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High quality insti- that have assumed global visibility relatively recently. tutions will help the fast growing countries avoid the But, it is perhaps the single most important long-term Middle Income Trap, and the slower growing coun- challenge facing humankind this century and beyond. tries establish the basic conditions for moving toward It could affect each and every human being on our sustained economic growth. Managing the common planet, irrespective of his or her country of residence challenges—be they the delivery of quality social or income level.

Large structural changes in the world economy— 5 spurred by globalization—are accelerating the pace 4 of growth. These are being led by the integration of PRC into the world economy, which is symbolized by 3 its accession to the World Trade Organization in 2001, as well as through the opening of formerly closed 2 economies in the former Soviet Union and Eastern Europe. But globalization has not just been about 1 expanding the global marketplace. The rapid development and absorption of information, communication 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 ASIA IN THE GLOBAL ECONOMY DURING 1750-2010: SETTING THE SCENE 6 GDP growth (%) 2 -1 Source: IMF World Economic Outlook, October 2010.

But much is also attributable to productivity has slowed. growth. Asian technology levels are catching up to Taking all these trends together, the period of those in the United States (US), and that catch-up is globalization since 1990 has allowed Asia’s share in reflected in high Asian growth rates. But the absolute the world economy to grow fast. A small number of levels of total factor productivity are still far lower in Asian economies have converged toward advanced Asia than in the US. This implies that most Asian country incomes and the rapid growth of its develop- countries have a long way to go before achieving con- ing economies have allowed Asia to account for more vergence with the US, and it is therefore premature than a quarter of global output (about 27 percent).

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Asia 2050: Realizing the Asian Century by Asian Development Bank

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