Asia: Launching Pad for Tomorrow's Emerging Markets

Enduring lessons from Asia's dynamic emerging markets

Asia's low-income countries have enormous potential

New development challenges, opportunities in today's world

With the Fund predicting that Asia will become the largest economic region in the world in about 20 years, the future of low-income countries in the region is a keenly debated topic. Speaking at an IMF-sponsored conference in Vietnam earlier this year, IMF First Deputy Managing Director John Lipsky said that “the region’s developing countries should be central participants and beneficiaries … by moving up the ladder.”

The IMF is committed to supporting these countries make the transformation into emerging markets. How best to do this will be a major topic discussed at a high-level conference co-hosted by the Government of Korea and the IMF in Daejeon, Korea on July 12–13.

Min Zhu, who will open the conference session on this topic, said, “This discussion will allow us to hear a wide range of views of how Asia’s low-income countries can improve their growth prospects. We can find lessons in the path taken by today’s emerging markets in the region, but how countries take advantage of new opportunities and manage risks will also be a crucial factor in determining tomorrow’s emerging markets.”

Rise of Asia’s emerging markets

Asia has had enormous success in transforming low-income countries into emerging markets, raising their level of development and average incomes. Sustained economic growth and expanding employment opportunities have been crucial.

A 2008 report by the Commission on Growth and Development, chaired by Michael Spence who is a keynote speaker at the Korea conference, identified only 13 economies worldwide that had grown on average by 7 percent or more per year, for 25 years or longer. Of those 13 economies, nine are in Asia: China, Hong Kong SAR, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan POC, and Thailand. India and Vietnam may soon join this list.

Experience in these dynamic emerging markets points to several common success factors.

An important part of their development strategies focused on building competitive manufacturing sectors to export goods to the rest of the world. They also managed to have high rates of saving and investment, and used foreign investment as an important source of financing and new technologies.

But, according to the Commission’s report “no economy can flourish in the midst of macroeconomic instability.”...