, D.P.R.

Source: See Table 11; the “zero” readings for Korea DPR indicate non-available information. 1997 and later figures are pre-crisisestimates.

PR China is a dominant factor in the overall North-East Asia context. According to the World Bank(1995a), and average economic growth in North Asia (which includes PR China and three "tiger"economies - Republic of Korea, Taiwan Province of China and Hong Kong SAR, China) rose to9% in 1991-94 from 7.4% in the preceding decade. Sub-regional growth is expected to ease to7.7% in 1995-2004 as PR China deliberately slows down to avoid overheating, capital inflows slowto more sustainable levels and infrastructure gets strained from recent rapid growth.

A.2.3.1People’s Republic of China

PR China is the world's most populous country; it has always been an important factor ininternational development. It's role has become even more important after the recent sharpacceleration of its economic development following adoption of "socialist market economy". Sorapidly has the economy grown that the country's development is beginning to significantlycontribute to reshaping the pattern of regional and world trade.

Despite its low per capita income, PR China's investment rate is almost 40% and domestic savingsrate is over 42%, according to the AsDB, which also reported for 1995 that PR China’s economyexperienced its fourth year of double-digit growth; achieved record surplus on trade15; increasedgross domestic saving to 42.2% of GDP; raised the resource surplus from 1.4 to 2.7% of GDP;increased external reserves by more than 42%; achieved official unemployment rate of only 2.9%;and reduced debt ratio by over 3% to 16% of GDP in the year. Economic growth had been 11.8% in1994 and was reduced to 10.2% in 1995 through deliberate efforts to avoid overheating and todampen inflation which had reached double digits. The OECD (1996) reported a fall in inflation toan annual rate of 5.5% in September 1996 from 14% one year earlier.

Early in 1996, the OECD organised a conference to consider the implications of PR China'sdevelopment over the coming 15-20 years. 16 At that meeting, Michalski et al17 reported that in a

15Exports rose by 23% and imports by only 14%; the merchandise trade surplus jumped from $7.3 billion in 1994 to $17.5 billion in1995. Japan is China’s biggest trading partner.16The report of that conference is "China in the 21st century. Long-term global implications". OECD, Paris. 1996



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decade and a half after 1978, PR China's annual output growth averaged 10% annually and itsexports 17%. PR China now accounts for about 4% of world merchandise trade. At the samemeeting, Perkins18 repaid highly accelerated investment growth, with 1994 domestic investmentestimated at $175 billion ($700 billion at purchasing power parity) supplemented by $33.8 billion ofFDI ( $37 billion in 1995, a growth of 11% over 1994). With the FDI has come technology andorganisational skills which create a foundation for further progress.

Despite the fundamental strengths revealed by the above parameters, Perkins raised the question ofwhether the very high export growth, a major factor in development, can be sustained - theperspective being that the world may not willingly continue to purchase PR China's labour-intensiveand low-cost manufactures if their current growth were maintained. The fear was that major marketswould resort to protectionism upon observing PR China's inability to reciprocate trade.19 At the 15%rate observed to date, PR China's 1995 exports of $150 billion would reach $600 billion in 2005 and$2400 billion only 10 years later in 2015. Protectionist restrictions in major markets could thenbecome a real possibility. Maintenance of the present export growth rates is therefore likely only forsome period into the future.

Perkins gave three scenarios for PR China's economic growth: under the most liberalised and openscenario, future growth is estimated at 8-9% annually; should the external trade environmentbecome hostile the growth rate could fall even to 4.5% annually; resumption of a centrally-controlled economy could reduce growth to somewhere around 4.5% annually.

At the same OECD meeting, Michalski et al raised a number of current challenges in looking atfuture prospects. These include infrastructure bottlenecks (transport, financial services etc);inadequately adapted institutional and legal framework for a market economy; inadequacy of skillsfor technologically higher industrialisation; incomplete reform process and a tendency to resort to"command-economy" approaches; considerable internal socio-economic disparities in society andamong regions; and land inadequacy to meet future agricultural needs. A number of scenariosdeveloped for the future all foresaw continuation of growth. However, should the reform processnot fully succeed, growth rates could be down to 5-6% annually; if there was an external marketslump combined with stalled reforms, annual growth would fall to only about 4-5%. Box A1 reportson the gradualist reform process which is more likely to be maintained by PR China (and otherformerly centrally-planned Asian countries) than a reversion to central planning.

17"China in the twenty-first century: an overview of the long-term issues." Wolfgang Michalski, Riel Miller and Barrie Stevens. In:"China in the 21st century. Long-term global implications". OECD, Paris. 199618"China's future: economic and social development for the twenty-first century." Dwight H. Perkins. In: "China in the 21st century.Long-term global implications". OECD, Paris. 1996 19China has a large domestic market which, at its present income levels, does not come close to being able either to consume the volumeof products it exports or to import their near-equivalent from abroad. Failure to reciprocate exports thus results from incapacity ratherthan unwillingness to import.



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Box A1: Gradualist transition of Asian centrally planned economies

According to the Asian Development Bank (1995), the distinctive “model” in the Asian transitionaleconomies is the gradualist approach pioneered by mainland PR China and also adopted by Lao PDRand Vietnam. Through step-by-step reduction of state control, PR China has “successfully built fairlycompetitive product markets and turned most of the economy over to market allocation. By the mid-1990s, the share of GDP produced by the state sector had fallen to less than 20%, with state-ownedenterprises accounting for less than 45% of gross industrial output. In the process, the PRC economyhas enjoyed unprecedented growth and structural change, with an annual growth of 9.5% in real GDPduring 1978-1994, a decline in the proportion of the labour force in agriculture from 71% to 56% in1993, and exports rising to more than 20% of GDP.

The most notable feature of the gradualist model is the creation of a dualistic economy in the short tomedium term, where a market segment is permitted to emerge and grow while the planned segment isgradually allowed to shrink. “ The process permits transition countries to ”carry“ the inefficient statesector on the strength of growth in the non-state economy.

Source: Asian Development Bank, (1995), Part III “Lessons from the transitional economies of Asia”.

There have been alternatives to the Michalski et al and Perkins futures: in assessing energy sectordevelopment prospects, Priddle20 has clearly assumed a compromise set of assumptions - he recordsthe 1983-94 GDP growth rate of 9.4% annually and projects an average 8.5% for 1993-2000. TheAsDB (1996a) expects real GDP growth to stabilize in a non-inflationary, sustainable range of 8%to 9%. According to the AsDB, however, challenges notwithstanding, PR China’s economy isprojected to grow annually at about 9% over the next two to three years, while inflation is expectedto decline further to around 12% on average. The AsDB (1997) has mildly revised its outlooktowards an 8% GDP growth in 1998, with inflation also at 8%.

Box A2: Mid-21st Century PR China??

David Li recently wrote of his vision of PR China in year 2046, a vision based on continuation of growth inthe region of 7-9% appears quite feasible. Highlights are:

• PR China will have been overtaken by India as the world’s most populous nation;• the economy will be by far the world’s largest and PR China will export and import as well as produce

and consume more of most goods and services than any other country;• coastal PR China will be as prosperous as North America and Europe and will be a larger market than

either of them. The hinterland will be poorer but its disadvantages will be no greater than those ofsouthern to northern Europe;

• PR China will depend on imports for food and many other commodities based on an open tradingenvironment and cooperative development;

• PR China will be the world’s leading aid donor;• Hong Kong SAR, China will have become the world’s leading financial centre.

Source: Li, D.K.P., “PR China in 2046’ (1996).

PR China's fundamentals, as reflected in high savings, low debt levels, investment, highly positivetrade balance and overall willingness to reform policy give reason to expect continued growth.

20China's long-term energy outlook. Robert Priddle. In: "China in the 21st century. Long-term global implications". OECD, Paris. 1996



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There are, however, concerns about a major state industry sector not yet liberalized and aninadequate regulatory framework, including for the financial services/banking sector.

A2.3.2 Mongolia

The World Bank (1995a) reports that in 1995 Mongolia's GDP grew 6.3%, against 2.3% in 1994.Mongolia was succeeding in controlling inflation (56.8% in 1995, against 87.6% in 1994).Investment is gaining : from 19% of GDP in 1993, it reached nearly 24% in 1995 but savings arevery low at only 17% of GDP in the latter year. This makes the country externally dependent forcapital; in a region where alternative investment opportunities are particularly attractive, Mongoliafaces relative difficulty in attracting its share. It also faces two other development challenges: anegative merchandise trade balance and a significant but not yet alarming external debt - 14% ofexport earnings went to debt servicing in 1995.

According to the AsDB (1995) short-term prospects initially suggested GDP growth at 4.5% in1996 and 1997, much gain being from industry. AsDB (1997) later revised 1996 growth to only2.6% with 3.5% being estimated for 1997 and 4.5% for 1998; even lower rates may apply in thepresent post-crisis situation. Efforts continue, aimed at diversification of export destinations beyondRussia and PR China which currently dominate. Reforms continue but recent election results mayresult in some slowing in the pace of liberalisation, the effect of which cannot yet be ascertained.

A2.3.3 Korea, D.P.R.

This economy is poorly documented. There are major shortages of food and evidence of severeunder-performance of the economy - the last in the region to remain strongly centrally planned. Inthe absence of alternative information, a nominal growth rate averaging 1.0% pa can be assumed.

A2.4 Southeast Asia

A2.4.1 General

This group of nine countries in south-east Asia21 has the greatest concentration of economies whichuntil mid-1997 were the most rapidly growing in the world. Total 1994 GDP at 1987 prices wasUS$389.6 billion which was 8% of the regional total. Figure A4 gives GDP growth rates, manyaveraging well above 6% annually. In descending order, the economies and their 1994 GDP are:

Indonesia (US$119.3 billion) 31%Thailand ($98.7 billion) 25%Malaysia ($56.9 billion) 15%Vietnam ($54.7 billion) 14%Philippines ($41.2 billion) 11%Myanmar ($12.1 billion) 3%

21Singapore is geographically part of this group although it is treated above under the NIEs.



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Brunei ($3.5 billion) 0.9%Laos ($1.7 billion) 0.4%Cambodia ($1.5 billion) 0.4%

Figure A4: Real GDP growth - SE Asia

Real GDP growth rate (%p.a) - South East Asia

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

1978-88

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Year

% p

.a g

row

th

CambodiaIndonesiaLao, PDR ofMalaysiaMyanmarPhilippinesThailandViet Nam


There is significant spread of economic power in this sub-group, with each of five countries of thenine accounting for at least 10% of the subregional GDP, although the largest economy (Indonesia)alone has 31%, a share which (like that of Thailand) will have diminished considerably since theparticularly severe financial disruption these two countries suffered from mid 1997.

AsDB estimates (1996a) show that overall, Southeast Asia's economy grew 7.9% in 1995, against7.8% in 1994; during 1995 Indonesia, Malaysia, Thailand and Vietnam achieved 7.5%-9.5% growthrates. Brisk domestic demand and strong exports, bolstered by large inflows of foreign investment,continued to support strong economic performance in almost all Southeast Asian countries.Southeast Asia was expected to sustain the fast tempo of economic growth in 1996, with continuedstrong inflow of foreign investment.

According to the Asian Development Bank (1996a), the three largest economies of Southeast Asia(Indonesia, Thailand, Malaysia) have high savings rates, which exceed a third of their respectiveGDPs. However, their need for investment is even larger and therefore they face resource gaps andcurrent account deficits almost 9% of GDP in Malaysia and 3.8% of GDP in Indonesia. In the lattercase, external debt has risen rapidly and has pushed the debt-service ratio to almost 34%. InThailand, the debt-service ratio is still under 12% but the share of FDI has fallen, while that ofexternal borrowing has gone up including short-term commercial debt. Much borrowing is forfurther investment, particularly in infrastructure but in the case of Thailand, at the time of the firstsymptoms of financial turmoil, it was revealed that much investment went into non-remunerativereal estate. Many Banks were over-extended and loan portfolios were largely non-performing.

Thus, while according to the World Bank (1995a) of all developing regions, East Asia is likely to bethe one that will continue to exploit rapidly expanding global trade and investment opportunities tothe fullest, failures have occurred in key financial institutions which are hindering further growth. What appeared to be adequate institutional capacity to exploit heavy investment and trade



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opportunities or infrastructure to operate in a global environment has proved vulnerable. Philippinesand Vietnam are also rapidly improving their capacities and environments for global operations.Other hitherto less successful economies were on the mend but have been set back by the 1997turmoil: the Philippines, Cambodia, Laos were undergoing rapid transition - the latter two towardmarket economies. ASEAN has recently decided to include both Cambodia and Laos (alongsideMyanmar) into association with effect from July 199722 but this no longer offers to the transitioneconomies guarantees of expanded opportunities for future regional trade, investment and growth.

The speed with which this sub-region can regain healthy growth may be the key to overall Asia-Pacific renewal (other than the overwhelming importance of Japan regaining vigour and theRepublic of Korea also).

A2.4.2 Indonesia

With an estimated population of over 195 million in 1995, Indonesia is the world's fourth mostpopulous country. It's economy has grown consistently fast over some decades and GDP per capitareached an estimated US$1,020 in 1995 according to Demaine (1997). Even after the severedevaluation and dislocation of the economy, Indonesia may well still be South East Asia's largesteconomy. Among it's successes has been rapid reduction of poverty - the population living belowthe poverty line decreased to only about 26 million in 1995 from 70 million in 1970. Incomeconcentration was modest, with 20% of the population accounting for 40.7% of the total income.

As in the other high-performance economies, rapid Indonesian development benefited from acombination of deliberate planning and policy while permitting freedom to market forces. Hobohm(1993) reviews focus of and progress under Indonesia’s 5-year development plan. Under the seriesof five-year Development Plans (called "Repelita") initiated in April 1969, government has guideddevelopment. From Repelita I (1969-70/1973-74) which was 66% aid-financed, Indonesia hasmoved to Repelita VI (1994/95-98/99), only 6.7% of funding for which was from foreign aid.

