The region should play a more influential role in the multilateral processes that are reforming the global architecture of finance, trade rules as well as climate change.
The launching of ESCAP’s Economic and Social Survey of Asia and the Pacific 2009 is a direct response to the financial crises. What distinguishes it from other publications is its acknowledgement of food-fuel security and climate change as converging issues with potentially significant longer-term impacts. These are referred to collectively as the triple crises. Not only does the survey provide strategic analysis of financial vulnerabilities and sources of resilience, it also states that current stimulus packages represent an unprecedented opportunity to jump-start a more inclusive, sustainable development paradigm.
The repeated and brutal downward revisions of economic forecasts have confounded all but a few of the most seasoned analysts. The survey notes that banking sector reforms and prudent macro-economic policies implemented after 1997 have left developing countries in the region better prepared to deal with the fall-out of the present financial crises. This resilience, however, started to erode when trade exports from the region declined. The Asia-Pacific is more economically integrated with the rest of the world than with itself. Intra-regional trade among developing countries accounts for only 37% of exports in our region compared to Nafta at 51% and the EU at 68%. As a result, the survey calls for more intra-regional and investment linkages so that domestic markets are strengthened to provide a secondary buffer to global market fluctuations.
During the first part of 2008, crude oil prices soared to record levels and food commodity prices increased to the highest levels in over 20 years. The resulting speculation and hoarding drove the price of rice, the region’s main staple, up by a staggering 150% in only four months. This had a disproportionate impact on the poor. This suggests a real need for the region to diversify its energy portfolio to buffer against short-term price fluctuations. Therefore, it is critical to foster mechanisms for the transfer of technical expertise in efficient and renewable energy from developed to developing countries. Doing so creates a win-win situation by addressing the three common threats of volatile energy prices, food security and climate change.
Despite the impressive economic growth of the last decade, inequalities between rich and poor have actually worsened in the Asia-Pacific, leaving millions more vulnerable to the impact of various crises. With the growing financial crisis, 24 million people in Asia and the Pacific are in danger of losing their jobs, with women and youth disproportionately affected. A worsening of the state of poverty and hunger in the region is now impossible to avoid and yet basic social protection programme coverage is low in the Asia-Pacific. It is estimated that only 30% of the elderly receive pensions and 20% of the population has access to health-care assistance.
These statistics suggest that there is a real need to strengthen social policies in order to create more resilient societies better able to face economic volatility. The provision of minimum wages, unemployment insurance and expansion of other social protection schemes will help bolster domestic demand during times of uncertainty. These social support systems need to be implemented as part of a development framework that helps create longer-term macroeconomic stability for the region.
The global crisis of climate change threatens to have even more fundamental, long-term consequences. Natural disasters, often associated with climate change stresses, struck with particular intensity in 2008. The number of deaths in the region reached 232,500 persons, accounting for a staggering 97.5% of such fatalities worldwide. One of the deadliest storms ever, Cyclone Nargis, left a heartwrenching trail of death and destruction in Myanmar: 84,500 people dead and 53,000 missing. Australia’s “big dry,” the worst drought in more than 100 years, entered its seventh year with fires causing devastation in the country’s south-east. UN studies have shown that there is a direct correlation between poverty and vulnerability to disasters. As the numbers of poor increase in our region, so too will the number of people at risk.
Although all attention is now focused on fighting the economic crisis, addressing food and fuel security issues in combination with climate change is not necessarily a contradiction in policy objectives. The Global Green New Deal promoted by UN Secretary-General Ban Ki-moon is based on the premise that investing in the green economy can generate millions of jobs while addressing the challenges associated with reducing carbon dependency, protecting ecosystems and preserving water resources. There is untapped potential for developing countries in the region to co-operate in developing affordable climate-friendly technologies the promote energy efficiency and diversify energy sources to include renewables.
Putting in place the appropriate financial incentives and regulatory frameworks regionally will help to secure energy supplies and speed up the transition to low-carbon energy systems. Further development and implementation of the ESCAP framework on renewable and sustainable energy should be given priority. The region should also play a more influential role in the multilateral processes that are reforming the global architecture of finance, trade rules as well as climate change.
The converging crises can be used to jump-start a regional reorientation towards a more inclusive and sustainable development path. Some countries in the Asia-Pacific are in a stronger position to help not only themselves but also others to smooth the impact of the crises and strengthen regional solidarity. ESCAP’s survey, launched globally on March 26, emphasises the importance of regional co-operation to develop long-term solutions.
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