Still Achieving, Still Pursuing: The Global Consequences of Asian Growth, Remarks by Anne O. Krueger, First Deputy Managing Director, IMF
December 14, 2005
Remarks by Anne O. Krueger
First Deputy Managing Director, IMF
To the Asia Society, Hong Kong
December 14, 2005
Good afternoon and thank you for that kind introduction. I am pleased to have the chance to address the Asia Society in Hong Kong-the first time, for me, although I have visited your sister organization in New York on more than one occasion.
As you know, I am in Hong Kong to attend the opening sessions of the World Trade Organization's Ministerial meeting. A successful outcome to the Doha development round of trade negotiations is, I believe, vital for the future stability and growth of the world economy. I will say more about the Doha round later.
But let me say now that I believe it is entirely appropriate that this Ministerial meeting, critical for the future of the Doha negotiations, should be taking place in Asia. Asia's economic record and dynamism is the best tribute I can think of to the benefits that the multilateral economic framework established at the end of the Second World War can bring for all the world's citizens.
Today I want to put Asia's splendid economic success in context. I propose to start by reviewing the dramatic transformation of Asia's economies over the past several decades. I want to examine what the Asia experience has taught all of us around the world. And I want to assess the implications of this region's impressive economic performance both for Asia and for the world as a whole. Along the way, I will say something about the Doha negotiations and, also, about the IMF's relationship with Asian countries.
The Asian transformation
A few hours in this bustling, modern metropolis with its hi-tech sky-scrapers and its traffic is enough to remind one of Asia's economic vibrancy. Of course, Hong Kong has characteristics that make it unique: the exceptionally beautiful natural setting, the ferries going back and forth across the bay, the food markets. But in other respects, Hong Kong has much in common with many places around the world: five star hotels, sophisticated shops and restaurants, cell phones and other technology wherever you look. If this isn't an example of economic success, I don't know what is. What's more, you could travel to many other places in Asia and experience the same phenomenon-Tokyo, Seoul, Singapore all strike the visitor as busy, modern and prosperous cities.
But now cast your minds back fifty years or so. In the 1950s, this was a continent largely made up of poor, and relatively backward, countries. Living standards were low in relation to many other parts of the world. Per capita GDP in Asia as a whole was about 40 per cent of that in Europe and barely one sixth of that in the United States. But we tend to forget that Asian per capita GDP was barely half that in South America, and that many African countries had higher living standards than most Asian countries.
That starting point makes Asia's transformation over the past five or six decades all the more remarkable. Of course, the Asian continent is anything but homogenous and when we talk about Asian growth we are actually using shorthand for a wide range of growth experiences. The rich variety of cultures to be found on this continent is matched, in many ways, by wide variations in economic performance.
Yet given this variation it is striking how much similarity there is in the end result and, as I shall come to shortly, in the way that result was achieved. Different Asian countries have started to grow rapidly at different points in time. But many of them have experienced rapid and sustained growth that has made possible dramatic rises in living standards and reductions in poverty. Since 1950, per capita incomes in Asia have grown roughly twice as fast as the United States.
Japan took off first, in the 1950s. It is now the world's second largest economy, with one of the highest per capita incomes. So it is easy to forget that while Japan was richer than many of its Asian neighbors in 1950, its per capita GDP was less than one third of that in the United States. By the then historical standards, Japan's rapid growth in the 1950s and 1960s was unprecedented. Real GDP grew on average by more than 8 percent a year in the 1950s and by around 10 percent a year in the 1960s. Between 1950 and 2003, real per capita GDP, in 2000 US dollars, grew eleven fold.
Though it started later, Korea's record was even more remarkable. From being one of the world's poorest countries-and the third poorest in Asia, the Korean reform program introduced in the early 1960s led to rapid growth over a remarkably sustained period-real GDP grew by around 8 per cent a year on average for more than thirty years. Real per capita GDP grew by eleven fold between 1960 and 2003-that is, even more rapidly than in Japan.
Singapore, Thailand, and Malaysia soon followed, recording rapid rates of growth. And the pattern of rapid growth has been repeated in most Asian economies, at different times, and from different starting points. Here in Hong Kong, in a little over four decades, real GDP per capita, in constant US dollars, has risen more than eightfold[: from around $3,000 in 1960 to getting on for $26,000 in 2003]. So Hong Kong's real GDP per capita has gone from just over one fifth of that in the United States to almost three quarters-a significant narrowing of the income gap.