Repelita I emphasized agriculture and infrastructural development and real annual GDP growth ratewas 8.6%. Repelita II focused on employment and more geographically even distribution ofeconomic development - average annual real GDP growth rate was 7.7%. Repelita III achieved anaverage of 5.7% per year while Repelita IV sought to consolidate manufacturing, upgrade industrytowards higher technology and diversify beyond petroleum exports - it led to annual real averagegrowth of 5.2%. Repelita V re-focused on infrastructure but also on human capacity development -and achieved an average of about 8.3% per year and manufacturing overtook agriculture in 1991 asthe leading sector of Indonesia's economy. Repelita VI (from 1994) has so far achieved real GDPgrowth of over 7.5% since 1994.

The AsDB (1995) projected that the Indonesian economy could maintain its momentum of 1995(8.1% growth) over another two years. In 1997, it reported a 1996 growth of 7.8% after the 8.2%achieved in 1995. The continuing high rate of gross domestic investment (over 38% of GDP) anddomestic saving (increased to 36% of GDP) were expected to can assure continuing growth. Forexample, the year 1995 saw record foreign investment approvals at $39.9 billion, a 68% increaseover 1994; the net capital inflow was sufficient to offset the current account deficit and add toreserves. 22"Partners should nudge Burma" by Jusuf Wanandi. International Herald Tribune, June 5, 1997.



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The Economist Intelligence Unit (1996a) reports, however, that the first eight months of 1996witnessed a 25.3% fall in value of approved foreign investment projects to $22.2 bn relative to thesame period a year-earlier. The likelihood of further downturn was confirmed by the results of a pollof 300 executives from ten Asian countries commissioned in the aftermath of the July 1995 riots,which showed that 43% of the respondents were reconsidering their investment plans in Indonesia.With its high pace of investment, even the rates of domestic saving (36.0% of GDP in 1995) wereinadequate. The country had started to have significant debt and debt servicing became a significantfactor in the economy with the ratio to exports at about 33%. With the coming of uncertainty aboutAsia, external funding flows ceased and credit worthiness was lost; repayments due became morecostly in devalued currency terms and a major crisis (which also had political dimensions) arosewhich the country is having difficulty exiting from.

A2.4.3 Thailand

During pre-crisis days, Thailand well illustrated the importance of Asia’s domestic and sub-regionalmarkets to contribute significantly to support sustained economic growth. Thailand was increasinglytrading with other developing countries in the region as their economies prospered. According to theAsDB (1995), other members of ASEAN have become collectively the most important tradingpartners for Thailand, followed by the US, Japan and the European Union. For the past decade, realGDP growth averaged 9% per annum while inflation was only around 4%. Overall GDP growth wasprojected at 8.3% for 1996 and 8% in 1997; the AsDB (1997) reports actual 1996 GDP growth at6.7% with projections of 6.1% and 6.6% for 1997 and 1998 respectively. The projections takeaccount of current problems facing the Baht as a result of exports decline and financial systeminsolvency from over-exposure on a property market that has many non-performing loans23. Exportgrowth, which was very buoyant at nearly 25% in 1995 after growth of 22% in 1994, has sincedipped partly due to it's reportedly over-valued dollar-linked currency relative to the currency of amajor export destination (Japan). The combination of these developments with an increasinglysignificant external debt precipitated the major crisis in Thailand which was the first in the regionbut soon triggered collapses in other countries.

Despite its current dislocation, Thailand has shown its potential for strong performance. Grossdomestic saving rose from 24% of GDP in 1985 to over 34% in 1995 and helped to support grossdomestic investment which rose from 28% of GDP in 1985 to 40% of GDP in 1995. The highappetite for investment explains the savings-investment gap in spite of high savings; the gap has ledto a current account deficit of more than 7% of GDP in 1995.

The future holds some challenges, among which the labour shortage threatens competitiveness aswage costs rise. More serious may be acute shortage of skills required to move Thai industries intomore technologically sophisticated industries - school attendance is reported to be significantlylower in Thailand than neighbouring Malaysia.24 Loss of former comparative advantage and

23 A panel of investors assessing the Asia prospects generally felt that the slowdown in exports was temporary and reflects need foradaptation to more sophisticated manufacture as well as reduced reliance on only the US dollar. For Thailand, the “crisis” was ascribedto unwise lending into an over-supplied property market. This problem may be shared by Malaysia. For details see “Investing in AsiaNow!” Panel discussion of moderator R. Holman with D. Krueger, J. Aver, C. Thompson and B. Shi in “Diplomatic World Bulletin”,April/May 1997.24For a fuller review of Thailand's current malaise, see "The fall of Thailand?" and "The baht spills over". The Economist, May 24, 1997.



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consequently of competitiveness is said to be the most important issue (AsDB, 1997). Lack ofequitable distribution of development among income groups and regions of the country is anotherissue. The current development plan emphasizes efforts to discourage concentration of industryaround Bangkok, which faces severe infrastructure challenges; the plan cannot be significantlyimplemented due to economic problems facing the country.

The continuing gap between gross domestic investment (about 41% of GDP in 1996) relative todomestic saving (about 35% of GDP) is also a problem and could become serious if FDI were tofall. This heavy reliance on foreign saving is a source of some concern. In Thailand, more thanIndonesia, outstanding external debt became quite significant, being equivalent to about 41% ofGDP. As soon as export performance faltered, the threat of default loomed.

A2.4.4 Malaysia

Malaysia has is an investment-led high-performance economy like Thailand's. It has a high savingsratio but still invests even more and so resorts (again partly like Thailand) to current account deficitfinancing. The attractiveness of the country to foreign investors, however, ensured minimal strainstill the 1997 crisis. Malaysia’s currency, its banking system and the economy in general camethrough better than both Indonesia and Thailand despite the country’s particularly heavy dependenceon exports.

Growth has consistently been in double digits or not much below. According to the AsDB, since1993, annual GDP growth has fluctuated between 8.3 and 9.3%; gross domestic savings between35.4 and 37.6 % of GDP; and domestic investment between 35.1 and 40.6% of GDP. In 1995,merchandise exports grew 26.6% and imports 30.6% - the latter dominated by investment goods. Inpre-crisis days, inflation remained below 4%, unemployment under 3% (the country facedmanpower shortages at all levels of skill) and incidence of poverty went below 10%. Although a netcapital importer, Malaysia also invests significantly abroad, particularly in ASEAN and East Asia.

In considering the future, a factor to consider is that Malaysia has probably got one of the world'smost privatised economies with even major infrastructural services in the market sector. Its growthrate has been higher than for many countries in the region; it has diversified resource and exportbase, and much of its growth potential could be regained with reasonable ease.

A2.4.5 Vietnam

Until about two years ago, Vietnam was on a rapidly accelerating phase of GDP growth. The AsDB(1995) reported GDP growth at 8% in 1993 rising to 9.5% in 1995; AsDB (1997) projectionssuggested 9.5% for 1997 and 9.3% for 1998. The regional economic turmoil started in mid 1995 hasmad these expectations unachievable. Both domestic savings and investment are lower as a share ofGDP than in the other high-performance SE Asian economies so the country depended on itsattractiveness for FDI. Vietnam still has a relatively light debt burden and its debt-service ratio hasjust passed 10%; its comparative advantage in labour-intensive manufacturing remains strong.

The issue is loss of export markets due to main destination countries having become economicallyweakened. Also, the process of reform from central planning is far from complete and some concernis being expressed by external investors. The adaptation of institutions and legal frameworks may



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prove a hindrance if their liberalisation is delayed significantly; for example, the still rathercentralised ownership of the banking sector seems to offer easier access to credit for the stillsignificant state enterprises sector. The heavy dependency on FDI is a source of potentialvulnerability.

A2.4.6 Philippines

At one time, the Philippines had a more advanced economy than many of the other countries in theregion which have since surpassed it. Policy difficulties created distortions and slowed downgrowth. According to the AsDB (1995) the Philippine economy has now regained growth potentialfrom a decade of structural reforms. Manufactured products now account for about 80% of exportscompared to less than 50% about a decade ago, so buffering earnings from volatile commodityexports. The country is making progress in reducing its debt-service which used to consume aquarter of export earnings as lately as 1993. The percentage of families living below the officialpoverty line has also declined from 39% in 1991 to 36% in 1994, an improvement which the currentregional economic crisis may cause to stall.

Before the crisis, although the country's performance had improved, the Philippines GDP growthwas generally significantly lower than in neighbouring countries - 4.8% in 1995. Philippinesdomestic savings and investment were both significantly lower than in neighbouring high-performance economies and, moreover, the savings ratio was less than two-thirds of investmentlevels so revealing a major funding gap. Due to investment driven imports, merchandise imports areover half again as large as exports for which some compensation is derived from services (e.g.tourism) and from FDI. This dependency is an area of vulnerability.

Economic growth in the Philippines in the past has often been hampered by infrastructuralconstraints, particularly power shortages but there have been major improvements in the powersupply in the recent past.

Growth prospects over the medium term appear reasonably bright and growth of the economygenerally will be driven largely by investment and exports - ignoring the current Asia-wideslowdown, the latter will benefit from increasingly liberal ASEAN and APEC markets.

A2.4.7 Myanmar

With its rich endowment of natural resources, large population and location at the doorstep of someof Asia's most dynamic economies (to the South and East) and the rapidly reviving Indian economy(to the west), Myanmar has potential to achieve very rapid sustained growth once the othereconomies revive and if it makes the necessary political adjustments that can promote investmentand trade. Notwithstanding its relative international isolation so far and consequent inability tocapture external investment, the economy is reported by the AsDB to have grown at 7.5% in 1995,which represented significant acceleration. Mining was the lead growth sector, particularly oil andgas - commodities which the other growing SE Asian economies can only continue to need more infuture when they revive.

However, Myanmar's savings rate is only around 12% of GDP and there is very limited FDI tosupplement domestic investment resources. There is a deficit on merchandise trade but as the



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country is very lightly indebted, if it opened up to private sector and official capital flows, it couldtake off relatively fast.

A2.4.8 Brunei

Brunei has a small but very prosperous economy (GDP around US$4 billion at 1987 prices) basedlargely on oil and associated activities. It is not extensively written about. Endowed with a resourceessential to modern commerce, located as it is in the midst of South East Asia's most rapidlygrowing economies and with easy access to the main sea lanes, the country can only prosper once itsneighbours resume growth. The main issue is heavy dependence on oil so that economicperformance is open to fluctuation according to international market prices.

Although incomes are high, GDP growth is unstable due to heavy dependence on one commodity(oil) - it grew 5% in 1990, 1% a year later, and at an estimated 2% in 1995.25

A2.4.9 Lao, PDR

In South East Asia, only the economy of Cambodia is smaller than that of Laos. In 1995 the GDPwas US$1.6 billion at 1987 prices. From under 6% in 1993, the GDP annual growth exceeded 8% in1994 but since then slowed down. According to the AsDB, growth is highly responsive toperformance of agriculture as the economy is still very rural-based.

Laos is just emerging from strongly centralised planning and inadequately liberalised policies areexpected to in the short term continue constraining growth. Manufacturing sector development ishampered by infrastructure bottlenecks and slow progress in privatization. At present, importingmanufactures from neighbouring countries is easier that investing in local manufacturing. Thiscould change rapidly as reform progresses but inadequate human skills could then become asignificant constraint to rapid development.

Until potential demand for Thailand slumped due to the recent crisis, Laos was planning to investheavily in hydro-power generation largely for export but these plans will have to be delayed. Improved power supplies would have helped to attract industry to Laos. Laos has a low debt-service(although debt is 37.5% of GDP, most is concessionary). Possibly most important is the admissioninto membership of ASEAN in July 1997.

The AsDB reported 1996 GDP growth at 7.9%; yet, the economy faces the significant challengesmentioned earlier apart from the loss of opportunities caused by the regional economic turmoil.

A2.4.10 Cambodia

It is till early days after achievement of peace and the Cambodian economy has not yet reachedsteady state or established a reliable trend. GDP growth rate has fluctuated but in 1995 was 7.5%, arate the AsDB expected to be retained till 1997. Investment has, however risen sharply - from being

25 Sources: Websites of US Government statistics office (www.stat.usa.gov) and CIA (www.ocdi.gov). April/May 1997.



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14.3% of GDP in 1993 it reached 21.5% in 1995, a trend the AsDB (1995) expected to continue.Domestic savings, are, however very low (little over 8% of GDP in 1995) but rising. Althoughexports are rising, imports are also increasing rapidly due to investment. Membership of ASEANstarts from 1997 was expected to increase investment and improve trade outlets but coincided withstart of the regional economic turmoil.

At this early stage after restoration of peace, it is not easy to project future growth but advantageouslocation near to potentially lucrative ASEAN markets may support eventual rapid growth.

A2.5 South Asia

A2.5.1 General

This group of seven countries includes India, the world's second most populous country and Asia'sthird largest economy after Japan and PR China. It also includes Pakistan, which is Asia-Pacific'sfourth most populous nation and thirteenth largest economy. The region has in the past notperformed particularly well but reforms underway have yielded some improvements in economicperformance, first results being the major spurt in trade and investment. The group's total 1994 GDPat 1987 prices was US$448.5 billion (including an assumed $0.2 billion for the Maldives). FigureA5 shows the real GDP growth rates for South Asia; a notable feature is growing convergence ingrowth rates of the various countries and apparent greater stability from annual fluctuations. Indescending size order, the economies and their 1994 GDP are:

India (US$364.3 billion) 81%Pakistan ($47.0 billion) 10%Bangladesh ($23.2 billion) 5%Sri Lanka ($9.2 billion) 2%Nepal ($4.2 billion) 1%Bhutan ($0.4 billion) 0.1%Maldives ($0.2 billion) 0.0%



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Figure A5: Real GDP growth rates for South Asia

Real GDP growth rate - South Asia

0.02.04.06.08.0

10.012.014.016.018.0

1978-88

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Year

% p

.a

BangladeshBhutanIndiaMaldivesNepalPakistanSri Lanka


The AsDB (1996a) reports that in 1995 South Asia’s average economic growth remained at the5.8% rate of 1994. Economic liberalization started in the early 1990s is leading to rapid growth inmanufacturing and exports.

