New models of inclusive growth: The end of “trade and invest first, distribute gains later”

The interplay of several factors was behind the choice of theme for this year’s issue of the Asia-Pacific Trade and Investment Report. First, the global economic crisis has caused a departure from the previous trend of high and sustained economic growth among the Asia-Pacific developing economies. This has prompted a rethink over the sustainability of an export-led growth model which depended on continuing strong demand in advanced economies. More fundamentally, the slowdown also exposed other weaknesses in the region’s dominant development approach including: a high dependency on low-priced labour; lax adherence to labour standards; high resource-intensity of production; and weak regulatory regimes with inconsistent enforcement. Second, the international community has agreed on the Rio+20 outcome document “The Future We Want” as a framework for achieving internationally accepted development goals. The document stresses the need for inclusive and equitable growth and will shape the global agenda following the United Nations campaign to achieve the Millennium Development Goals which draws to a close in 2015. Trade and investment are instrumental parts of that framework. Third, there is increasing awareness of, and objections to, the rising inequalities in the region. This points to the risks inherent in pursuing trade and investment under “business as usual” conditions; further increases in inequality are a growing threat to social stability and sustainability. Trade and investment are intimately linked with issues of employment, income distribution and inequality; hence any change in approach to trade policy will have important implications on the overall development of any market-oriented economy.

Related Subject(s): International Trade and Finance