Indonesia, still one of Asia's poorer countries, experienced real GDP growth of 8 percent a year on average during the 1970s and 5.5 percent during the 1980s. And the much smaller and much poorer Vietnam has recorded rapid rates of growth since economic liberalization started. Average annual growth in Vietnam has ranged from just under 6 percent a year in the 1980s to above 7 percent a year more recently.
And, of course, we have seen [mainland] China growing rapidly, following economic liberalization. Real GDP grew by more than 9 percent a year over the twenty five years from 1978, and per capita incomes have risen sevenfold. And as India started a program of economic reforms in the early 1990s, so its growth rate accelerated, to 6 percent or more a year. Since the 1990s, India has been one of the most rapidly growing developing economies.
Common features of Asian progress
The Asian growth experience has, with few exceptions, been remarkable to behold. Many observers attribute much of the success that Asian economies have experienced to what we might call cultural characteristics: hard work, determination, consistency, single-mindedness, adaptability. These are all important elements in contributing to economic success. But they were always there. The most powerful explanation for Asia's economic performance in recent decades has surely been the change to sound economic policies: in particular openness to trade combined with an economic framework that brings macroeconomic stability and that establishes appropriate incentives for individuals and firms and encourages flexibility.
It is hard to overstate the role played by economies opening up to trade and becoming outward-oriented in the Asian economic miracle. No country-in Asia or anywhere else-has achieved sustained, rapid growth without such an opening up of the economy. It is all too easy, when trying to keep up with the nitty-gritty of the Doha negotiations, to overlook the basic fact that the expansion of trade has driven, and continues to drive, economic growth. This is true at the global level-world trade growth has consistently outpaced the growth in global GDP. And it is true at the national level. Time and again in Asia (and elsewhere) we have seen the close correlation between the introduction of economic reforms-in Korea, Chile, India, China, for example-and the sharp acceleration of economic growth.
In fact, as I noted earlier, Asian countries have benefited greatly from the multilateral framework put in place after the Second World War. The founders of the Bretton Woods institutions-the IMF and the World Bank-recognized the importance of international financial stability as a prerequisite for growth. The Fund was charged with promoting macroeconomic and financial stability. But these tasks were seen as means to an end-the ultimate objective of the creators of the postwar economic order was always more rapid growth, and thus rising living standards, poverty reduction and full employment.
And an integral element of the postwar vision was a multilateral free trading system based on the principle of progressive trade liberalization. As trade barriers gradually fell after the Second World War, so growth accelerated. Asian growth performance has been so impressive because governments across Asia came to recognize that sound macroeconomic policies accompanied by trade liberalization would bring substantial rewards in terms of more rapid growth.
But those policies brought rapid and more significant benefits than they would have had world markets been growing more slowly-that is without multilateral liberalization and the growth it engendered. Global growth was so rapid because of the opportunities offered by the multilateral trading system. The founders of that system had taken to heart the damage inflicted on the global economy by the protectionist, beggar-thy-neighbor policies of the large industrial countries in the 1930s. Instead of promoting growth, such policies had helped intensify the Great Depression.
In Korea the single-minded commitment to economic reform, crucially starting with trade liberalization, enabled the economy to grow at sustained rates previously unheard of anywhere in the world. For the decade from 1959, export earnings grew at 41 per cent a year on average. Since 1970, exports have grown at close to 20 percent annually. In 1960, exports accounted for 3 per cent of GDP: by 1980, the export share was one third of GDP. And for the ten years from 1963, real GDP growth averaged more than 9 percent a year.
Chinese exports have grown at an annual average rate of nearly 18 percent since 1970, with exports accounting for more than a third of GDP in 2003. In 1980, China's share of world trade was less than 1 percent in 1980; by 2003 it had risen to nearly 6 percent. By then, China had become the second largest Asian exporter, after Japan.
And when, in the 1990s, India started to move rapidly away from its inward-looking past and started to embrace openness-liberalizing trade and encouraging enterprise--exports rose sharply in consequence. In 1992, Indian exports were less than half of one percent of total world exports. This year they are likely to be almost one and a quarter percent. As a share of GDP, India exports more than doubled between 1990 and 2003, to nearly 15 percent. Asia as a whole accounted for just under 16 percent of world merchandise exports in 1980: by 2003, that figure had risen to over 28 percent.