Before the Asian economic crisis started in mid 1997, the World Bank (1995a) believed that SouthAsia was likely to see improved economic performance if reforms quickened, opportunities wereseized and economic ties to the fast-growing East Asian region expanded. Following the start ofreform, private capital flows to South Asia nearly doubled from $5.7 billion in 1993 to $10.4 billionin 1994. The World Bank reported GATT Secretariat expectations that several sectors of SouthAsian comparative advantage should gain from the Uruguay Round including clothing (up 60%after ten years relative to what it would be without the Round), textiles (34%), and agricultural,forestry, marine, processed food and beverage products (19 to 20%). It also expected increasing tieswith East Asia to help: exports to East Asia in 1986-93 grew twice as fast as overall exports to theworld but would, after the crisis, find little market.

AsDB pre-crisis assessment (1995) was that the outlook for South Asia was less promising than forSoutheast Asia and that the average GDP growth may be around 5-6% till 1997. A major constraintwas the low rate of saving compared to Southeast Asia which restrains investment. However,savings rates are rising in countries such as India. Prospects are also somewhat dampened by therelatively high debt-service ratios for the two dominant economies 27% of exports for India and33% for Pakistan.

A2.5.2 India

With a 1995 population of over 929 million, India is the world’s second most populous country; it isset to overtake PR China in the next century, although not within the 2010 horizon of this sectorstudy. On a purchasing power parity (PPP) basis (as estimated by the World Bank) - India had aGNP per capita equivalent to US$1,280 in 1994. On this basis, India has the sixth largest economyin the world, according to Baru (1996).



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Economic development is challenged by population growth: since independence, India’s economyhas grown only slowly, barely faster than its population. India has wide inter-regional disparities andincome-group disparities too; Baru (1996) considers the large inequalities as an important definingfeature of the sub-continent.

India has for long had a highly administered economy with complex bureaucracy and a largegovernment involvement in the economy at both federal and state levels. Until recent liberalization,both imports and exports have been highly controlled by quotas, bans or licensing requirements. Inmid-1991 a series of policy reforms was announced, involving substantial deregulation of theindustrial and trade sectors, delicensing of investment, liberalization of procedures, plans for theprivatization of public enterprises, and the opening up of hitherto restricted areas to privateinvestment. Changes have freed up foreign equity participation in Indian businesses and foreigndirect investment and high technology and power sectors are now open to 100% foreign equityparticipation. To address the inadequacy of infrastructure, there has been recent opening up toprivate sector participation, including foreign investors. In practice, only partial reform orprivatisation of public enterprises has occurred so far.

According to Baru (1996) the 1960-80 average annual GDP growth rate has been only 3.5% but roseto 5.0% for 1975-84 and 5.9% for 1985-90 at market exchange rate. GDP growth reached a peak of7.0% in 1995/96; and about to be 6.6% in 1996/97 but the long-term (1960-80) average was onlyabout 3.5%; 5.4% in 1980/81-1984/85; and 5.6% in 1985-90. According to the AsDB (1996a), GDPgrowth was expected to increase to 6.4% in 1996 but in fact the AsDB (1997) reports 6.8% achievedin 1996.

The economy has responded quickly to the limited reform effected so far: there has been a spurt intrade: in 1995, exports increased by more than 21% (although imports also rose sharply, by nearly27%). External capital inflows are growing, mostly direct investment. However, gross domesticinvestment in 1995 declined slightly as a share of GDP and so did gross domestic saving for a fewyears following liberalization. In the long term perspective, however, domestic savings as aproportion of GDP doubled since the 1960s to 23.7% in 1990/91 and an estimated 24.4% in1994/95. Government borrowing has, however, increased and combined with the debt burden, isone of the key problems facing the Indian economy. The external debt-service ratio was around 25%and the external debt to GDP ratio was about 29.4% in September 1995 but was 41.0% in 1991/92.

Baru (1996) reports that in July 1996, India became a “dialogue partner” in ASEAN and is a fullmember of the Asian Regional Forum (ARF). With its new “look East” policy, India may reap thebenefits of those links once the formerly fast-growing Asian economies regain healthy performance.It is also pursuing a South Asian Preferential Trade Agreement. In its links with both developed andnewly industrializing economies, India has potential to greatly increase trade in services. Intellectualservices are an area of comparative advantage, given the high levels of human skills in the country.26

The IMF assessment (1995) is that India's recovery is now well established. However, for the futurehow steadily and rapidly a large economy for so long heavily administered and with a diversity ofstate-level policies and controls will turn itself round for take-off depends on whether he frequentchange of governments will leave commitment to reforms undiminished. Growth rates are much

26According to the World Bank (1995a), services exports are growing rapidly in the field of software development, for example. TheIndian software industry has an annual growth rate of 70% and its 600-odd companies generated revenues totalling more than $500million in 1993-94, two-thirds from exports.



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higher than before but remain significantly lower than those achieved by South East Asia in the pre-crisis era. The savings ratio is still low; many states are too financially squeezed by high recurrent-costs budgets to be able to invest in the infrastructure development India urgently needs; the countryhas significant debt; its real interest rates are high and the IMF (1996) considers this a factor whichcould slow long-term growth. Although India is becoming more attractive to foreign investors, itstill gets far less FDI than Singapore, for example.

A2.5.3 Pakistan

Pakistan is the region's fourth most populous country and, if it becomes prosperous, has potential tobecome a significant economic power. However, it faces a very high population growth rate (around2.5%) which has caused it to quickly overtake Japan as the fourth most populous country in Asia.According to UN projections, Pakistan will also overtake Indonesia and become third in Asia beforeyear 2010. Given that the pace of economic growth has in the past not been remarkable and thateven following the ongoing reforms, GDP increased only at 4.7% in 1995 (having been only 2.3%in 1993) the high rates of population growth suggest potential stagnation or only slow growth inprosperity. The AsDB projected growth of 5.5% in 1996 and 5.8% in 1997 - rates which can onlystagnate or go lower due to dislocation of the region’s dynamic economies.

Domestic savings rates are in the region of 20% of GDP with investment nearly the same. Pakistanhas a significant debt and debt servicing already takes a third of export earnings. The AsDB alsoreports high defence spending. With merchandise exports regularly earning less than imports cost,the country needs foreign inflows, an important element of which is income repatriations form itsnationals abroad. These supplement FDI, the levels of which are not yet very high relative to thecountry's needs. Inflation, currently at about 13%, is also a problem.

Analysts believe that Pakistan needs to reduce the dominance of commodities in its exports,upgrade human capacities and infrastructure, control inflation, bring debt under control and to boostsavings so as to support higher domestic investment - these will all take some time.

A2.5.4 Bangladesh

Bangladesh is the sixth most populous country in the region, one of the most crowded and amongthe poorest. Although very short of land, Bangladesh remains highly dependent on agriculture(33% of GDP). With average farm size very small and is declining further: the challenge is how toachieve adequate capital accumulation for take off under these circumstances. Economic prospectsare modest at best. Efforts are now focused on creating a manufacturing and services sector toreduce dependence on the limited land resources - yet as of now, formal sector employment absorbsonly 10% of the labour force.

Reforms are working but progress is slow given the limited capacity to save (6.8% of GDP in 1995)and consequently low investment capacity (14.8% of GDP in 1995) much of which is externallydependent. Certain sectors have done well and the AsDB reports (1996a) record 1995 exportsgrowth of 37% (but from a low base) due to the ready-made garments sector. Annual GDP growthnow hovers around 4.0-4.5%.



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A2.5.5 Sri Lanka

The World Bank reports that Sri Lanka was an early reformer in South Asia and its growth has beenconsistently above 5% in the past few years. Sri Lanka’s economy grew by 5.6% in both 1994 and1995 with the industry sector buoyant according to the AsDB (1996a). Sri Lankan exports increased20.3% in 1995 its while imports grew by 18.6%. Merchandise imports have, for some years now,remained below exports. Sri Lanka has fairly high investment rates - over 25% of GDP in 1995 butdomestic savings are only around 16% of GDP so indicating high reliance on FDI. Given that Asianinvestors were significant, the current regional economic crisis has potential to significantly slowdown the pace of growth.

The country's strengths include human capacities (but the labour market is highly administered andinflexible), an open economy, and limited debt obligations. Sri Lanka also has considerable tourismresources. Weaknesses include the poor security situation which undermines focus on development;the low savings rate mentioned earlier; and an inflation rate which approaches 10%.

A2.5.6 Nepal

Nepal has a highly agriculture-based economy (42% of GDP) with services, largely tourism, next.Being landlocked it faces disadvantages in access to international markets for its relatively low-value exports of basic commodities and of carpets and garments, the country’s two staple exportitems. Nepal, with a population just exceeding 20 million and an economy of over US$4 billion, issignificant but is dwarfed by other economies in the South Asia sub-region.

Nepal has low domestic savings, like other economies in the sub-region (half of investment inrecent years) and is therefore dependent on net external inflows. Merchandise imports exceedexports by a large margin - in 1995 by a factor of 3.7; furthermore, exports are growing muchslower than imports and it is services that may hold the key to bridging the gap in an otherwiseunsustainable situation. The external debt is equivalent to about half the GDP and is therefore heavyrelative to GDP but much is concessional and thus debt service remains below 8% of exports.

With its rural-based economy facing an adverse trade balance and significant population pressure,Nepal faces challenges in boosting domestic accumulation and reaching economic take-off. Due toheavy dependence on agriculture and on volatile commodity and low-value artisanal productsexports, GDP growth rate fluctuates - from a 1993 level of 3.3% it reached 7.3% in 1994 only todrop to 2.3% a year later - this is less than the population growth rate.

Future growth, even assuming further economic liberalisation and privatisation is unlikely to beconsistently faster than in the past.



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A2.5.7 Bhutan

Bhutan's economy is less than $0.5 billion and is largely rural based (agriculture, livestock andforestry). The savings rates are very low but investment has been relatively high - met largely fromofficial aid. It has poorly-developed infrastructure, including financial infrastructure necessary for aliberalised economy. According to the AsDB (1996a), Bhutan had a GDP growth of 5.5% against6.5% in 1994. GDP growth for 1996 was originally estimated at 7% but has been reviseddownwards by AsDB (1997) to 6.4%. Bhutan relies on a narrow range of economic activities; itsland-locked status and difficult accessibility add further hurdles to economic growth. Futureperformance cannot be estimated with confidence.

A2.5.8 Maldives

This country has a fishing and tourism-dominated economy. GDP growth depends on prosperityelsewhere encouraging international tourism-related travel. The improvements in neighbouringeconomies therefore augur well for the Maldives and may help to diversify beyond dependence onlong-haul tourists. Recent GDP growth has been around 6% annually. The slowdown in the region’sdynamic economies is likely to have some adverse effects on this even though most tourists stillcome from elsewhere.

A2.6 Pacific Islands

A2.6.1 General

Other than for a few cases, many countries and territories in this subregion are very small andinformation on them is often incomplete on any economic or social parameters. The entire economyof the Pacific Islands accounts for about 0.1% of the Asia-Pacific regional GDP; for the countrieswhere information was available, the 1994 GDP at 1987 prices was US$7.32 billion which issomewhat less than the GDP of Sri Lanka. Figure A6 gives GDP growth rates for three countries inthe subregion, including Papua New Guinea, the dominant economy.

The group's 1995 population totalled about 6.2 million, a little higher than that of Hong Kong SAR,China. The approximate sub-regional 1994 GDP breaks down as follows:

Papua New Guinea (US$4.62 billion) 63%Fiji ($1.57 billion) 21%New Caledonia ($0.57 billion) 8%Solomon Islands ($0.23 billion) 3%Vanuatu ($0.14 billion) 2%Western Samoa ($0.01 billion) 1%Tonga ($0.01 billion) 1%Kiribati ($0.00 billion) 0.4%

Figure A6: Real GDP growth rates for selected Pacific Countries



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Pacific - selected real GDP growth

-5.0

0.0

5.0

10.0

15.0

20.0

1978-88

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Papua New GuineaSolomon Is.Fiji


According to the AsDB, the Pacific sub-region is characterised by smallness of economies andnarrow production and export base. It is vulnerable to external developments and has no meaningfulinfluence either on production or trade trends at international scale. All sub-regional totals aredominated by Papua-New Guinea, followed by Fiji, New Caledonia and the Solomon Islands. As anexample, although the 1995 GDP growth was quite high for some islands (W. Samoa for exampleachieved 9.6% according to the AsDB (1997)), the collective GDP fell 1.0% in reflection of a2.9% decline for Papua New Guinea, the dominant economy. The Papua New Guinea economygrew only 2.3% in 1996; with its exports heavily directed towards Japan, Republic of Korea andAsia in general, the Papua New Guinea economy is severely exposed during the Asian economiccrisis.

The Pacific countries are mainly raw-commodity dependent for exports. According to the WorldBank, the long-term outlook for commodity prices remains unfavourable - the Bank expects realcommodity prices to be no higher in 2004 than in 1990. Countries dependent on these may thereforehave difficulties achieving or maintaining prosperity.

The AsDB estimated average economic growth over 1996/97 at only 2-4%. The Pacific outlook isnot bright in the medium term. The need is recognised to diversify the economies sufficiently tominimise instability.



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109

ANNEX 3: ECONOMIC GROWTH - A LONG LOOK BACKWARDS

OECD-supported research27 into long-term economic development and its determinantsreveals that world annual compound growth rates between 1820 and 1992 have averaged1.21% for GDP per capita; 2.17% for total world GDP; and 3.73% for world exports. Worldtrade has grown 540-fold during the period and has been a major engine for overalldevelopment.

