The Case For Modest Growth In Asia
The rising nations of Asia need to tread a path of ‘moderate prosperity’ that fits the hard resource constraints of the 21st century, argues Chandran Nair.
The most important decisions about climate change and other resource issues over the next decades will not be made in Washington, London or Brussels, but in Beijing, New Delhi, Jakarta, Lagos, and the other major emerging economies of Asia and Africa.
One thing that should be clear is that Asians cannot and should not aspire to consume as much as Americans and Europeans do to sustain economic growth. According to the United Nations, Asia is already home to more than four-billion people, and will add another billion by 2050; in contrast, the population of those living in ‘more developed regions’ will stay constant at around 1.2 billion over the same period. The world can barely handle one-billion people in the developed world with Western-style lifestyles, so imagine the devastation to resources and environments when that number is increased five times over.
Our current economic model, with its focus on promoting relentless overconsumption through under-priced resources and the externalisation of the true costs, will bring catastrophic impacts to Asia and the rest of the world. As such, Asian governments will need to create their own economic and development model: one that can provide a path to ‘moderate prosperity’ for Asians, while protecting the planet’s resources for future generations and thus avoiding chaos.
However, most Asian countries have blindly followed a Western economic model of free markets, technology-driven growth and rampant capitalism. Asian people and, by extension, Asian governments, often seem like they want to not just emulate the West, but to beat it at its own game. That means the tallest skyscrapers, the most expansive malls, the largest airports, the most cars, the biggest companies, the flashiest apps — all the symbols of Western prosperity and modernity, yet Asian.
Even countries that have modelled their economies and governments very differently still find themselves tied to aping Western growth models and lifestyles to spur development. China’s state-driven economy may be more able than the US to take the lead on global trade, climate action and renewable energy. Yet, for most Chinese, ‘success’ is modelled after the West. Even as President Xi tries to define the ‘Chinese dream’ in a more spiritual and culturally attuned way, many in China probably see it as something similar to its consumerism-driven equivalent in the US.
To avoid the catastrophe, which all the scientific evidence points to, Asian governments will need to focus on three important elements.
First, they must place the sustainable management of resources at the centre of economic planning, rather than leaving it as an afterthought. They need to intervene consistently in the market to ensure that resources are protected for future generations. If resources are mismanaged or overused today, they will create more social unrest, fail to create equitable societies and less will be available for the next generation (which, given population growth in Asia, will undoubtedly be larger), unfairly constraining their rightful access to common and public goods.
Second, they must internalise the many externalities that pervade the economy. Almost all economic activity places some external cost on a third party, much of it unpriced. Local communities near resources can suffer from pollution and disruption; workers suffer from low wages and poor working conditions; and the whole country can suffer from environmental damage, carbon emissions, economic disruption and increasingly scarce resources, not to mention the significant social cost of overconsumption. Asian leaders have to act to resolve these externalities and the threats therein.
And finally, they must manage the expectations of their people in order to create a ‘moderate prosperity’ that fits the hard resource constraints of the 21st century. It is clearly impossible for all of Asia to live as Americans or Europeans do. There are just not enough resources on the planet. But our current economic model — the much-celebrated Western liberal democratic system — is not good at discussing how to manage expectations as freedoms are considered to be unfettered. It is far easier to offer people the promise of as much consumption as they can afford, and hope things will sort themselves out in the end with technology as the panacea. But Asia will not have the luxury of this hope.
Asian governments will need to decide what standard of living is sustainable in a future marked by far stricter resource constraints than what the West faced during its development, built around exceptionalism, but it must also define it in a way that does not seem to be ‘less than’ what people in the West enjoy. Whether it is a focus on cultural diversity and protection, national spirituality, or pride in collective welfare, whatever Asian governments develop must remain compelling to their populations, and underpin a new socio-political and economic arrangement suited to the stark constraints of the 21st century.
Chandran Nair is the founder of the the Global Institute for Tomorrow (GIFT) an Asia-based think tank and provider of executive training