Export growth has been widespread. In Pakistan, exports have grown at an annual rate of nearly 10 percent since 1970, with exports as a percentage of GDP almost tripling, to more than 20 percent between 1970 and 2003. Bangladesh experienced export growth of nearly 12 per cent a year on average over the three decades to 2003.
Rising living standards
Rapid growth has brought enormous benefits in terms of rising living standards and poverty reduction. Even in 1950, Hong Kong's literacy rate was higher than that of many Asian countries: but it was only around 60 percent. The latest figures show a literacy rate of almost 95 percent. The infant mortality rate here is one of the lowest in the world, at 3 deaths per 1,000 live births. And life expectancy is a remarkable 80 years, again one of the best in the world.
Dramatic improvements in the quality of life have been repeated across Asia, as poverty rates in most countries have fallen, and living standards have risen. In the two most populous countries in Asia, China and India, rapid growth in the 1990s lifted more than two hundred million people out of poverty. In East Asia, including China, there were one hundred and fifty million fewer people living on a dollar a day in 1998 than there were in 1987, and nearly two hundred million fewer living on 2 dollars a day. In the eight years from 1988 and 1996, the percentage of Thai citizens living on or below a dollar a day fell from nearly 18 percent to just 2 percent. In Pakistan it fell from almost 50 percent in 1987 to below 14 percent in 1998. In Indonesia, in 1987, three quarters of the population survived on 2 dollars a day or less. By 2002 that ratio was down to a little over half.
As another indicator, literary rates have improved sharply. The literacy rate in China has risen from just over 50 percent in 1970 to over 90 percent on the latest figures. In India, fewer than 20 percent of adults were literate in 1950: now the figure is heading towards 60 percent. Indonesia has seen its literacy rate rise dramatically: in 1950 about 20 percent of all adults were literate; now more than 85 percent are. In Singapore a little more than half the adult population was literate in 1950: now that figure is above 90 percent. The Philippines, Thailand, Vietnam-and, of course, Korea-all have adult literacy rates of over 90 percent.
It is a similar story with infant mortality rates. Like Hong Kong, Singapore now has an infant mortality rate of 3 deaths per 1,000 live births-down from 35 in 1960. Korea's rate fell from 90 deaths per 1,000 live births in 1960 to 5 in 2000. Infant mortality in China was 150 deaths per 1,000 live births in 1960: it has fallen to 32. Even in those countries where infant mortality rates are still relatively high, the improvements have been substantial. Indonesia had an infant mortality rate of 128 deaths per 1,000 births in 1960. It has been reduced to 35. In Thailand, the infant mortality rate was more than 100 deaths per 1,000 births in 1960: the rate has fallen to 25. In India in 1960, the infant mortality rate was 146 per 1,000 live births and has now fallen to 68. And the infant mortality rate has almost halved in Pakistan since 1960, although it remains relative high, at 74 deaths per 1,000 births.
Life expectancy has also risen sharply among Asian countries. In China, life expectancy at birth has risen from around 40 years in the early 1950s to more than 70 years now; in India it has risen from below 40 years to around 64 years over the same period. In Indonesia it is now about 67 years, up from less than 40 years in the early 1950s. Life expectancy is close to, or significantly above, 70 years in Korea, Malaysia, the Philippines and Vietnam: all countries where it was below 50 years in the early 1950s.
Some poorer Asian countries, such as Pakistan and Bangladesh, have found sustained rapid growth more elusive, and their population growth has made it more difficult for them to narrow the income gap with rich countries. Yet even in these countries, growth enabled rising living standards. Both Pakistan and Bangladesh have seen a marked increase in life expectancy: it is up to around 64 years in Pakistan, from 45 years in 1962.
Though some countries have moved at a slower pace than others, it is clear that Asia as a whole has indeed experienced a dramatic transformation. This change has, in general, been one based on sound economic policies, of which trade liberalization has been the single most important. It's true that trade liberalization would not have been anything like as effective without macroeconomic stability and economic policies that foster competition. But trade liberalization encourages those policies and the potential benefits from liberalization provide strong incentives for putting the appropriate policy framework in place.
Of course, the going hasn't always been smooth. Economic success brings fresh challenges and economic structures and policies sometimes adjust more slowly than they should to meet those new challenges in a timely manner. In Asia, as elsewhere, policymakers have to adapt as our understanding about how economies work, and interact, increases.