For Asia-Pacific, the 1820-1992 period has witnessed GDP per capita (in 1990 dollars and at1990 dollar prices), increase by a factor of 6; total GDP by a factor of 25 (correspondingchanges for the whole world have been 8 : 40). The region's population increase has only beenby a factor of 4. The Asia totals mask some great differences. For example, Japanese percapita income rose between 1820 and 1992 by nearly 28 fold - the world record. Since 1950,the most rapid growth in Asia has been in Republic of Korea, Taiwan Province of China andThailand.

The developmental gap among regions and countries has increased: while the income inter-regional spread was less than 3:1 in 1820 it reached 16:1 in 1992. The inter-country range rosefrom over 3:1 to 72:1 during the same period.

Selected determinants of economic growth

Maddison (1995) identified four main causal influences which he claims to, in the long term,explain large increases of per capita output and which can be observed to be in action in theAsia-Pacific region today. They are: (a) technological progress; (b) accumulation of physicalcapital; (c) development of human skills, education, and organising ability; and (d) integrationof individual national economies through trade.

Supportive factors include three other elements: economies of scale, structural change, and therelative scarcity or abundance of natural resources. All the above elements have beenprominently evident during the recent fast development of Asia.

Maddison highlighted the fact that in considering the divergent rates of development, thedifficult question is not so much why some countries have succeeded so well as why so manyothers have stagnated or regressed. He implied that social attitudes and institutional factorssuch as reliable financial institutions and instruments, access to credit and insurance, andsecure property rights may also be critical.

Technology has reduced the cost of production and raised productivity; physical capitalaccumulation has included raising of capital intensity in production which have raisedproductivity. For example, since 1950, the dynamic economies of Asia like Europe havegreatly increased the capital intensity of their economic activities.

Analysts increasingly attach great importance to human capacity improvement as a factor indevelopment. Maddison reports that in 1820, the majority of the population in all countries 27 A. Maddison , 1995. Monitoring the World Economy 1820-1992.. Development Centre of the OECD, Paris.



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was illiterate but that in Japan and the USA the average person’s “human capital” increasedten-fold from that time to 1992 and this facilitated absorption of technical progress. Mostleading economies in Asia-Pacific are associated with universal primary education and withhigh levels of secondary and (increasingly also) tertiary education. Most are investingdomestic resources for this but some gained from colonial legacies - for example, Japan leftTaiwan Province of China with higher levels of education and a body of technicians andentrepreneurs who subsequently played a key role in capitalist development.

Trade induces development because through it, even small countries (such as Singapore orHong Kong SAR, China) are able to capture economies of scale which their own size wouldotherwise deny them. It is noteworthy that exports, which were only 1% of world product in1820 accounted by 1992 for 13.5%.

Asia-Pacific, as all other regions of the world which have prospered, has made major gainswith regard to all the above factors. Most prominent areas of the region's progress have beencapital accumulation based on high investment and savings, and the growth of trade. Exportshave been the key but imports, especially those of capital goods for industrialisation, have alsobeen an important element of development.



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ANNEX 4 : ASIA-PACIFIC CONTRASTS

Annex Table A13 shows that in 1995, altogether, the top 17 countries and territories (abouthalf of the countries and territories) accounted for 99% of Asia-Pacific population. PR Chinaalone accounted for nearly 39% of the region's population (20% of the world total) with Indiaa close second at nearly 30%. Between them, these two largest countries have over two-thirdsof the region's population. Next in line and quite far behind is a group of countries which haveover 100 million people - Indonesia, Japan, Pakistan, and Bangladesh, which between themaccount for nearly 580 million people or less than India alone. The Philippines and Vietnamalso have potential to reach populations of over 100 million in the coming century;

There is skewed distribution of both economic production and population. In terms ofeconomic output, Annex Table A1 shows that Japan, the top country, alone accounts for58% of regional GDP; the first 10 countries already accounted for over 94% of regional GDPin 1995. By contrast, PR China and India, with nearly 70% of the region's population, accountfor only 17% of its GDP while five small countries and territories (Republic of Korea, TaiwanProvince of China, Hong Kong SAR, China, Singapore, and Malaysia), with only 3% of theregion's population, had 11% of its GDP. In 1995, the top five countries or territories28

accounted for:

• 82% of total regional land area; 83% of the arable land under current technologies and71% of forests and woodland (Annex Table A18);

• 83% of regional population (Annex Table A13). Much of the region's population isrelatively young, but some countries have rapidly-ageing populations;

• 84% of GDP, (which include India and PR China). If these two populous countries areexcluded, the top five become Japan, Australia, Republic of Korea, Taiwan Province ofChina and Indonesia and these alone have over 73% of the regional GDP (but only 11% ofthe population) (Annex Table A1);

• 67% of value of exports, which are a major engine driving development. If we exclude PRChina, the leading five become Japan, Hong Kong SAR, China (soon to be part of PRChina), Singapore, and Taiwan Province of China. Between them, these have only 6.5% ofthe region's population (Annex Table A4).

Some island states are so heavily dependent on narrowly-based exports that they face extrememacro-economic instability due to volatile international commodity markets and vulnerabilityto natural catastrophes etc.

In 14 of the 38 countries where data were available, annual population growth rates for1990-1995 exceeded 2% including some medium-population size countries (Pakistan,Philippines and Vietnam); for another 16 they were at or above 1% (including both PR Chinaand India) (Annex Table A15). In fact, apart from Japan and Thailand, all countries withsignificant populations were above the 1% p.a. rate during 1990-95.

28 Not necessarily the same five countries or territories for each parameter.



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For the 35 countries and territories with information, the average of annual GDP growth ratefor 1990-1995 has a very wide range: six averaged above 8%; another eight averaged above5% but below 8%; the rest were mostly positive but a very few suffered economic contraction.The Asia-Pacific region has all of the world's "miracle" economies, all of which havesustained spectacular growth rates for the longest periods known in history. Yet Asia-Pacificstill leads the world in absolute numbers of the poor; it also has many economies whichremain largely agrarian, with some also having significant pre-agrarian elements heavilydependent for subsistence on natural resources such as forests;29

Of the industrial countries and 25 developing ones for which information was available, 9 hadover 30% of their GDP derived from agriculture and of these, for 4 the ratio was above 40%.For only 13 was GDP in agriculture less than 20% (Annex Tables A11, A12). There is a ratioof over 13:1 (relative to the regional average) in per capita land area (ignoring land qualitydifferences) and a 11:1 ratio in per capita arable land availability (Annex Table A18).

The expansion of the agricultural frontier has sharp contrasts: for 11 countries, the 1970-1994trend shows reduction of agricultural area by as fast as over 11% annually (Singapore) andnearly 9% annually (Cambodia) while for three countries, the agricultural land has grown atover 2% annually and for four others at over 1% annually. The rate of area expansion forpermanent crops shows even greater contrasts. Pakistan leads with a rate equivalent to a14-year doubling time. The approximate doubling time of permanent crops for selectedcountries are:

Vietnam 18 yearsThailand 19 yearsLaos 24 yearsSolomon Islands 29 years.

Of the very major countries, Indonesia has the equivalent of 31 yeas doubling time. AnnexTable A19 has details.

On the whole, Asia-Pacific countries have achieved food self-sufficiency and many are insurplus. But in 1995, the region still received 2.16 million tons of cereals, 29% of the worldtotal cereals food aid, down from 57% in 1970 (Annex Table A21); the main recipient sub-region is South Asia, with Bangladesh in the lead. Ten countries account for almost all thefood aid needs and many of these have been reducing their dependency rapidly.

29Estimated numbers of forest-dependent people in the region, mostly tribal peoples, vary greatly - between 200 and 500 millionshave been mentioned. Strict definition of forest dependency could reduce these numbers to around 100 million but no "factual"information exists as these elements tend to be marginal in core statistical activities.



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ANNEX 5: CATEGORISATION OF COUNTRIES BY INCOME AND POPULATIONDIMENSIONS (ONLY COUNTRIES FOR WHICH INFORMATIONCONVENIENTLY FOUND)

Parameter & level Countries/territories by range of per capita real GNP in 1995 (US$)Till $500 $501-1000 $1001-8000 >$8000

Population growth rate>3.00% pa Increase Maldives2.00 to 2.99% paIncrease

Laos PR, Bhutan,Pakistan, Nepal

Solomon Is. Vanuatu, PapuaNG

1.50 to 1.99% paIncrease

Cambodia,Bangladesh

Kiribati, Samoa,Philippines

Mongolia,Malaysia, Fiji

< 1.5% pa Increase Myanmar, India,Vietnam

Sri Lanka,Indonesia, KoreaDPR, China PR

New Caledonia,Thailand, Tonga

Brunei, NewZealand, Australia,Singapore, KoreaRep., Hong KongSAR, China, Japan

1994-2025 % change in rural population>30% Increase Bhutan, Nepal,

Laos PR,Cambodia,Pakistan

Solomon Is.,Maldives, Vanuatu,Samoa, Kiribati

Papua NG

10 to 30% Increase Vietnam,Bangladesh,Myanmar, India

0 to 10% Increase Sri Lanka Fiji Singapore0 to -10% Decrease Korea DPR Mongolia,

Thailand,Malaysia

Brunei, Australia

-10 to -30% Decrease Philippines,Indonesia, ChinaPR

New Caledonia,Tonga

New Zealand

Over -30% Decrease Japan, Hong KongSAR, China, KoreaRep.

Agriculture as % of GDP in 1995> 30% Bangladesh,

Vietnam, Bhutan,Nepal,Cambodia,Myanmar, LaosPR

Tonga

20 to 30% India, Pakistan Korea DPR,Philippines

Papua NG,Mongolia, Fiji

10 to 20% Sri Lanka, ChinaPR

Malaysia,Thailand

<10% Korea Rep., Hong KongSAR, China, Singapore,Taiwan Province ofChina

Average 1970-94 annual % change in area under permanent crops



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Parameter & level Countries/territories by range of per capita real GNP in 1995 (US$)Till $500 $501-1000 $1001-8000 >$8000

> 3.00% Increase Pakistan,Vietnam

Thailand

2.00 to 2.99% Laos PR Solomon Is.,Indonesia

Malaysia

1.50 to 1.99% Philippines, ChinaPR

Vanuatu New Zealand

0.00 to 1.49%Increase

Nepal, Bhutan,Myanmar,Bangladesh

Samoa, KoreaDPR, Kiribati

Papua NG,Tonga, Fiji

Korea Rep.,Australia, HongKong SAR, China

0.00 to -1.99%Decrease

India Sri Lanka New Caledonia Japan, TaiwanProvince of China

>2.00% Decrease Cambodia Brunei



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ANNEX 6: DATA TABLES

Table A6.1: Ranking of Asia-Pacific countries and territories for 1995 total real GDP (at1987 prices)

Country or territory Millions % Cumulative %US$ Millions

Japan** 2964113 57.8 2964113 57.8PR China* 485567 9.5 3449680 67.3India 364272 7.1 3813952 74.4Australia** 249598 4.9 4063550 79.2Korea, Rep. of 231593 4.5 4295143 83.7Taiwan Province of China 194000 3.8 4489143 87.5Indonesia 119324 2.3 4608467 89.9Thailand 98658 1.9 4707125 91.8Hong Kong SAR, China 70374 1.4 4777499 93.2Malaysia 56940 1.1 4834439 94.3Vietnam 54731 1.1 4889170 95.3Pakistan 47043 0.9 4936213 96.2New Zealand** 41566 0.8 4977779 97.1Philippines 41225 0.8 5019004 97.9Singapore 36766 0.7 5055770 98.6Bangladesh 23245 0.5 5079015 99.0Myanmar 12141 0.2 5091156 99.3Sri Lanka 9245 0.2 5100401 99.5Korea, D.P.R. 6450 0.1 5106851 99.6Papua New Guinea 4624 0.1 5111475 99.7Nepal 4232 0.1 5115707 99.7Brunei 3496 0.1 5119203 99.8Mongolia 3160 0.1 5122363 99.9Lao, D.P.R*** 1656 0.0 5124019 99.9Fiji 1566 0.0 5125585 99.9Cambodia 1487 0.0 5127072 100.0New Caledonia 575 0.0 5127647 100.0Bhutan 372 0.0 5128019 100.0Solomon Islands 226 0.0 5128245 100.0Vanuatu 135 0.0 5128380 100.0Western Samoa 94 0.0 5128474 100.0Tonga 78 0.0 5128552 100.0Kiribati 28 0.0 ASIA-PACIFIC 5128580 100 5128580 100

Source: WB "Stars" database *Calculated from population and per caput GDP ** Calculated from earlier years using GDP growth rates and "Stars" data. *** Source: World Factbook, US Government. CIA Website



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Table A6.2: Ranking of Asia-Pacific countries and territories in 1995 by GNP/Capita

Country or territory US$Japan** 25062Singapore 23360Hong Kong SAR, China 21650Australia** 17580New Zealand** 13125Taiwan Province of China 10215Korea, Rep. of 8220Malaysia 3520Fiji 3320Thailand 2210Tonga 1640Papua New Guinea 1160Vanuatu 1150Western Samoa 970Philippines 960Maldives 900Indonesia 880Solomon Islands 800Kiribati 730Sri Lanka 640Korea, D.P.R.* 640China, P.R. 530Pakistan 440Bhutan 400Lao 320India 310Myanmar 235Bangladesh 230Vietnam 215Nepal 200

Source: Table A2, AsDB Outlook 1996/97 *World Factbook, US Govt (CIA Website). Assumed GDP is 75% of PPP; Deflated 5% from 1996. **OECD National accounts 1960-95 - Volume I, Tab 20; at 1990 prices/exchange rates.



