By Ken Gewertz

Gazette Staff

Asian economic growth has been portrayed as something of a miracle, somehow taking place outside the realm of scientific explanation. However, according to a new study, the Asian miracle is not only explicable but may provide useful lessons for other regions as well.

The 300-page report, Emerging Asia: Changes and Challenges, was produced by a team of economists and social scientists from around the world, led by Jeffrey Sachs, director of Harvard Institute for International Development, and David Bloom, deputy director. The study was sponsored by the Asian Development Bank, in celebration of its 30th anniversary.

"This report helps to debunk the myth that Asia's development and growth has been magical," said Sachs. "Likewise, it shows that those who predict that the region's economies will crash are also off-base. I am hopeful that this study will encourage Asian policymakers to take pride in their success and fix those areas in need of remedy. This report provides useful lessons for other parts of the world, too, and offers insights as to how Asia's success might be replicated."

Drawing on extensive data from countries throughout the region, the report shows that Asia's transformation was remarkable by historical and global standards, but not miraculous. Good policy choices, particularly in the areas of trade promotion, manufactured exports, sound macroeconomic management, and well-functioning institutions, underlay the region's success stories.

Crucially important, too, according to the report, were the rapidly improving health of the population and the region's demographic shifts. Dramatic decreases first in mortality rates and later in fertility rates have led to a temporary boom in the proportion of the working-age population. For the most part, Asian countries have succeeded in putting this population to work, thus spurring economic growth and widespread improvement in the quality of life.

Aside from historians of Asia and other experts, few realize that as recently as 1820, China and India together produced 58 percent of world output. However, these two countries and much of the rest of Asia turned inward when Europe and the Americas expanded foreign trade during the Industrial Revolution. As a result, Asia fell behind, and by the end of World War II, it accounted for only 19 percent of world output.

Projecting into the future, the report shows that growth is likely to slow down in East Asia but that South Asia may be poised for a period of unprecedented development. Overall, careful policy choices may push Asia's share of total world output to approximately 57 percent by the year 2025, compared with 37 percent in 1992.

But Asian policymakers, the report concludes, will need to steer carefully in the coming decades to avoid problems that often accompany rapid growth. One area of particular concern is environmental management. The report stresses that the deteriorating urban environment is especially in need of attention (13 of the world's 15 most polluted cities are in Asia), and that governments should increasingly employ market mechanisms to control pollution.

The report addresses a number of other crucial areas, including education, health and nutrition, gender equality, the family, aging, population policy, labor markets, and pensions, suggesting ways in which Asia will need to adapt its institutions to the changing international environment.

Copies of the report can be ordered from the Asian Development Bank through its Information Office, P.O. Box 789, 0980 Manila, Philippines. For more information, please call the HIID Publications Office, 495-3287.