But even painful experiences can offer lessons that will strengthen the growth potential of economies, and make them more resilient in the future. The Asian financial crises of the late 1990s were certainly painful for those countries affected. But it taught all of us a great deal about what is needed to deliver enduring macroeconomic stability and sustained rapid growth. And it left the countries that implemented the lessons from the crisis stronger and better equipped to handle downturns and shocks.
The crisis directly affected a relatively small number of countries: Korea, Thailand and Indonesia were the worst hit. For those countries years of spectacular growth ended in a dramatic series of national financial crises. But the crisis had an impact well beyond the countries involved, not least because it was shocking to see economies that had experienced such rapid growth over such long periods suddenly appear so vulnerable.
The proximate cause of the crisis was the sudden sharp reversal of capital flows to the region. Net inflows to the Asian crisis countries were over 6 percent of their GDP in 1995, and just under 6 percent in 1996. In 1997, net outflows were 2 percent of GDP, a figure which rose above 5 percent the following year. The economic dislocation caused by the sudden reversal was huge, and would have been so for any country.
But the turnaround in investor sentiment was not, as some have argued, wholly capricious. There had been a huge expansion of credit over a relatively short period of time. Rapid credit growth is almost always indiscriminate and, therefore, dangerous. The result had been a sharp rise in the number of bad loans. The rate of return on capital had fallen and, n time, NPLs rose. As international creditors saw countries whose fundamentals were less sound than had previously appeared to be the case, a rapid reassessment of the creditworthiness of debtors and loan exposure was inevitable.
Several factors conspired to make the consequences of this shift in investor sentiment extremely painful. Fixed exchange rates prevented a more rapid adjustment to the shift in capital flows. Government assurances that exchange rate pegs would be maintained left currency mismatches unrecognized until governments were forced to devalue. Banks had built up liabilities in one currency and assets in another. Devaluation then left financial institutions and businesses facing massive losses, or insolvency. The weaknesses of domestic banking systems were revealed-as was the impact on economic performance.
The contraction in GDP that most crisis countries experienced made things even worse, of course, because the number, and size, of non-performing loans grew rapidly. The further weakening of the financial sector inevitably had adverse consequences for the economy as a whole. In short, the crisis economies found themselves in a vicious downward spiral.
But the crisis forced policymakers to confront the structural weaknesses that had been exposed and undertake reforms, the momentum for which had been lacking before the crisis erupted. By tackling policy failures quickly and boldly, the Korean authorities laid the groundwork for a rapid recovery. Within two years, Korean GDP was back to pre-crisis levels-a remarkable achievement in the circumstances. Indonesia, the last of the crisis countries to complete its Fund-supported program, was able to exit at the end of 2003.
Taken together with other capital account crises of the 1990s, the Asian crisis offered valuable lessons. First, there is no getting away from the importance of a sound macroeconomic framework, including appropriate monetary and fiscal policies. The crisis countries now have better macroeconomic frameworks in place. Monetary policy has become more focused. Fiscal policy reforms have been undertaken. Second, macroeconomic stability is difficult to sustain without an appropriate exchange rate regime. Floating exchange rates make possible more rapid adjustment in the event of shocks. Third, a fixed exchange rate regime must be complemented by appropriate monetary and fiscal policies. If it is not, the economy will lack the flexibility to respond to shocks without a sharp slowdown in growth or even a contraction in output.
A fourth important lesson was the vital importance of a healthy financial sector. As economies become more sophisticated, so the role played by a strong, deep, financial sector in allocating resources efficiently becomes ever more important. We also now appreciate even more than before the importance of a healthy corporate sector-and how much this matters for the soundness of the financial sector. A weak financial sector cannot be nursed back to health if persistent weaknesses in the corporate sector are ignored. Low profitability and poor management in the corporate sector will simply result in more bad loans, undermining any attempt to clean up bank balance sheets.
So a strong, well-regulated financial sector means addressing difficult issues such as non-performing loans; capital adequacy; and effective supervision. Financial institutions need the appropriate incentives to develop the skills required to assess and manage credit risk and returns. Effective bankruptcy laws-that strike the right balance between creditors' and debtors' rights-need to be in place.