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Table A6.3: Asia-Pacific countries and territories in GDP growth rate order for 1990 &1995 (%p.a)

Country or territory 1990 Country or territory 1995Maldives 13.9 China, P.R. 8.9Thailand 10.0 Korea, Rep. of 8.2Indonesia 8.9 Thailand 7.4Korea 8.4 Vietnam 7.4Malaysia 7.4 Malaysia 7.2Singapore 6.4 India 7.2Bangladesh 5.3 Lao, D.P.R. 6.8Sri Lanka 5.0 Singapore 6.7Japan 4.7 Myanmar 5.7Lao, D.P.R., 4.4 Indonesia 5.6Taiwan Province of China 4.3 Taiwan Province of China 5.4Bhutan 3.8 Cambodia 4.6India 3.7 Sri Lanka 4.4Hong Kong SAR, China 3.1 Mongolia 4.1Nepal 2.8 Australia 3.2Fiji 2.6 Maldives 2.4Vanuatu 1.7 Hong Kong SAR, China 2.4China, P.R. 1.6 Philippines 2.4Australia 1.5 Bhutan 2.3Pakistan 1.3 New Zealand 2.2Myanmar 0.9 Bangladesh 1.7Philippines 0.2 Tonga 1.6New Zealand 0.1 Fiji 1.4Vietnam -0.1 Pakistan 0.9Cook Islands -0.3 Japan 0.7Marshall Islands -0.3 Kiribati 0.6Solomon Islands -1.1 Nepal 0.2Cambodia -2.0Tonga -2.7Papua New Guinea -4.8Mongolia -4.9Kiribati -5.5Micronesia -6.5Western Samoa -8.0Source: Table A2 AsDB Outlook 1996/97.



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Table A6.4: Ranking of Asia-Pacific countries and territories for 1994 by value of exports(F.O.B US$ billions)

Country or territory Billions % Cumulative %Millions

Japan* 307.2 27.1 307.2 27.1Hong Kong SAR, China 151.4 13.4 458.6 40.5China, P.R.. 102.6 9.1 561.2 49.6Singapore 98.7 8.7 659.9 58.3Korea, Rep. of 93.7 8.3 753.6 66.5Taiwan Province of China 92.2 8.1 845.8 80.4Australia* 64.9 5.7 910.7 85.4Malaysia 56.9 5.0 967.6 85.4Thailand 44.5 3.9 1012.1 89.4Indonesia 40.2 3.5 1052.3 92.9India 26.8 2.4 1079.1 95.3New Zealand* 16.2 1.4 1095.3 96.7Philippines 13.4 1.2 1108.7 97.9Pakistan 7.8 0.7 1116.5 98.6Vietnam 3.6 0.3 1120.1 98.9Sri Lanka 3.2 0.3 1123.3 99.2Bangladesh 2.9 0.3 1126.2 99.5Papua New Guinea 2.6 0.2 1128.8 99.7Korea, D.P.R.** 0.8 0.1 1129.6 99.8Fiji 0.5 0.0 1130.1 99.8Cambodia 0.5 0.0 1130.6 99.8Myanmar 0.4 0.0 1131.0 99.9Nepal 0.4 0.0 1131.4 99.9Mongolia 0.4 0.0 1131.8 99.9Lao, D.P.R 0.3 0.0 1132.1 100.0Solomon Islands 0.1 0.0 1132.2 100.0Maldives 0.1 0.0 1132.3 100.0Bhutan 0.1 0.0 1132.4 100.0ASIA-PACIFIC 1132.4 100 1132.4 100.0Source: Table A11/ Asian Development Bank Outlook (1996/97) * Table 11 OECD National Accounts - Main Aggregates Vol. 1 1960-95"1997 edition ** Source: World Factbook, US Government (CIA Website).



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Table A6.5: Asia-Pacific countries/territories - merchandise exports and imports growth(% p.a.)Country/territory 1990 1995 1996 1997

Export Import Export Import Export Import Export ImportAdvanced Industrial Economies (AIEs)Australia* 8.3 -3.8 4.0 8.5 11.0 5.8 7.7 6.0Japan* 6.9 7.9 5.0 13.5 1.7 11.4 8.3 8.3New Zealand* 4.5 2.2 2.7 8.3 2.5 7.5 5.0 9.0NIEsHong Kong SAR, China 12.3 13.8 16.7 17.8 15.6 14.8 15.3 15.7Korea, Rep. of 2.8 14.6 32.4 33.3 14.3 11.8 14.2 13.0Singapore 19.8 22.4 15.5 18.3 13.0 13.3 12.0 12.2Taiwan Province of China 1.4 4.5 20.5 22.4 13.8 13.5 13.4 14.1North AsiaChina, PR of 19.2 -13.3 23.0 4.0 11.0 .. 17.2 ..Mongolia -44.1 -46.5 22.9 26.0 10.0 .. 9.9 ..Korea, D.P.R. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.SE AsiaBruneiCambodia 8.3 -7.1 55.7 52.0 -10.5 3.7 -1.2 3.2Indonesia 16.7 31.5 11.1 23.1 14.5 14.8 16.0 13.1Lao, PDR of 24.3 -4.4 15.8 4.1 10.6 15.5 8.9 8.7Malaysia 16.3 28.2 26.6 30.6 18.5 18.0 16.5 16.0Myanmar -0.1 72.3 8.0 9.0 .. .. .. ..Philippines 4.7 17.2 28.9 24.4 25.0 20.0 25.0 18.0Thailand 15.0 29.9 24.5 28.4 17.0 20.0 16.0 20.0Viet Nam 31.1 6.1 45.0 58.3 32.2 36.1 37.7 28.9South AsiaBangladesh 28.2 -1.2 2.4 14.8 22.6 28.0 15.2 21.1Bhutan -11.9 -19.0 6.0 16.4 .. .. .. ..India 9.0 14.4 21.1 26.7 18.0 21.0 15.0 18.0Maldives 13.3 8.9 -1.9 17.0 .. .. .. ..Nepal 35.2 17.3 -10.0 15.0 -5.0 12.8 7.5 16.0Pakistan 12.2 9.9 13.4 17.2 13.0 17.8 13.4 18.7Sri Lanka 23.1 13.2 20.3 18.6 11.0 13.0 12.0 14.0Pacific IslandsCook Islands 74.6 17.8 .. .. .. .. ..Fiji -5.4 31.5 2.0 0.3 .. .. .. ..Guam .. .. .. .. .. ..Kiribati -10.2 21.8 11.1 21.6 .. .. .. ..Marshall Is. 14.2 13.5 15.1 4.9 .. .. .. ..Micronesia. 84.0 26.7 4.8 .. .. .. .. ..N. Mariana Is. .. .. .. .. .. ..New Caledonia .. .. .. .. .. ..PNG -10.9 -17.6 -0.9 14.3 .. .. .. ..Solomon Is. -6.1 -18.0 28.7 26.0 .. .. .. ..Tonga -7.6 4.7 -18.7 17.5 .. .. .. ..Vanuatu 36.8 36.7 6.5 5.7 .. .. .. ..Western Samoa -31.2 4.5 85.7 6.0 .. .. .. ..

Source: Tables A11 and A13 - AsDB Outlook 96/97. Annex Tables 9, 10 OECD Economic Outlook No.60 (Dec 1996)Goods & Services.



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Table A6.6: Asia-Pacific countries/territories - gross domestic saving (as % of GDP) Country/territory 1989-90 1990 1995

Advanced Industrial Economies (AIEs)Australia* 23.7 21.0 n.a.Japan* 31.9 33.5 n.a.New Zealand* 21.3 20.4 n.a.NIEsHong Kong SAR, China 33.5 35.8 34.5Korea, Rep. of 32.4 36.2 37.0Singapore 41.8 39.8 55.6Taiwan Province of China 32.9 28.1 26.3North AsiaChina, PR of 30.8 37.9 42.2Mongolia .. 2.5 17.0Korea, D.P.R. n.a. n.a.SE AsiaBruneiCambodia .. 2.3 8.3Indonesia 30.9 32.3 36.0Lao, PDR of .. .. ..Malaysia 33.2 33.4 37.2Myanmar 12.0 11.7 12.2Philippines 22.2 18.7 14.7Thailand 27.2 34.2 34.2Viet Nam .. 2.9 19.1South AsiaBangladesh 2.1 2.6 6.8Bhutan 14.0 22.2 36.0India 21.2 23.6 22.5Maldives .. .. ..Nepal 10.4 7.9 10.3Pakistan 8.7 11.8 15.8Sri Lanka 14.6 15.5 15.9Pacific IslandsCook Islands .. .. ..Fiji 19.0 19.8 ..Guam ..Kiribati -16.8 -7.5 ..Marshall Is. .. .. ..Micronesia. .. .. ..N. Mariana Is. .. .. ..New Caledonia .. .. ..Papua New Guinea 14.3 16.1 ..Solomon Is. .. ..Tonga .. -14.7 ..Vanuatu 7.2 8.8 ..Western Samoa -7.4 20.0 ..Asia-Pacific (APFSOS)Source: Table A7/AsDB Outlook 96-97. * Source: OECD National Accounts Main Aggregates Volume I - national tables. ** 1981 only.



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Table A6.7: Ranking of Asia-Pacific countries and territories for 1995 by level ofinvestment as % of GDP

Country or territory 1990 Country or territory 1995% %

Kiribati 78.8 Bhutan 54.5Vanuatu 43.2 Malaysia 40.6Thailand 41.3 Thailand 40.0Korea, Rep. of 36.9 China, P.R. 39.5Singapore 35.7 Indonesia 38.3China, P.R, 35.2 Korea, Rep. of 36.6Bhutan 33.2 Singapore 33.9Japan 32.7 Hong Kong SAR, China 33.1Mongolia 32.3 Japan 29.9Malaysia 31.2 Viet Nam 27.6Indonesia 30.7 Sri Lanka 25.7Hong Kong SAR, China 27.4 Taiwan Province of China 24.5India 27.0 India 24.0Papua New Guinea 24.4 Mongolia 23.7Philippines 24.2 Philippines 22.3Taiwan Province of China 23.1 Cambodia 21.5Tonga 22.8 New Zealand 21.0Sri Lanka 21.9 Nepal 20.2New Zealand 21.3 Australia 19.7Australia 21.0 Pakistan 19.1Fiji 19.3 Bangladesh 14.8Pakistan 18.9Nepal 18.4Myanmar 13.0Vietnam 12.6Bangladesh 12.2Cambodia 8.2Source: As for Table



122

Table A6.8: Asia-Pacific countries/territories - gross domestic investment (% of GDP) Country/territory 1981 1990 1995 1997

Advanced Industrial Economies (AIEs)Australia* 27.2 21.0 19.7 n.a.Japan* 31.1 32.7 29.9 n.a.New Zealand 24.6 21.3 21.0 n.a.NIEsHong Kong SAR, China 27.2 27.4 33.1 31.0Korea, Rep. of 30.6 36.9 36.6 35.2Singapore 41.7 35.7 33.9 35.4Taiwan Province of China 22.8 23.1 24.5 25.4North AsiaChina, PR of 30.5 35.2 39.5 38.7Mongolia .. 32.3 23.7 25.9Korea, D.P.R. n.a. n.a. n.a. n.a.SE AsiaBruneiCambodia .. 8.2 21.5 23.0Indonesia 29.3 30.7 38.3 39.0Lao, PDR of .. .. .. ..Malaysia 30.6 31.2 40.6 41.7Myanmar 15.3 13.0 .. ..Philippines 22.0 24.2 22.3 24.7Thailand 30.7 41.3 40.0 41.0Viet Nam .. 12.6 27.6 34.0South AsiaBangladesh 13.1 12.2 14.8 15.5Bhutan 37.6 33.2 54.5 ..India 22.4 27.0 24.0 25.0Maldives .. .. .. ..Nepal 19.4 18.4 20.2 23.4Pakistan 18.7 18.9 19.1 20.4Sri Lanka 24.7 21.9 25.7 25.2Pacific IslandsAmerican Samoa .. .. .. ..Cook Islands .. .. .. ..Fiji 20.6 19.3 .. ..Guam ..Kiribati 60.4 78.8 .. ..Marshall Is. .. .. ..Micronesia. .. .. .. ..N. Mariana Is. .. .. .. ..New Caledonia .. .. .. ..Papua New Guinea 24.9 24.4 .. ..Solomon Is. 31.1 .. .. ..Tonga .. 22.8 .. ..Vanuatu 32.3 43.2 .. ..Western Samoa 28.2 .. .. ..Source: Tab A8/AsDB Outlook 96/97 For Australia, Japan & New Zealand - Source: World Tables (WB) - at market prices * 1993 data used instead of 1995 for Australia and Japan



123

Table A6.9: Ranking of Asia-Pacific countries and territories for 1990 & 1995 by debtservice ratio (debt as % of exports)

Country or territory 1990 Country or territory 1995Papua New Guinea 35.7 Indonesia 33.7Indonesia 30.9 Pakistan 33.4India 30.1 India 26.7Bangladesh 28.5 Philippines 15.1Philippines 27.2 Bhutan 14.8Pakistan 23.2 Mongolia 14.1Kiribati 22.7 Bangladesh 13Nepal 17.6 Thailand 11.7Thailand 16.9 Vietnam 10.5Sri Lanka 14.0 Sri Lanka 10Solomon Islands 11.7 China, P.R. 9.1China, P.R. 11.5 Nepal 7.8Fiji 11.3 Malaysia 6Korea, Rep. of 10.7 Korea, Rep. of 4.9Lao, P.D.R. 10.3 Lao, P.D.R. 4.8Malaysia 10.3Vietnam 9.3Myanmar 9.3Bhutan 7.4Western Samoa 5.9Maldives 5.5Tonga 3.0Vanuatu 2.2Source: Based on data of Table A18/AsDB Outlook 96/97.



