Sri Lanka warned Asia-Pacific nations against the possibility of developed countries adopting further protectionist measures as they are confronted with the problem of slow and sluggish economic growth.
Dr. Sarath Amunugama, Sri Lanka's Senior Minister for International Monetary Co-operation was addressing over 50 nations from this region at the launch of the Asia-Pacific Trade and Investment Report for 2011 prepared by the Bangkok-based ESCAP, the largest regional arm of the United Nations system.
Dr Amunugama, the current chairman of the ESCAP Commission having been unanimously elected to the position in May this year and who was a principal speaker at the launch of this report produced by the Trade and Investment Division of ESCAP headed by Dr. Ravi Ratnayake, reiterated that the global economic downturn has had a serious impact on the economies of the developed countries.
He said this global phenomenon had compelled the developed countries to look inward to enhance domestic production and consumption.
Dr. Amunugama said that looking at vital employment figures in the developed world, especially with elections looming in some countries, one notices a worrying pattern of developed-country economies’ unable to significantly stimulate growth. This in turn could lead to calls for protectionism from within their societies and from policy makers to safeguard jobs and promote the consumption of local manufactures and produce.
He told the developing nations gathered in Bangkok that in the light of the current problems facing the developed economies, the Asia-Pacific region would need to change their strategies to keep their own economies growing.
New markets need to be found within our own populations and among the huge populations residing in the region. He plugged the idea of trade agreements between and among nations which will enhance greater sub-regional and regional trade.
Speaking earlier in the week at the opening of the Asia-Pacific Business Forum, Dr. Amunugama pointed to the urgent need to identify the comparative advantages enjoyed by the developing nations and make use of those advantages to the benefit of the developing world.
He said that comparative advantage does not only denote cheap labour for agriculture and manfactured goods that has attracted investment to the Asia-Pacific region.
It also means adaptability, the growth of science and technology, infrastructure such as roads, railways and shipping to move locally-produced goods to global markets, procurement of raw materials and connectivity. He pointed out that leading economies of Asia have succeeded in providing such "packages."
But there are other significant factors that provide such comparative advantages. One such factor now emerging is the demographic pattern of many countries. He said that population growth in developed countries is ranged between zero population growth or less than one percent growth annually.
It means that the trained industrial workforce of developed countries will be eroded with an ageing society bringing in its wake health, social and political problems. The currently emerging problems of the United States and Japan, for example, stem from this and are likely to worsen in the future.
While many developing countries too will face this demographic phenomenon eventually, they have a short-term advantage in that this "demographic window" will be open to them for about another two decades.
Dr. Amunugama urged the developing economies to prepare themselves to seize this advantage.
He thanked Under Secretary-General of the UN and Executive Secretary of ESCAP Dr. Noeleen Heyzer and her staff at the Trade and Investment Division for producing a valuable report that provided many insights to the situation in the region.