Asia and the world
The lessons of the Asian crisis in terms of policy reform were important for their own sake. Those countries that reacted speedily to the policy shortcomings revealed by the crisis also recovered most rapidly. And the consequences of the shortcomings in some policy areas opened the eyes of policymakers elsewhere in the world. Fewer countries now rely on fixed exchange rate regimes. The importance of a stable macroeconomic framework is widely recognized. And we have all become much more conscious of the need for strong and well-functioning financial sectors.
But the Asian crisis arguably had another important dimension as well. The shockwaves it sent around global financial markets were an important reminder of how much more significant Asia had become for the world economy. We all knew about the remarkable success stories in individual Asian economies. Some of us perhaps failed to recognize quite how important Asia as a region has become.
Yet it stands to reason: even from a relatively low base, rapid growth across a significant number of countries is likely to have an impact on the distribution of global output. In 1960, the ten biggest Asian economies accounted for just over 12 percent of world GDP. Twenty years on those countries' share had risen to 20 percent; and today it is around a quarter-and growing.
It is growing, in part, because Asian policymakers continue to be adaptable and quick to learn from their own mistakes, and those of others. Emerging market Asia is today one of the most rapidly growing regions of the world economy and has played a major part in the continuing buoyancy of the world economy. As Asia has become an increasingly important region, in terms of economic weight, so we have seen Asian governments strengthen their call for a greater formal role in international affairs-not least in the councils of organizations like the International Monetary Fund.
The Fund management's position on this issue is clear. We recognize that Asia has a powerful and legitimate claim to greater weight in the Fund than allowed for under the current rules. Asia has a voice, of course: it wields considerable influence in Fund discussions. But it is clearly under-represented. This issue is firmly on the agenda of the Fund's shareholders ahead of the next Annual Meetings, in Singapore next year.
What the world needs from Asia
Asia can make its influence felt in many ways, however. I discussed earlier the important contribution that the multilateral framework had made to Asia's economic success. The rapid growth that Asian countries experienced would have been slower without an open world trading system, and without the sustained and rapid rise in global GDP. The six decades of growth that the world has benefited from is a direct result of the multilateral economic framework adopted at Bretton Woods, and certainly permitted more rapid growth..
By harnessing the benefits of a rapidly expanding global economy, policy refirms in Asia enabled high rates of growth. And Asia, in turn, has contributed significantly to the rapid expansion of global trade. In doing so, Asian countries have acted as a model for others to follow. It is clear that the lessons from Asia's experience can be applied in many other parts of the world; and this is especially true of those regions that have yet to attain the sustained rapid growth that Asia has achieved. Sustained rapid growth is essential for poverty reduction: and Asia's experience is a reminder of what growth can do.
It is vital that today all those who have benefited from the open trading system of the postwar era work to ensure its survival and further growth. Doing so will enable continued benefits for economies that have grown rapidly; and it will provide better opportunities for those countries that have yet to experience more rapid growth the opportunity to adopt appropriate policies and gain from the further rapid expansion of global trade.
The progressive elimination of tariff and non-tariff trade barriers-mainly in manufacturing-has been a persistent feature of the international trading system under the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization. It is no coincidence that the sharp fall in tariff rates and the removal of quantitative and other restrictions that took place in successive rounds of international trade negotiations were matched by an unprecedented expansion in global trade. They were inextricably linked: one would not have been possible without the other, and together they created a virtuous circle, with expanding trade stimulating growth and growth creating a favorable environment for further trade liberalization.
In 1947, average tariffs on manufactured imports among the industrial countries were over 40 percent. These tariffs were progressively reduced, so that by the late 1990s they had been lowered to less than 5 percent in the main industrial countries-the European Union, the United States, and Japan. As the newly-industrializing countries (NICs) embarked on successful development strategies, they too began reducing their levels of protection. Today, average protection in most of the developing world is far below what it was a decade or two ago.
At the start of this new century, world trade was worth around $8 trillion-25 per cent of global GDP. That compares with $1.5 trillion, in comparable dollar terms, in 1970, and 13 per cent of world GDP. According to the WTO, the volume of world trade in 2000 was 22 times that of 1950. Merchandise exports have grown by 6 per cent a year on average for the past 50 years. World trade has consistently grown more rapidly than global GDP, and continues to do so. Last year, global growth was 5 percent; global trade grew by 8.5 percent.
The more open an economy is, the more it will benefit from expanding global trade, and Asia has clearly demonstrated the truth of this. As a result the Asian continent accounts for the much larger share of world trade and world output that I mentioned earlier. And, as you know, without this rapid growth the enormous gains for Asian citizens that I described a few moments ago would not have been possible.