124

Table A6.10: Asia-Pacific countries and territories in 1990, 1995 : debt service ratio (Debtservice as % of exports)

Country/territory 1990 1995 1997Advanced Industrial Economies (AIEs)Australia n.a. n.a. n.a.Japan n.a. n.a. n.a.New Zealand n.a. n.a. n.a.NIEsHong Kong SAR, China .. .. ..Korea, Rep. of 10.7 4.9 4.7Singapore .. .. ..Taiwan Province of China .. .. ..North AsiaChina, PR of 11.5 9.1 9.1Mongolia .. 14.1 9.8Korea, D.P.R.* n.a n.a. n.aSE AsiaBrunei .. .. ..Cambodia .. .. ..Indonesia 30.9 33.7 32.0Lao, PDR of 10.3 4.8 7.0Malaysia 10.3 6.0 6.0Myanmar 9.3 .. ..Philippines 27.2 15.1 14.0Thailand 16.9 11.7 14.0Viet Nam 9.3 10.5 8.1South AsiaBangladesh 28.5 13.0 13.0Bhutan 7.4 14.8 ..India 30.1 26.7 27.6Maldives 5.5 .. ..Nepal 17.6 7.8 6.8Pakistan 23.2 33.4 30.0Sri Lanka 14.0 10.0 11.0Pacific IslandsCook Islands .. .. ..Fiji 11.3 .. ..Guam .. .. ..Kiribati 22.7 .. ..Marshall Is. .. .. ..Micronesia. .. .. ..N. Mariana Is. .. .. ..New Caledonia .. .. ..Papua New Guinea 35.7 .. ..Solomon Is. 11.7 .. ..Tonga 3.0 .. ..Vanuatu 2.2 .. ..Western Samoa 5.9 .. ..Source: Table A18 AsDB Outlook 1996/97 * Debt in 1995 estimated at US$8 billion (US Govt. "World Factbook" CIA Website).



125

Table A6.11: Ranking of Asia-Pacific countries and territories for 1995 by agriculture as %of GDP)

Country or territory %Lao, D.P.R. 56.5Myanmar 46.1Cambodia 44.6Nepal 41.9Tonga 38.9Bhutan 37.6Vietnam 33.9Bangladesh 32.8Papua New Guinea 30.0India 27.8Korea, DPR*. 25.0Pakistan 24.0Mongolia 23.1Philippines 21.5Fiji 21.3Sri Lanka 19.5China, P.R.C. 18.9Malaysia 13.9Cook Islands 13.7Thailand 10.9Korea, Rep of 6.7Taiwan Province of China 3.1Hong Kong SAR, China 0.2Singapore 0.2Source: Based on data of table A6/AsDB Outlook 96/97. *World Factbook. US Government (CIA Website).



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Table A6.12: Asia-Pacific countries/territories - sectoral share of GDP 1995 (%) Country/territory Agriculture Industry Services

Developed countriesAustralia n.a. n.a. n.a.Japan n.a. n.a. n.a.New Zealand n.a. n.a. n.a.(No comparable data for these countries)NIEsHong Kong SAR, China 0.2 18.1 81.7Korea, Rep. of 6.7 30.5 62.8Singapore 0.2 42.7 57.1Taiwan Province of China 3.1 38.9 58.0North AsiaChina, PR of 18.9 53.0 28.1Mongolia 23.1 42.1 34.8Korea D.P.R.* 25.0 60.0 15.0SE AsiaBruneiCambodia 44.6 18.7 36.7Indonesia 15.9 42.2 41.9Lao, PDR of 56.5 18.9 24.6Malaysia 13.9 47.1 39.0Myanmar 46.1 15.3 38.6Philippines 21.5 35.5 43.0Thailand 10.9 42.2 46.9Viet Nam 33.9 27.7 38.4South AsiaBangladesh 32.8 19.6 47.6Bhutan 37.6 28.3 34.1India 27.8 31.1 41.2Maldives .. .. ..Nepal 41.9 19.3 38.8Pakistan 24.0 27.0 48.9Sri Lanka 19.8 31.3 48.9Pacific IslandsCook Islands 13.7 7.6 78.7Fiji 21.3 17.6 61.1GuamKiribatiMarshall Is.Micronesia.N. Mariana Is.New CaledoniaPapua New Guinea 30.0 39.6 30.4Solomon Is.Tonga 38.9 12.1 49.0VanuatuWestern SamoaSource: Table A6 AsDB Outlook 1996/97; * For DPR Korea, US Govt (CIA Website)

Table A6.13: Asia-Pacific Population - Medium Fertility (thousands) Country 1960 1970 1980 1990 1995 % %** 2000 2005 2010 % %**

CHINA (Main + Taiwan Province of China 657492 830675 998877 1155305 1220224 39 39 1276301 1321569 1364950 36 36India 442344 554911 688856 850793 929005 29 68 1006770 1082184 1152283 31 67Indonesia 96194 120280 150958 182812 197460 6 74 212565 226938 239377 6 73Pakistan 49955 65706 85299 119141 136257 4 79 156007 177590 200621 5 79Japan 94096 104331 116807 123537 125068 4 83 126428 127196 127044 3 82Bangladesh 51419 66671 88221 109765 118229 4 86 128310 139911 151890 4 86Viet Nam 34743 42729 53711 66689 73793 2 89 80549 86847 92261 2 88Philippines 27560 37540 48317 60779 67839 2 91 75037 82102 88813 2 91Thailand 26392 35745 46718 55580 58242 2 93 60495 62612 64568 2 92Myanmar 21746 27102 33821 41354 45106 1 94 49342 53479 57461 2 94Rep Korea 25003 31923 38124 42869 44909 1 96 46883 48594 50033 1 95Dpr Korea 10525 14263 17666 20363 22097 1 96 23913 25416 26575 1 96Nepal 9263 11327 14498 18772 21456 1 97 24347 27439 30722 1 97Malaysia 8140 10853 13763 17891 20140 1 98 22299 24329 26239 1 98Sri Lanka 9889 12514 14819 17057 17928 1 98 18821 19858 20977 1 98Australia 10276 12535 14569 16888 17866 1 99 18838 19846 20853 1 99Cambodia 5433 6938 6498 8695 10024 0 99 11207 12302 13433 0 99Hong Kong SAR, China 3075 3942 5039 5705 6123 0 99 6373 6457 6513 0 99Lao Pdr 2177 2713 3205 4202 4882 0 99 5693 6547 7451 0 99Papua Ng 1920 2422 3086 3839 4301 0 100 4811 5357 5924 0 100New Zealand 2372 2820 3113 3360 3561 0 100 3760 3973 4188 0 100Singapore 1634 2075 2415 3016 3327 0 100 3587 3778 3912 0 100Mongolia 959 1256 1663 2216 2463 0 100 2736 3023 3313 0 100Bhutan 868 1047 1292 1645 1770 0 100 2032 2313 2615 0 100Fiji 394 520 634 726 784 0 100 848 917 989 0 100Solomon Is. 118 161 227 320 378 0 100 444 517 596 0 100Brunei 82 130 193 257 293 0 100 326 354 379 0 100Maldives 99 121 158 216 254 0 100 302 355 413 0 100New Caledonia 79 108 143 168 181 0 100 195 208 220 0 100Vanuatu 64 87 117 149 169 0 100 192 217 245 0 100Samoa 112 145 155 160 165 0 100 174 189 208 0 100Tonga 64 82 92 96 98 0 100 100 102 104 0 100Kiribati 40 50 61 72 78 0 100 86 95 105 0 100Cook Is. 18 21 18 18 19 0 100 20 21 22 0 100Total 1594545 2003743 2453133 2934455 3154489 100 100 3369791 3572635 3765297 100 100** Please Note That Bangladesh Overtakes Japan Between 1995 And 2000 Under Both "Medium" And "Low" Fertility Scenarios.

Table A6.14: Asia-Pacific Population - Low Fertility Variant (in thousands) Country 1960 1970 1980 1990 1995 % *Cum % 2000 2005 2010 % * Cum %

CHINA (All) 657492 830675 998877 1155305 1220224 39 39 1269927 1304355 1329683 36 36India 442344 554911 688856 850793 929005 29 68 1002476 1068320 1122487 31 67Indonesia 96194 120280 150958 182812 197460 6 74 211303 222771 230364 6 73Pakistan 49955 65706 85299 119141 136257 4 79 155704 176562 198293 5 78Japan 94096 104331 116807 123537 125068 4 83 126197 126733 126082 3 82Bangladesh 51419 66671 88221 109765 118229 4 86 127805 138221 148320 4 86Viet Nam 34743 42729 53711 66689 73793 2 89 80025 85172 88732 2 88Philippines 27560 37540 48317 60779 67839 2 91 74779 81266 87007 2 91Thailand 26392 35745 46718 55580 58242 2 93 59945 61409 62552 2 92Myanmar 21746 27102 33821 41354 45106 1 94 49178 52942 56303 2 94Rep Korea 25003 31923 38124 42869 44909 1 96 46677 48090 49123 1 95DPR Korea 10525 14263 17666 20363 22097 1 96 23798 25097 25987 1 96Nepal 9263 11327 14498 18772 21456 1 97 24299 27276 30355 1 97Malaysia 8140 10853 13763 17891 20140 1 98 22201 24014 25558 1 98Sri Lanka 9889 12514 14819 17057 17928 1 98 18438 19073 19774 1 98Australia 10276 12535 14569 16888 17866 1 99 18743 19562 20258 1 99Cambodia 5433 6938 6498 8695 10024 0 99 11185 12229 13275 0 99Hong Kong SAR, China 3075 3942 5039 5705 6123 0 99 6371 6452 6491 0 99Lao PDR 2177 2713 3205 4202 4882 0 99 5592 6336 7112 0 99Papua NG 1920 2422 3086 3839 4301 0 100 4799 5322 5849 0 100New Zealand 2372 2820 3113 3360 3561 0 100 3746 3920 4083 0 100Singapore 1634 2075 2415 3016 3327 0 100 3572 3736 3828 0 100Mongolia 959 1256 1663 2216 2463 0 100 2727 2993 3244 0 100Bhutan 868 1047 1292 1645 1770 0 100 2001 2248 2512 0 100Fiji 394 520 634 726 784 0 100 844 905 962 0 100Solomon Is. 118 161 227 320 378 0 100 443 514 589 0 100Brunei 82 130 193 257 293 0 100 324 348 366 0 100Maldives 99 121 158 216 254 0 100 297 343 394 0 100New Caledonia 79 108 143 168 181 0 100 194 204 212 0 100Vanuatu 64 87 117 149 169 0 100 191 216 243 0 100Samoa 112 145 155 160 165 0 100 174 187 203 0 100Tonga 64 82 92 96 98 0 100 100 101 103 0 100Kiribati 40 50 61 72 78 0 100 86 94 104 0 100Cook Is. 18 21 18 18 19 0 100 20 21 22 0 100Total 1594545 2003743 2453133 2934455 3154489 100 100 3354161 3527032 3670470 100 100

** Please note that Bangladesh overtakes Japan between 1995 and 2000 under both "medium" and "low" fertility scenarios.



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Table A6.15: Asia-Pacific Population Growth Rates - Medium Fertility Variant (% p.a) Rankedaccording to 1990-95 growth rates)

COUNTRY 1950-1955 1970-1975 1990-1995 1995-2000 2000-2005 2005-2010Solomon Is. 2.61 3.38 3.32 3.21 3.05 2.83Maldives 1.77 2.46 3.31 3.44 3.22 3.01Laos 2.05 2.18 3.00 3.07 2.80 2.59Cambodia 2.15 0.46 2.84 2.23 1.86 1.76Pakistan 2.24 2.57 2.68 2.71 2.59 2.44Nepal 1.51 2.44 2.67 2.53 2.39 2.26Brunei Darusalaam 5.56 4.30 2.64 2.10 1.66 1.35Vanuatu 2.84 3.10 2.49 2.49 2.47 2.45Malaysia 2.72 2.44 2.37 2.04 1.74 1.51Guam 1.11 2.20 2.30 1.81 1.44 1.20Papua New Guinea 1.56 2.38 2.27 2.24 2.15 2.01Philippines 2.61 2.72 2.20 2.02 1.80 1.57Mongolia 2.20 2.84 2.11 2.10 2.00 1.83Viet Nam 1.33 2.34 2.02 1.75 1.51 1.21Singapore 4.90 1.73 1.96 1.50 1.04 0.70India 2.00 2.24 1.76 1.61 1.44 1.26Myanmar 1.85 2.32 1.74 1.80 1.61 1.44Korea, DPR -1.40 2.67 1.63 1.58 1.22 0.89Kiribati 2.25 2.05 1.61 1.90 1.96 1.96Indonesia 1.69 2.41 1.54 1.47 1.31 1.07New Caledonia 3.35 4.16 1.53 1.48 1.34 1.15Fiji 3.01 2.03 1.53 1.56 1.58 1.50Bangladesh 1.70 2.77 1.49 1.64 1.73 1.64Bhutan 1.65 2.04 1.46 2.77 2.59 2.45Hong Kong SAR, China 4.64 2.18 1.42 0.80 0.26 0.17Tuvalu 1.22 1.52 1.42 1.34 1.25 1.17New Zealand 2.26 1.79 1.16 1.09 1.10 1.05Australia 2.21 2.07 1.13 1.06 1.04 1.00China, main 1.87 2.12 1.02 0.85 0.70 0.59Sri Lanka 2.55 1.67 1.00 0.97 1.07 1.10Thailand 2.58 2.92 0.94 0.76 0.69 0.61Korea, Rep 1.02 2.00 0.93 0.86 0.72 0.58Cook Is 2.02 -1.60 0.93 0.90 0.87 0.84Samoa 2.84 0.88 0.57 1.13 1.60 1.91Tonga 5.11 1.51 0.36 0.38 0.40 0.42Japan 1.43 1.33 0.25 0.22 0.12 -0.02Tokelau 0.49 -1.38 0.00 0.00 0.00 0.00Niue 4.55 -4.12 -2.15 -1.90 -1.66 -1.40Taiwan Province of ChinaNorfolk IsASIA-PACIFICS/C Asia 2.03 2.35 1.92 1.81 1.69 1.53S/E Asia 1.92 2.44 1.73 1.60 1.41 1.20Oceania 2.21 2.09 1.37 1.33 1.32 1.26Eastern Asia 1.75 2.12 1.02 0.85 0.66 0.59WORLD 1.78 1.95 1.45 1.37 1.27 1.20Developing 1.21 2.37 1.77 1.65 1.53 1.43Developed 1.21 0.79 0.40 0.26 0.17 0.15



