In the 1970s the Club of Rome warned that the world would soon reach the limits of
growth. Since then, Asia Pacific has been a textbook example in the growth of limits.
This, however, does not mean that its long-term future as a fast-growing region is assured. If the growth in output of Asia's developing economies was based mainly on a higher input of labour and capital, there is a risk that they will experience diminishing returns, and therefore lower growth rates.
There are others reasons for concern. While governments strive to remove infrastructure bottlenecks, the lack of some basic services and facilities may already be slowing down growth momentum. The planned improvements may be 'too little, too late'.
A major worry is the dramatic deterioration in the environment. Bangkok's traffic congestion is notorious, as is industrial pollution in Seoul and Taipei, and even more so in the industrial centres of China. As long as industrialization and urban agglomeration continue to increase, living conditions are unlikely to improve markedly. In rural areas, aggressive logging and expansion of arable land have caused soil erosion with consequent flooding, or even changes in weather patterns. This is forcing millions of farmers into increasingly overcrowded and unmanageable cities.
Population growth, while lower in percentage terms than in parts of Africa or Latin America, results in unbearably high population density. China grows by 16-18 million people a year - as much as the entire current population of Scandinavia. The annual increase for Indonesia is 3-4 million - the total population of New Zealand.
More careful use of energy is needed in order to sustain growth and save vital natural resources. Both China and Indonesia are on the way to becoming energy importers, thus joining Japan, the Asian NIEs and the Philippines in their dependence on Middle East oil supplies, with serious consequences for their foreign exchange balances.
Rapid growth of income gives rise to feelings of unfairness. Ostentatious consumption is envied or detested, materialistic goals are questioned. Industrialization and the liberalization of markets bring efficiency gains and higher productivity, but also the danger of growing unemployment, as in China and Indonesia. Governments must work hard to maintain a delicate balance between economic growth and the risk of social upheaval.
Quality of life is another important issue. GNP figures only reflect the creation of material wealth; they fail to measure the extent to which human lives are enriched. It is only this broader concept of increase in quality of life which one may call development. In other words, high growth rates do not necessarily lead to substantial development, though they certainly can help. Depletion of natural resources and exploitation of cheap labour can result in high growth rates, as can the accumulation of wealth through corruption among the elite.
The vision of governments as regards the future of their society, the way in which they invest in development and take care of the needs of people and the environment are foremost in assessing sustainable growth potential. The analysis of macro-economic data is insufficient for this purpose. But any broader perspective leads us into uncharted waters. How does one measure quality of life? How does one weigh the limited availability of space in Japan against its low crime rate, and compare these
two aspects with those in the USA? What role do climate, traffic conditions, the chanc of a fair trial, the quality of services play?
The United Nations Development Program (UNDP) has tried to get to grips wit] this topic for years.
It stresses the importance of an equitable distribution of the benefit of economic growth and the sharing of opportunities between individuals ani generations. It also argues that the creation and accumulation of wealth do nc necessarily fulfil important human choices: it is the use of wealth, not wealth itself th determines the quality of life. Respect for the law, maintenance of minority rights, eqm treatment of men and women do not depend on wealth. Some Asia Pacific countries d not grant these conditions to their people, even if they claim to do so.
In an attempt to compare countries with each other, the UNDP has created Human Development Index (see Table 1.2. with only three components: longevity education and standard of living. Longevity is taken as an indication of health cart education as an indicator of providing people and society with an opportunity t improve themselves, and standard of living as an indicator of well-being. The UND] ranks a total of 173 countries around the world, first using the HDI, then using incom per capita. About half the countries in the region see their standing considerabl' improved when the HDI is applied. This means that they have been comparativel more successful in pursuing development in a broader sense than in simply improvin their people's income in dollar terms.
The limits of long-term growth : The Strategic Importance of Asia Pacific article from Strategy Management Catagory The limits of long-term growth
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