japan and asean · japan and asean (challenges) to raise gdp per capita, productivity must grow:...
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Japan and ASEAN:Toward Next 50 Years
Tomoo KikuchiLee Kuan Yew School Public Policy
October 24, 2017
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The 21st century is predicted to bean “Asian century,” where Asiaproduces more than 50% of globalGDP in absence of major militaryconfrontation or war. (ADB)
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1 50 years is a long time
2 Linear projection and itslimitation
3 Multi-polar world
4 Japan and ASEAN
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Population Share World Bank, UN
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Population share forecast
1960 2065China declines 22% 12%India rises 15% 18%ASEAN-5 levels off 7% 8%Japan declines 3% 1%
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GDP Share World Bank, Constant USD 2010
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GDP share
1960 2016US 28% 22% (0.8x)China 1% 12% (12.0x)Japan 7% 8% (1.1x)ASEAN-5 1% 3% (3.0x)
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How long will it continue?
• China’s meteoric rise
• Japan’s lost 2.5 decades
• ASEAN’s gradual rise
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GDP Share World Bank, Constant USD 2010
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GDP share forecast
2016 2065US 22% 20%China 12% 18%Japan 8% 10%ASEAN-5 3% 5%
China’s and ASEAN’s potentialunderestimated?
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Share in ASEAN Trade ADB
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Share in ASEAN trade
1990 2015 2040US 21% 9% -2%China 2% 18% 30%Japan 17% 8% -5%
Clearly not sustainable: Industrialtransition. Evolving global supplychains.
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Conclusion 1
China and India will have a greaterinfluence on ASEAN but the US,Japan and EU will continue to bepresent. (technology, innovation andinstitutions)
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GDP per capita World Bank, Constant USD 2010 (thousand)
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GDP per capita (thousand USD2010)
1960 2016US $17 $52 (3x)China $0.2 $7 (35x)Japan $9 $48 (5x)ASEAN-5 $0.8 $5 (6x)
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GDP per capita World Bank, Constant USD 2010
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GDP per capita (thousand USD2010) forecast
2016 2065US $52 $85 (1.6x)China $7 $10 (1.4x)Japan $48 $87 (1.8x)ASEAN-5 $5 $8 (1.6x)
Divergence. China’s and ASEAN’spotential underestimated?
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China grows old before grows rich?
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Conclusion 2
China slows down considerably andtransits to a consumption-driveneconomy. (aging, diminishingmarginal product and other supplyside constraints)
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• Growth model: High saving, highinvestment, export-oriented,financial repression
• Centralization: Urban-ruraldivide, concentration of politicalpower
• 1.4 billion population:Resources, environment
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Conclusion 3
Japan’s economy shrinks relative tothat of China and ASEAN butcontinues to export technology,capital and service. (finance,infrastructure, urban redevelopment,automation and other services)
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• No growth model
• Financial asset: Household $16trillion, Corporate $10 trillion
• Government debt: $11 trillion
• Population decline: 1 million(2010-2015)
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Japan and ASEAN (Some optimism)
• Demand for Japanese productand service will grow.
• ASEAN will be a source ofskilled labor force.
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Japan and ASEAN (Challenges)
• To raise GDP per capita,productivity must grow:innovation and technologicaltransfer in ASEAN.
• Declining and aging population(variation among ASEAN).
• Japan’s growth depends on howwell the Japanese economy canbe integrated into the region.
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Conclusion 4
Japan and ASEAN are highlycomplementary. (Labor and capital,demographics, natural resources,technology)
Japan needs to manage geopoliticalconflicts and to take a leadership inregional economic integration.
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