130

Table A6.16: Asia-Pacific Population Growth Rates - Low Fertility Variant (% p.a.) Rankedaccording to 1990-95 growth rates)

COUNTRY 1950-1955 1970-1975 1990-1995 1995-2000 2000-2005 2005-2010Solomon Is. 2.61 3.38 3.32 3.17 2.98 2.72Maldives 1.77 2.46 3.31 3.09 2.91 2.74Laos 2.05 2.18 3.00 2.72 2.50 2.31Cambodia 2.15 0.46 2.84 2.19 1.79 1.64Pakistan 2.24 2.57 2.68 2.67 2.51 2.32Nepal 1.51 2.44 2.67 2.14 2.31 2.49Brunei Darusalaam 5.56 4.30 2.64 1.98 1.43 1.00Vanuatu 2.84 3.10 2.49 2.45 2.40 2.34Malaysia 2.72 2.44 2.37 1.95 1.57 1.25Guam 1.11 2.20 2.30 1.72 1.28 0.95Papua New Guinea 1.56 2.38 2.27 2.19 2.07 1.89Philippines 2.61 2.72 2.20 1.95 1.66 1.37Mongolia 2.20 2.84 2.11 2.04 1.86 1.61Viet Nam 1.33 2.34 2.02 1.62 1.25 0.82Singapore 4.90 1.73 1.96 1.42 0.90 0.48India 2.00 2.24 1.76 1.52 1.27 0.99Myanmar 1.85 2.32 1.74 1.73 1.47 1.23Korea, DPR -1.40 2.67 1.63 1.48 1.06 0.70Kiribati 2.25 2.05 1.61 1.84 1.88 1.84Indonesia 1.69 2.41 1.54 1.36 1.06 0.67New Caledonia 3.35 4.16 1.53 1.36 1.09 0.77Fiji 3.01 2.03 1.53 1.47 1.40 1.22Bangladesh 1.70 2.77 1.49 1.56 1.57 1.41Bhutan 1.65 2.04 1.46 2.46 2.33 2.22Hong Kong SAR, China 4.64 2.18 1.42 0.79 0.25 0.12Tuvalu 1.22 1.52 1.42 1.28 1.15 1.01New Zealand 2.26 1.79 1.16 1.01 0.91 0.81Australia 2.21 2.07 1.13 0.96 0.86 0.70China, main 1.87 2.12 1.02 0.80 0.53 0.38Sri Lanka 2.55 1.67 1.00 0.56 0.68 0.72Thailand 2.58 2.92 0.94 0.58 0.48 0.37Korea, Rep 1.02 2.00 0.93 0.77 0.60 0.42Cook Is 2.02 -1.60 0.93 0.85 0.76 0.68Samoa 2.84 0.88 0.57 1.05 1.46 1.71Tonga 5.11 1.51 0.36 0.33 0.30 0.27Japan 1.43 1.33 0.25 0.18 0.08 -0.10Tokelau 0.49 -1.38 0.00 0.00 0.00 0.00Niue 4.55 -4.12 -2.15 -1.96 -1.75 -1.57Taiwan Province of ChinaNorfolk IsASIA-PACIFICEastern Asia 1.75 2.12 1.02 0.76 0.51 0.35S/C Asia 2.03 2.35 1.92 1.72 1.52 1.29S/E Asia 1.92 2.44 1.73 1.48 1.20 0.88Oceania 2.21 2.09 1.37 1.24 1.15 1.01WORLD 1.78 1.95 1.45 1.28 1.11 0.97Developed 1.21 0.79 0.40 0.20 0.07 -0.02Developing 1.21 2.37 1.77 1.55 1.35 1.18



131

Table A6.17: Area of Countries and Territories

Total Area ('000 Ha) Land Area ('000 Ha)Country 1994 % Cumul% Country 1994 % Cumul%

China Main 956,100 33 33 China Main 929,100 33 33Australia 774,122 26 59 Australia 768,230 27 59India 328,759 11 70 India 297,319 10 70Indonesia 190,457 7 77 Indonesia 181,157 6 77Mongolia 156,650 5 82 Mongolia 156,650 6 82Pakistan 79,610 3 85 Pakistan 77,088 3 85Myanmar 67,658 2 87 Myanmar 65,755 2 87Thailand 51,312 2 89 Thailand 51,089 2 89Papua N Guin 46,284 2 91 Papua N Guin 45,286 2 91Japan 37,780 1 92 Japan 37,652 1 92Viet Nam 33,169 1 93 Malaysia 32,855 1 93Malaysia 32,975 1 94 Viet Nam 32,549 1 94Philippines 30,000 1 95 Philippines 29,817 1 95New Zealand 27,053 1 96 New Zealand 26,799 1 96Laos 23,680 1 97 Laos 23,080 1 97Cambodia 18,104 1 97 Cambodia 17,652 1 97Nepal 14,718 1 98 Nepal 14,300 1 98Bangladesh 14,400 0 98 Bangladesh 13,017 0 98Korea D P Rp 12,054 0 99 Korea D P Rp 12,041 0 99Korea Rep 9,926 0 99 Korea Rep 9,873 0 99Sri Lanka 6,561 0 99 Sri Lanka 6,463 0 99Bhutan 4,700 0 100 Bhutan 4,700 0 100Taiwan Provinceof China

3,596 0 100 Taiwan Provinceof China

3,541 0 100

Solomon Is 2,890 0 100 Solomon Is 2,799 0 100Newcaledonia 1,858 0 100 Newcaledonia 1,828 0 100Fiji 1,827 0 100 Fiji 1,827 0 100Vanuatu 1,219 0 100 Vanuatu 1,219 0 100Brunei Darsm 577 0 100 Brunei Darsm 527 0 100Samoa 284 0 100 Samoa 283 0 100Hong Kong SAR,China

107 0 100 Hong KongSAR, China

99 0 100

Tonga 75 0 100 Kiribati 73 0 100Kiribati 73 0 100 Tonga 72 0 100Singapore 62 0 100 Singapore 61 0 100Guam 55 0 100 Guam 55 0 100Maldives 30 0 100 Maldives 30 0 100Niue 26 0 100 Niue 26 0 100Norfolk Is 4 0 100 Norfolk Is 4 0 100Tuvalu 3 0 100 Tuvalu 3 0 100Nauru 2 0 100 Nauru 2 0 100Tokelau 1 0 100 Tokelau 1 0 100Total 2,928,761 100 100 Total 2,844,922 100 100Average 73219 3 3 Average 71123.05 0

Table A6.18: Per capita Areas (Ha) Land Area Arable Land Forests And Woodland

Country 1970 1980 1990 1994 Country 1970 1980 1990 1994 Country 1970 1980 1990 1994Mongolia 124.72 94.2 71.96 66.29 Australia 3.32 3.02 2.84 2.66 Australia 11.62 10 8.62 8.22Australia 61.31 52.75 45.50 43.53 Niue 1 1.67 2.5 1.67 Solomon Is 15.9 11.28 7.68 6.69Newcaledonia 16.93 12.78 10.88 10.27 Mongolia 0.59 0.71 0.64 0.56 Mongolia 11.94 9.13 6.31 5.82Niue 5.20 8.67 13.00 8.67 New Zealand 0.89 0.8 0.76 0.43 Vanuatu 10.51 7.81 6.05 5.51Solomon Is 17.39 12.33 8.75 7.65 Cambodia 0.39 0.31 0.42 0.38 Newcaledonia 6.56 4.95 4.21 3.98New Zealand 9.50 8.61 7.98 7.59 Samoa 0.37 0.35 0.34 0.33 Laos 5.42 4.29 3 2.65Vanuatu 14.01 10.42 8.07 7.34 Thailand 0.34 0.35 0.31 0.29 New Zealand 2.65 2.4 2.28 2.17Laos 8.51 7.20 5.49 4.87 World 0.35 0.3 0.26 0.24 Bhutan 2.55 2.08 2.05 1.92Bhutan 4.62 3.80 3.04 2.91 Fiji 0.13 0.14 0.22 0.23 Niue 1 1.67 3 1.67Fiji 3.51 2.88 2.52 2.37 Myanmar 0.37 0.28 0.23 0.21 Brunei Darsm 3.38 2.33 1.78 1.61World 3.53 2.94 2.47 2.32 India 0.29 0.24 0.19 0.18 Fiji 2.28 1.87 1.63 1.54Norfolk Is 4.00 2.00 2.00 2.00 Laos 0.24 0.21 0.2 0.18 Cambodia 1.9 2.03 1.38 1.22Brunei Darsm 4.05 2.73 2.05 1.88 Tonga 0.24 0.17 0.18 0.17 Malaysia 1.95 1.54 1.24 1.13Cambodia 2.54 2.72 2.00 1.77 Nepal 0.17 0.15 0.12 0.13 Samoa 0.99 0.84 0.83 0.79Malaysia 3.03 2.39 1.84 1.67 Vanuatu 0.17 0.15 0.13 0.12 World 1.17 0.97 0.82 0.74Samoa 1.95 1.78 1.75 1.67 Solomon Is 0.25 0.18 0.12 0.11 Myanmar 1.19 0.95 0.77 0.71Myanmar 2.43 1.94 1.57 1.44 Cook Is 0.05 0.06 0.11 0.11 Indonesia 1.02 0.78 0.61 0.57Cook Is 1.10 1.28 1.28 1.21 Indonesia 0.15 0.12 0.11 0.09 Korea D P Rp 0.5 0.4 0.34 0.31Kiribati 1.46 1.20 1.01 0.94 Malaysia 0.08 0.07 0.1 0.09 Nepal 0.54 0.37 0.3 0.27Indonesia 1.51 1.20 0.99 0.93 Philippines 0.12 0.11 0.09 0.08 Thailand 0.62 0.35 0.27 0.25Thailand 1.43 1.09 0.92 0.88 Viet Nam 0.13 0.11 0.08 0.08 Philippines 0.42 0.26 0.22 0.21Tonga 0.88 0.78 0.75 0.73 Bangladesh 0.13 0.1 0.09 0.07 Japan 0.24 0.22 0.2 0.2Nepal 1.24 0.96 0.74 0.67 Bhutan 0.09 0.08 0.07 0.07 Korea Rep 0.21 0.17 0.15 0.14Korea D P Rp 0.82 0.66 0.55 0.51 Korea D P Rp 0.1 0.09 0.08 0.07 Viet Nam 0.32 0.22 0.14 0.13Philippines 0.79 0.62 0.49 0.45 Sri Lanka 0.06 0.06 0.05 0.05 Sri Lanka 0.15 0.12 0.12 0.12Viet Nam 0.76 0.61 0.49 0.45 Guam 0.07 0.06 0.04 0.04 Tonga 0.1 0.09 0.08 0.08Guam 0.65 0.51 0.41 0.37 Korea Rep 0.07 0.05 0.05 0.04 Guam 0.12 0.09 0.07 0.07Sri Lanka 0.52 0.44 0.38 0.36 Newcaledonia 0.06 0.05 0.04 0.04 India 0.12 0.1 0.08 0.07India 0.54 0.43 0.35 0.32 Japan 0.05 0.04 0.03 0.03 Kiribati 0.04 0.03 0.03 0.03Japan 0.36 0.32 0.30 0.30 Brunei Darsm 0.05 0.02 0.01 0.01 Bangladesh 0.03 0.02 0.02 0.02Tuvalu 0.50 0.38 0.33 0.30 Maldives 0.02 0.02 0.01 0.01 Hong Kong SAR, China 0 0 0 0Korea Rep 0.31 0.26 0.23 0.22 Hong Kong SAR, China 0 0 0 0 Maldives 0 0 0 0Nauru 0.33 0.29 0.2 0.18 Singapore 0 0 0 0 Singapore 0 0 0 0Maldives 0.25 0.19 0.14 0.12 Average 0.28 0.27 0.28 0.24 Average 2.31 1.82 1.47 1.32Bangladesh 0.20 0.15 0.12 0.11Hong Kong SAR, China 0.03 0.02 0.02 0.02Singapore 0.03 0.03 0.02 0.02Average 8.13 6.53 5.42 4.95



