Shifting from low-cost manufacturing to economies based on knowledge, innovation, and high-end services is imperative if developing Asia is to sustain its high growth rate, experts said at a recent Asian Development Bank (ADB) seminar in Kazakhstan.
“Asia’s emerging economies can reach - and go beyond - middle-income levels by becoming knowledge-based economies like Japan, the Republic of Korea, and Singapore. Systematic investment in new information and communication, manufacturing and other technologies is needed for these countries to create and innovate themselves,” Bindu Lohani, ADB’s Vice-President for Knowledge Management and Sustainable Development said in advance of the seminar.
Developed economies have spent time and resources to move up the value chain. By drawing on best practices and latest technologies, Asia can leapfrog by, for example, shifting to smart energy grids, cloud computing, 3D manufacturing, and mobile rather than fixed-line communications.
At the same time, growing regional trade and the likelihood that the region will account for half of the global middle class and 40% of the global consumer market by 2020 means it is well placed to assimilate those technologies.
To do that, developing Asia needs to increase investment in research and development, perhaps by pooling their investments, to create innovative, competitive industries. Public funding may be needed to help companies start up.
Higher education and training need to be significantly improved to generate the skills and critical thinking processes vital to a modern competitive economy. In addition, governments need to put in place mechanisms and adopt policies that enable innovation and creativity to flourish. This includes protecting intellectual property rights, providing adequate financing options, and nurturing more flexible labor markets.