Emerging Markets in Asia Need to Adapt Their Growth Model in a Post-COVID World
HKUST IEMS Policy Briefs No. 3
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Key Points
- Asian emerging markets have prospered with an economic model that was heavily leveraged to a particular model of globalisation, notably through integration into global supply chains of manufactured goods.
- This export-led model is now under significant pressure as globalisation continues to change. These dynamics have been strengthening for some time as the capital intensity and sophistication of production increases. This reduces the importance of low wage and cost structures and suggests that human capital and specialist supply chains are more important.
- Covid-19 will accelerate this process, with an accelerated transition to digital technologies and automation – and growing pressure in some advanced economies to bring production home. Some economies will struggle to adjust to these new competitive realities. More developed Asian economies are more likely to be able to successfully transition than less developed emerging markets.
- New economic strategies will be required in many Asian emerging markets in response. First, upgrading of existing sectoral strengths is required to respond to new competitive realities, together with the development of new growth engines. Second, a sharper focus on regional markets, catering to the preferences of the Asian consuming class. And third, improving productivity in the domestic economy in addition to an export-led model.
About the author
David Skilling is the founding Director of Landfall Strategy Group, an economic and policy advisory firm that works with governments, firms and financial institutions in Asia, the Middle East, and Europe, with a specific focus on small advanced economies. David has previously worked in various roles in the New Zealand Government, founded an independent economic think tank in New Zealand, and was with the McKinsey Global Institute and McKinsey & Co in Singapore.
David holds a Ph.D. in Public Policy, and a Master in Public Policy degree, from Harvard University, as well as a Master of Commerce degree in Economics from the University of Auckland. David was named as a Young Global Leader by the World Economic Forum in 2008.
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