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Table A6.19: Asia-Pacific land use 1994 and its change rates 1970-1994 (%p.a) Agricultural Area ('000 Ha) Permanent Crops Area ('000 Ha) Forests & Woodland ('000 Ha)Country 1994 * GR %** Country 1994 * GR% Country 1994 * GR%Fiji 433 2.96 Pakistan 550 5.05 Pakistan 3,480 0.95Cambodia 5,338 2.47 Viet Nam 1,247 3.87 Bhutan 3,100 0.93Malaysia 7,885 2.34 Thailand 3,360 3.68 Sri Lanka 2,100 0.72Thailand 21,245 1.70 Laos 25 2.88 Hong Kong SAR, China 22 0.62Vanuatu 169 1.44 Solomon Is 17 2.45 Niue 5 0.34Philippines 10,650 1.27 Indonesia 13,045 2.22 Malaysia 22,248 0.25China Main 494,910 1.23 Malaysia 5,782 2.19 India 68,500 0.14Papua N Guin 530 0.72 Philippines 3,850 1.96 New Zealand 7,667 0.13Nepal 4,500 0.70 Vanuatu 124 1.84 Brunei Darsm 450 0.12Laos 1,700 0.66 New Zealand 1,537 1.81 Myanmar 32,400 0.04Indonesia 41,971 0.58 China Main 3,700 1.73 Fiji 1,185 0Bhutan 413 0.54 Nepal 43 1.48 Kiribati 2 0Korea D P Rp 2,050 0.47 Bhutan 19 0.98 Guam 10 0Solomon Is 96 0.35 Korea Rep 185 0.94 Japan 25,000 0Pakistan 26,510 0.34 Australia 205 0.71 Korea D P Rp 7,370 0Viet Nam 7,086 0.32 Myanmar 542 0.69 Maldives 1 0Tonga 52 0.27 Papua N Guin 390 0.63 Newcaledonia 708 0Samoa 123 0.26 Tonga 31 0.57 Vanuatu 914 0Kiribati 37 0.13 Bangladesh 242 0.5 Papua N Guin 42,000 0New Zealand 16,607 0.12 Samoa 67 0.37 Singapore 3 0India 181,000 0.07 Korea D P Rp 300 0.3 Tonga 8 0Bangladesh 9,300 0 Kiribati 37 0.13 Australia 145,000 -0.01Sri Lanka 2,323 0 Fiji 80 0.05 Korea Rep 6,456 -0.11Guam 20 0 Guam 6 0 Solomon Is 2,450 -0.21Niue 8 0 Hong Kong SAR,

China1 0 Samoa 134 -0.25

Maldives 4 0 Niue 2 0 Nepal 5,750 -0.28Norfolk Is 1 0 Newcaledonia 6 -0.29 Cambodia 12,200 -0.39Myanmar 10,421 -0.13 Sri Lanka 975 -0.44 Indonesia 111,774 -0.42Australia 469,054 -0.15 India 3,600 -0.81 Mongolia 13,750 -0.44Taiwan Province ofChina

872 -0.15 Japan 423 -1.46 Philippines 13,600 -0.51

Korea Rep 2,123 -0.34 Cook Is 3 -1.94 China Main 128,630 -0.54Japan 5,083 -0.52 Taiwan Province of

China66 -2 Taiwan Province of

China1,866 -0.68

Cook Is 5 -0.55 Brunei Darsm 4 -4.4 Laos 12,550 -0.7Mongolia 118,470 -0.64 Cambodia 19 -8.75 Bangladesh 1,889 -0.77Newcaledonia 229 -0.68 Mongolia 1 Viet Nam 9,650 -1.64Hong Kong SAR,China

8 -1.87 Singapore 0 Thailand 14,800 -1.67

Brunei Darsm 13 -2.43 Asia Total 40,484 Asia Total 699,666SINGAPORE 1 -11.10 ASIA Average 0.484 ASIA Average -0.1217ASIA TOTAL 1441240 n.a. World average = 1.1 World average = -0.11ASIA Average 0.0106** World = 0.26Source : FAOSTAT; Note that GR% is for the period 1970-1994.

Table A6.20: Land UseArable Land ('000 Ha) Forests & Woodlands ('000 Ha)

Country 1970 1980 1990 1994 % Cumul% Country 1970 1980 1990 1994 % Cumul%India 160,610 164,742 165,869 166,100 40 40 Australia 145,600 145,600 145,613 145,000 24 24China Main 99,280 96,175 92,463 91,210 22 63 China Main 144,400 133,400 124,650 128,630 13 63Australia 41,614 44,031 47,900 47,000 11 74 Indonesia 122,800 117,600 111,775 111,774 7 74Pakistan 19,167 19,994 20,484 20,960 5 79 India 66,040 67,480 67,762 68,500 3 79Indonesia 18,000 18,000 20,253 17,126 4 83 Papua N Guin 42,000 42,000 42,115 42,000 2 83Thailand 12,300 16,515 17,494 17,085 4 88 Myanmar 32,172 32,051 32,399 32,400 2 88Myanmar 9,970 9,573 9,567 9,534 2 90 Japan 25,043 25,198 25,105 25,000 1 90Bangladesh 8,885 8,913 9,544 8,458 2 92 Malaysia 21,149 21,149 22,248 22,248 1 92Philippines 4,620 5,204 5,480 5,520 1 93 Thailand 22,280 16,547 14,968 14,800 1 93Viet Nam 5,630 5,940 5,339 5,511 1 95 Mongolia 15,000 15,178 13,741 13,750 1 95Japan 4,910 4,294 4,121 3,999 1 96 Philippines 15,899 12,457 13,640 13,600 1 96Cambodia 2,693 2,000 3,755 3,819 1 97 Laos 14,700 13,735 12,600 12,550 1 97Nepal 1,953 2,290 2,320 2,700 1 97 Cambodia 13,210 13,160 12,170 12,200 0 97Korea Rep 2,153 2,060 1,953 1,848 0 98 Viet Nam 13,800 11,950 9,395 9,650 0 98Malaysia 920 1,000 1,700 1,822 0 98 New Zealand 7,470 7,470 7,667 7,667 0 98Korea D P Rp 1,510 1,610 1,700 1,700 0 99 Korea D P Rp 7,370 7,370 7,370 7,370 0 99New Zealand 2,500 2,500 2,561 1,534 0 99 Korea Rep 6,628 6,568 6,476 6,456 0 99Mongolia 744 1,182 1,385 1,319 0 99 Nepal 6,245 5,550 5,751 5,750 0 99Sri Lanka 810 870 925 908 0 99 Pakistan 2,833 2,850 3,380 3,480 0 99Laos 658 670 838 875 0 100 Bhutan 2,592 2,577 3,168 3,100 0 100Taiwan Province of China 798 831 824 806 0 100 Solomon Is 2,560 2,560 2,456 2,450 0 100Fiji 67 90 160 180 0 100 Sri Lanka 1,820 1,760 2,082 2,100 0 100Bhutan 89 104 113 121 0 100 Bangladesh 2,224 2,192 1,903 1,889 0 100Samoa 53 55 55 55 0 100 Taiwan Province of China 2,224 1,865 1,865 1,866 0 100Papua N Guin 17 20 35 50 0 100 Fiji 1,185 1,185 1,185 1,185 0 100Solomon Is 40 40 40 40 0 100 Vanuatu 914 914 914 914 0 100Vanuatu 15 18 20 20 0 100 Newcaledonia 708 708 708 708 0 100Tonga 20 16 17 17 0 100 Brunei Darsm 440 450 458 450 0 100Newcaledonia 7 7 7 7 0 100 Samoa 143 134 134 134 0 100Guam 6 6 6 6 0 100 Hong Kong SAR, China 19 21 22 22 0 100Hong Kong SAR, China 12 7 6 6 0 100 Guam 10 10 10 10 0 100Niue 5 5 5 5 0 100 Tonga 8 8 8 8 0 100Brunei Darsm 6 3 3 3 0 100 Niue 5 5 6 5 0 100Maldives 3 3 3 3 0 100 Singapore 3 3 3 3 0 100Singapore 4 2 1 1 0 100 Kiribati 2 2 2 2 0 100Total 400,069 408,770 416,946 410,348 100 100 Maldives 1 1 1 1 59 200Average 11767 12023 12263 12069 3 3 Total 739,497 711,708 693,750 697,672 2 2

Average 21128 20335 19821 19933 0 0



135

Table A6.21: Food Aid (Total Cereals) From All Donors

Recipient 1970 1980 1990 1995 % 1995 Asia% Cumul

Bangladesh 0 798,399 1,451,974 824,750 38 38Korea D P Rp 0 0 0 735,199 34 72India 2,591,400 435,378 217,069 312,812 14 86Sri Lanka 338,100 235,703 201,437 119,632 6 92Cambodia 10,600 132,995 21,873 75,296 3 95Laos 6,600 4,000 0 23,835 1 97Viet Nam 631,500 180,700 74,638 20,941 1 98Pakistan 1,055,622 317,780 379,719 18,083 1 98Philippines 42,500 84,560 109,240 16,709 1 99Indonesia 1,301,100 388,680 45,774 11,750 1 100Bhutan 0 1,188 4,208 2,387 0 100Myanmar 40,900 7,000 0 1,820 0 100Thailand 0 32,400 107,040 1,800 0 100Papua N Guin 0 0 60 150 0 100Fiji 14,100 6,500 0 0 0 100Kiribati 0 400 0 0 0 100Hong Kong SAR,China

2,100 0 0 0 0 100

Korea Rep 1,893,600 678,273 0 0 0 100Macau 100 0 0 0 0 100Malaysia 6,000 0 4,129 0 0 100Maldives 0 0 3,189 0 0 100Mongolia 0 0 30,665 0 0 100Singapore 100 0 0 0 0 100Samoa 0 444 2,585 0 0 100Asia Total 7934322 3,304,400 2,653,600 2,165,164 100 100World 14,019,740 9,685,137 13,399,360 7,456,934Asia % Of World 57 34 20 29



136

List of Working Papers already released

APFSOS/WP/01 Regional Study - The South PacificAPFSOS/WP/02 Pacific Rim Demand and Supply Situation, Trends and Prospects:

Implications for Forest Products Trade in the Asia-Pacific RegionAPFSOS/WP/03 The Implications of the GATT Uruguay Round and other Trade

Arrangements for the Asia-Pacific Forest Products TradeAPFSOS/WP/04 Status, Trends and Future Scenarios for Forest Conservation including

Protected Areas in the Asia-Pacific RegionAPFSOS/WP/05 In-Depth Country Study - New ZealandAPFSOS/WP/06 In-Depth Country Study - Republic of KoreaAPFSOS/WP/07 Country Report - MalaysiaAPFSOS/WP/08 Country Report - Union of MyanmarAPFSOS/WP/09 Challenges and Opportunities: Policy options for the forestry sector in the

Asia-Pacific RegionAPFSOS/WP/10 Sources of Non-wood Fibre for Paper, Board and Panels Production:

Status, Trends and Prospects for IndiaAPFSOS/WP/11 Country Report - PakistanAPFSOS/WP/12 Trends and Outlook for Forest Products Consumption, Production and

Trade in the Asia-Pacific RegionAPFSOS/WP/13 Country Report - AustraliaAPFSOS/WP/14 Country Report - ChinaAPFSOS/WP/15 Japan - In-depth country study (Draft)APFSOS/WP/16 Country Report - Sri LankaAPFSOS/WP/17 Forest Resources and Roundwood Supply in the Asia Pacific Countries:

Situation and Outlook to Year 2010APFSOS/WP/18 Country Report - CambodiaAPFSOS/WP/19 Wood Materials from Non-Forest AreasAPFSOS/WP/20 Forest Industry Structure and the Evolution of Trade Flows in the Asia-PacificRegion - Scenarios to 2010APFSOS/WP/21 Decentralization and Devolution of Forest Management in Asia and the

PacificAPFSOS/WP/22 Commentary on Forest Policy in the Asia-Pacific Region (A Review for

Indonesia, Malaysia, New Zealand, Papua-New Guinea, Philippines,Thailand, And Western Samoa

APFSOS/WP/23 Asia Pacific Forestry Sector Outlook: Focus On Coconut WoodAPFSOS/WP/24 Ecotourism And Other Services Derived From Forests In The Asia-

Pacific Region: Outlook To 2010APFSOS/WP/25 Technology Scenarios in the Asia-Pacific Forestry SectorAPFSOS/WP/26 In-depth Country Report - IndiaAPFSOS/WP/27 People and Forests: Situation and ProspectsAPFSOS/WP/28 Non-Wood Forest Products Outlook Study for Asia and The Pacific:

Towards 2010APFSOS/WP/29 Opportunities for Forestry Investment in Asia and the Pacific Through

Carbon Offset InitiativesAPFSOS/WP/30 Country Report - The MaldivesAPFSOS/WP/31 Country Report - Vietnam



137

APFSOS/WP/32 Country Report - NepalAPFSOS/WP/33 Country Report - The PhilippinesAPFSOS/WP/34 Regional Study on Wood Energy Today and Tomorrow in AsiaAPFSOS/WP/35 The Status, Trends and Prospects for Non-Wood and Recycled Fibre

Sources in ChinaAPFSOS/WP/36 Outlook, Trends and Options with Special Reference to Legislation,

Institutions and Capacity Building (A Review for Bangladesh, Bhutan,China, Myanmar, Japan and Vietnam) (Draft)

APFSOS/WP/37 Perspectives of Environmental Civil Society Organizations on Forestry inthe Asia-Pacific Region: Outlook To 2010

APFSOS/WP/38 Summary Of The Country Outlook: Lao PDRAPFSOS/WP/39 Forestry and Key Asian Watersheds (Issued by ICIMOD as ISBN 92

9115 760 0)APFSOS/WP/40(a) FAO Outlook Study On Wood Based Panels Production, Consumption

And Trade In The Asia Pacific Region 1996 to 2010APFSOS/WP/40(b) FAO Outlook Study On Wood Based Panels Production, Consumption

And Trade In The Asia Pacific Region - 1996 To 2010 - China SectionStudy On China’s Wood-Based Panel Market Outlook For The Years2000-2010

APFSOS/WP/41 Scenarios For Extra- And Inter-Sectoral Developments Of ForestryOutlook Study For Asia And The Pacific

APFSOS/WP/42 Country Report - Forestry Of MongoliaAPFSOS/WP/43 Asia-Pacific Forestry Statistics Compendium (Draft):

Volume I - Socio-Economic, Resources and Non-wood ProductsStatisticsVolume II - Wood Products Statistics

APFSOS/WP/44 Urban Forestry in the Asia-Pacific Region - Situation and Prospects(Draft)

APFSOS/WP/45 Country report - IndonesiaAPFSOS/WP/46 In-depth country report - ThailandAPFSOS/WP/47 Review of Economic and Social Developments in the Asia-Pacific

Region with Projections to 2010APFSOS/WP/48 Country Report – BangladeshAPFSOS/WP/49 Review of Social and Economic Developments in the Asia-Pacific

Region with Projections to 2010

Documents

˜ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDY