MDG's success depends on critical initiatives

Well, indeed China's economy is already overtaking the United Kingdom. And by 2040, will be larger than the United States, according to Goldman Sachs. India, the emerging giant is gaga to surpass the Japanese economy by 2032. In total, Asia not only accounts for 40% of the world's population, but also totals a fifth of global production.

This phenomenal growth of the Asian economy is not the whole story, of course. For all its achievements, Asia unfortunately remains home to two-thirds of the world's poor who live on less than a dollar a day.

Despite this accelerating growth, the UK Department for International Development predicts that by 2015 some 309 million South Asians and Chinese will still live in poverty.

Thus, if the Millennium Development Goals (MDGs) were to be realised, Asia would be a good place to start. To speed up this, both the politics and economics of the region will have to be regulated in a "pro-poor" direction -- rather than running along the contours of Beijing, Delhi and Tokyo politics.

On the other hand, inequality levels are currently rising in Bangladesh, Indonesia and Vietnam -- while poverty is rising sharply in China's rural provinces.

The result has been to go of the track of several income and non-income MDG targets for human development such as in hunger, Measles, Mumps and Rubella (MMR) and sanitation.

Such inequality is encircled by corruption, increasing disparities gender, caste, religious, ethnic and social discrimination that reduces people's ability to benefit from economic growth.

Another significant problem is governance, with the Kaufman, Kraay & Mastruzzi (KKM) Index showing that corruption and political instability are never far removed from the Asian political landscape.

Even assuming a "Golden Era" for Asia -- where growth rates continue to rise and political conflict is held in suspension -- disparities will increase between regions within the larger countries.

Migration will increase rapidly to where the jobs are found. And South Asia would still have over 268 million people in poverty by 2015. Should growth rates dip by a mere 1%, many countries would not even halve their income poverty.

Per capita incomes will thus remain low, and although total spending power will be significant, the average consumer will not feel the benefits in a situation where the biggest economies do not translate into being the richest. Worse still, Asian growth is also starting to come without extra job creation.

Critical initiatives like removing corruption, redistribution policies, fiscal transfers and infrastructure provision are required for in countries across Asia. Improving participatory political structures in a stable manner will also be essential to Asia's success.

Beside, other policy requisite include improving the role of the private sector, improving the effectiveness of the state through improved public spending and most importantly promoting internal and international trade.

It is only with such effective firewalls in place that climate change, natural resource depletion, the spread of diseases and the impact of economic shocks can be marginalised.

Thus, if the Millennium Development Goals (MDGs) are to be realised, Asia would be a good place to start. This is true for states that, while crossing from Low-Income Country (LIC) to Middle-Income Country (MIC) status, remain precariously balanced at the bottom end of the middle-income scale.

India and Vietnam will keep a sharp focus on this challenge around 2012-14 as they make the transition, as will Pakistan and Bangladesh around 2020.

According to the Asian Development Bank (ADB), no less than 15 trade and investment initiatives have been sealed in Asia since 1998 -- with a further 20 under negotiation and 16 more proposed.

Much of the drive for such bilateral trade agreements has come from Japan in a bid to counter China's regional influence.

Even assuming a "Golden Era" for Asia -- disparities will increase between regions within the larger countries.

Koizumi has plans to conclude a further 15 agreements by the end of the year, including one with ASEAN by 2010. South Korea already concluded such an agreement at the start of 2006.

The use of bilateral agreements undoubtedly creates new trade opportunities, but they can also often end up diverting trade from one country or region to another.

Any pause in Asian growth would have global implications for commodity prices, inflation and productivity.

If corruption, redistribution policies, fiscal transfers and infrastructure provision enacted across Asia, it will become all the more critical -- if growth is to remain sustainable. This will be a major factor underlying Asia's delicate social, political and economic balancing act.

Billy I Ahmed is a researcher.