For nearly three years, the global economy has experienced much turbulence. Many of the world's regions have stagnated and are only recently beginning to turn around. But among global economies, the Asia-Pacific region is leading the way with a robust recovery.
According to the latest report by the International Monetary Fund (IMF), growth rates of 15 percent are expected in Singapore. Elsewhere in the region, China and Thailand are projected to grow by 10.5 percent and 7.5 percent respectively.1 Other APEC members such as Japan, Australia and New Zealand are also reported to be recovering positively.
These economies, and others within APEC, have continued to perform well despite the seriousness of the recent global crisis. Many APEC economies saw a solid recovery as early as 2009. Growth rates in the region have also continued this upward momentum in the first quarter of 2010. IMF economists predict this to continue, but at a more sustainable pace of 6.8 percent next year.
With the region forging ahead, APEC's work on liberalizing and facilitating trade, investment and cooperation within the region continues to act as a key driver for growth and prosperity. APEC was well positioned to respond quickly and deal with the crisis effectively. APEC's actions included committing to a standstill on protectionist measures, intensifying ongoing work to accelerate regional economic integration, and laying out the foundation to ensure that growth carries on and development continues in the long-term.
Essentially what APEC took from the crisis is the realization that the region can no longer return to "growth as usual." It has been recognized that the quality of growth must be improved in order for APEC economies to continue to develop, to address new challenges, and to remain dynamic. As a result, in 2009, APEC Leaders committed to forge a new comprehensive growth paradigm for the post-crisis landscape.
Japan - as APEC's host economy for 2010 - has led the development of this plan. Coined as the "APEC Growth Strategy", this is an approach to economic development that takes into consideration new challenges and global realities, such as energy and environmental constraints, human security concerns, the necessity of constant innovation, and economic performance and opportunity disparities across and within economies.
This is also "a strategy towards common growth" for every APEC economy to pursue, says Dr. Takashi Omori, the Chair of APEC's Economic Committee.2 Thus in August 2010, all members of APEC - including ministers from economies and top officials from the Asian Development Bank, the International Energy Agency, and the World Bank - met for the first time in Beppu, Japan to deliberate on this new strategy. This culminated in the Beppu Declaration
which provided the basis for further discussion at the last APEC Senior Officials' Meeting in September 2010.
"Formerly economies just wanted to grow fast to make people wealthy," says Hidehiko Nishiyama, co-Chair of the Senior Officials' Meeting for APEC Japan 2010, "but that approach has created its own problems." With climate change and other human security concerns arising, there is an urgency to create growth that can be sustained for future generations to come; and therefore there is necessity, adds Nishiyama, "to improve the quality, as opposed to just the rate of growth."
As APEC Trade Ministers have aptly pointed out in their June 2010 meeting, the region's long-term economic trajectory needs to be balanced, inclusive, sustainable, innovative, and secure, in order to achieve further prosperity and collective well-being. These ideas make up the five attributes of the APEC Growth Strategy; and these attributes will guide APEC economies towards realising higher quality growth in the region.
This first attribute, Balanced Growth, refers to dealing with the imbalances that exist both between and within economies. Better social safety nets - such as pensions, healthcare and education - need to be put in place so that domestic and regional consumption can be boosted. This also means more focus on economic structural reforms such as competition policies and reducing regulatory burdens.
Realising the second attribute of Inclusive Growth would allow everyone to benefit from trade and ensure as many citizens as possible have the opportunity to improve their lives. This will be translated into action through initiatives that promote job creation, enhance human resources and small business development, create new economic opportunities for women, and improve access to finance.
The third attribute, Sustainable Growth, refers to the need to make growth compatible with environmental imperatives and energy constraints. Already APEC has embarked on new projects that focus on improving the energy efficiency of sectors such as transportation and power generation and initiatives that expand the potential use of renewable energy sources to accelerate the move to a low-carbon economy.
Creating an environment that promotes and facilitates the development and commercialization of ideas is what the fourth attribute, Innovative Growth, is all about. This attribute is achieved through initiatives that provide policy and regulatory infrastructure conducive to innovation, such as intellectual property rights protection, information and communication technology application, and research and development promotion.
The fifth and final attribute, Secure Growth, refers to protecting people, businesses and economies from natural disasters, health pandemics or human-made interference that reduce an economy's productive capacity. Projects that promote good policies and practice in areas such as counter-terrorism, preventing and countering of emergency preparedness, diseases, and food security help realise this goal.
"This agenda comes out of a number of forces for change," says Christopher Findlay, a University of Adelaide economics professor in an article to the East Asia Forum earlier this year, "including the response to the global financial crisis, the concerns which have been raised about the distribution of the benefits of growth within economies (and between them), the intersection of these developments with the climate change debate, and the twittering rate of technological change in the digital world."
APEC is continuing its traditional role of building confidence in these areas - through a process of dialogue, pathfinder initiatives, and persuasion - to make change. But as a consequence of numerous past successes, adds Findlay, "APEC has a new role as the driver of structural change."
The global economy is counting on the Asia-Pacific to continue to lead the way forward. The APEC region, "is the world's growth engine," says Nishiyama, "so it bears a great responsibility for the future course of the global economy, and the livelihoods and welfare of many."
In the coming days, APEC Leaders will meet again for the 18th time in Yokohama, Japan. Discussion on the APEC Growth Strategy is likely to be at the top of the meeting's agenda.
Over the years, APEC has proven that by working together the region's economies can generate robust growth. Now APEC Leaders are poised to show the world that growth can also be balanced, inclusive, sustainable, innovative and secure. Indeed, the APEC region is well placed to demonstrate its global leadership. With a resilience that has led the world through the economic crisis, APEC's next endeavor will be to redefine growth - and in doing so, APEC will likely serve as an example to economies and regions around the globe.
These figures were sourced from the IMF's October 2010 "Regional Economic Outlook: Asia and Pacific, Consolidating the Recovery and Building Sustainable Growth" report.
Takashi Omori, "Smaller Enterprises are Key for Regional Growth Strategy," Financial Times, September 9, 2010.