Economic Expansion and Poverty Reduction Over the past half-century, Asia has become the world’s standard-bearer for both economic expansion and poverty reduction. Asia has made tremendous growth that accompanies poverty reduction.

Asia’s Economic Profile

In 2020, the Gross Domestic Product (GDP) of Asia was greater than the GDP of the rest of the world combined. Experts estimate that by 2030, the Asia-Pacific region will account for 60% of the world’s economic growth.

Tremendous economic growth is not a new phenomenon in Asia. In fact, since 1960, Asia’s economy has grown at a higher rate than any other continent. East Asia’s economy, specifically, has exceeded the rest of the world over the same time frame. Japan kickstarted Asia’s period of growth after World War II. Soon after, the “four dragons” —  Taiwan, Singapore, Korea and Hong Kong, emerged. The dragons each experienced tremendous and sustained economic growth in the latter half of the 20th century. In 1978, China opened its economy to the world, marking a huge leap forward for Asia’s economy.

With economic growth comes an increase in prosperity as the Asia-Pacific region is home to 90% of the world’s new members of the middle-class. While Asia’s economic prospects are tremendously promising, economic growth does not always translate into advancements in quality of life. Poverty reduction is an essential component of improving living standards and poverty reduction in Asia has been an important focus for Asian governments.

Poverty Reduction in Asia

Since the beginning of Asia’s period of tremendous economic growth, the region has seen similarly tremendous progress in poverty reduction. Asia continues to lead the world in poverty reduction.

No single country is more responsible for this achievement than China. In the last 30 years, more than 700 million people in China have made it out of extreme poverty. On a shorter time scale, China’s efforts to reduce poverty have yielded similarly promising results. From 2015 to 2019, China reduced poverty from 5.7% to 0.6% of the total population. In February 2021, China officially celebrated the end of absolute poverty, defined as the level at which a person cannot afford to meet their basic needs like food, water, healthcare, education and more.

Room for Improvement

Economic growth is not solely responsible for the successes of poverty reduction in Asia. In fact, as economic growth has progressed, Asia has actually experienced diminishing marginal returns in poverty reduction. In other words, as Asian economies have continued to grow, the growth has had a reduced effect on poverty reduction rates. Economic expansion and poverty reduction do not always happen equally. Policy is still needed to ensure poverty does not become a hidden issue. Despite all the expansion of the past 50 years, poverty in Asia is still a significant problem.

Asia’s progress in reducing poverty has been substantial but continued efforts are needed to truly eradicate poverty with further progress. There are still more than 320 million people in Asia who live in extreme poverty, defined as less than $1.90 a day. Furthermore, the COVID-19 pandemic has negatively affected poverty reduction in Asia. A World Bank report in September 2020 estimated that for the first time in 20 years, poverty could rise in East Asia. It estimated that as many as 38 million East Asian people could fall below the $5.50 poverty line. As such, continued focus on poverty reduction efforts is crucial, now more than ever.

Leo Ratté
Photo: Flickr

Poverty in Southeast AsiaCambodia and other Southeast Asian nations struggled economically well before the pandemic and COVID-19 threatens to send millions of people further into poverty.  The Southeast Asia Strategy Act shows the United States’ commitment to supporting Southeast Asian nations in an effort to promote peace and stability and alleviate poverty in Southeast Asia.

The Association of Southeast Asian Nations (ASEAN)

The Association of Southeast Asian Nations (ASEAN), an inter-governmental organization made up of 10 member states, has worked for decades to facilitate economic growth and prosperity in Southeast Asia. Established in 1967 in Thailand, ASEAN was originally comprised of five member states: Indonesia, Malaysia, the Philippines, Singapore and Thailand. Over the next several decades, ASEAN membership grew to 10 nations. This happened when Brunei Darussalam, Cambodia, Lao PDR, Myanmar and Vietnam joined the partnership.
The primary aim of ASEAN is to encourage economic cooperation, development and growth in Southeast Asia. ASEAN member states also work together to facilitate the more effective usage of agricultural resources in the region, fostering growth in trade between ASEAN member states and the international community at large.

Finding Security

After the United States pulled out of the Trans-Pacific Partnership (TPP) in 2017, safety, security and economic prosperity have been uncertain in the region. This led to fears of increased Chinese aggression and dominance in Southeast Asia. ASEAN member states are seeking reassurance that the United States will help the states maintain economic independence from China.

The Southeast Asia Strategy Act, introduced in the House by Reps. Ann Wagner and Joaquin Castro on February 15, 2021, aims to reaffirm the United States’ support for ASEAN member states. The Southeast Asia Strategy Act, which passed in the House in April 2021, would mandate that the federal government “develop and submit to the appropriate congressional committees a comprehensive strategy for engagement with Southeast Asia and ASEAN.” The strategy must include a description to expand “broad based and inclusive economic growth” in the region.

Importantly, ASEAN member states invest heavily in the United States economy — more than China and India combined. These states collectively generate more than half a million U.S. jobs. The United States has never articulated a “comprehensive strategy” in the region before. However, “ASEAN diplomats and U.S. think tanks are eager for the U.S. to be on the record about its plans to engage with ASEAN.” The Southeast Asia Strategy Act would prompt the United States to do just that.

Working Together

ASEAN’s work to facilitate economic growth in Southeast Asia is vital. An ASEAN report in 2020 emphasized the commitment of ASEAN member states to providing a “social protection framework” that is responsive to emerging risks and vulnerabilities in the region, including climate change, disasters and economic crises. According to the report, the social protection framework would help protect citizens from destitution, poverty and decreasing income rates.

By working together, ASEAN member states have made strides toward reducing poverty in Southeast Asia, improving childhood health outcomes and increasing access to higher quality basic education. Thailand improved rates of child stunting from 25% to 11% over a span of 30 years. This was through specific community-based nutritional initiatives in poverty-stricken areas. In addition, Vietnam’s remarkable basic education system shows the benefits that ASEAN member states bring about for citizens. This was successful in part “due to the nation’s commitment to education reform and substantial public spending.”

The Road Ahead

The United States’ support of ASEAN member states is crucial in the effort to mitigate the economic impacts of COVID-19. This is also needed to support future economic growth and prosperity in Southeast Asia. Mandating that the United States federal government devise a cohesive strategy will help in the support of ASEAN member nations. The Southeast Asia Strategy Act will fight poverty in the region by encouraging the United States to help. This will assist in facilitating the important work ASEAN has done to support economic growth over the past several decades.

Thomas McCall
Photo: Flickr