The currently favorable global economic climate is a favorable background for emerging market and low income countries to pursue structural economic reforms that will significantly raise their potential growth rates and make their economies less vulnerable to shocks. It is also an opportunity for Asian economies to build on their success hitherto.
Neither poorer countries seeking to raise their growth rates significantly, nor Asian countries looking to continuing rapid growth, will be able fully to realize their ambitions if the multilateral trading system is undermined.
All of us here recognize that the Doha round of international trade negotiations is now at a critical stage. Even as I speak, the negotiators are hard at work. A successful conclusion to the round-in 2006 if not at this week's meeting-is crucial both because it will give fresh impetus to further trade expansion and because its absence could undermine the global trading system.
All countries have a strong interest in ensuring that trade continues to grow, because without it growth will be slower, at best. And all countries have an equally strong interest in avoiding anything that undermines the world trading system that has served us so well. The damaging protectionism of the 1930s may seem a distant, and for some a dim, memory. But protectionist policies would inflict at least as much damage on the world economy in the twenty first century, and possibly more: we have, after all, that much more to lose.
So there is a need for Asia to play a leading role in resolving disagreements and breathing new life into the global trading system that has served Asian countries so well in the past. A Doha round agreement will bring huge benefits for developing countries. And by strengthening the multilateral trading system, and opening up global markets still further, an agreement would also strengthen the prospects for continuing rapid growth in Asia. Asia needs a strong open world trading system if it is to continue to grow. Indeed, given that Asian countries tend to have more diverse export markets than most trading economies, a strong multilateral trading system is correspondingly more important.
Many Asian economies have long been reaping the benefits of trade liberalization. Unilateral liberalization brings substantial and significant gains for those countries that undertake it. But the gains are even greater when countries act together to liberalize. Many other countries have yet to experience those gains because their governments have resisted liberalization. Experience has shown that unilateral liberalization brings enormous gains, and those gains accrue mainly to the country doing the liberalizing. The more open economies become, the more they and their citizens can benefit. We have seen from Asia's experience that open trade, and the economic growth that follows, can lift millions out of poverty. Most countries can experience most of the benefits from trade openness by liberalizing themselves. But the benefits for all countries of further multilateral liberalization are far greater.
Leadership means more than bold words, though these are certainly needed in the negotiations now under way a short distance from here-and that will, I trust, continue once the Hong Kong meeting is over. Effective leadership also means arguing by example. The world needs the Asian countries to continue to play a leading, and positive, role in the Doha round by spelling out the benefits to be gained from trade opening-and by making commitments to open those sectors of their economies that are still protected.
It is easy to be distracted by the restrictions industrial countries place on access to some of their markets, and by the subsidies they offer to some sectors. Of course, the industrial countries need to do their part; they need to put their money where their mouth is and set an example.
But the industrial countries do not hold the key to the gains from trade liberalization that the rest of the world needs. By far the largest gains will come from trade liberalization by the developing countries themselves, even acting unilaterally. If more countries liberalize, the greater will be the gains: the tariffs developing countries currently impose on each other are far greater than those that the industrial countries impose. Let me go back briefly to the experience of the 1930s that I mentioned a moment ago. The protectionist focus of the large economies during that period was called beggar-thy-neighbor. High tariffs, restricted markets and competitive devaluations were the order of the day.
This, of course, was a fallacious argument. Economic progress is the opposite of a zero-sum game. Trade liberalization benefits everyone [even taking into account temporary adjustment costs experienced in some countries] and enables all economies that liberalize to grow more rapidly.
Asian economies have gained so much from the liberalization of the past decades that their governments, perhaps more than any other, are aware of the benefits to be had from a successful round.
The world economy needs Asia's contribution. It needs its dynamism. It needs it flexibility and its ability to learn. And it needs its understanding of the huge gains that commitment to sound macroeconomic policies and trade liberalization can bring.
And, if I may say so, Asia needs the world. Asia's economic success has been truly remarkable and shows every sign of continuing to be so. But that success has come from Asia's rapid integration into a rapidly growing global economy and a rapidly expanding trade system. If globalization has taught us anything it is surely that the benefits can only accrue if integration is embraced, if the world trading system is preserved and strengthened and if appropriately flexible economic policies are pursued. It is only in this way that rapid growth and rising living standards can lead to poverty reduction for all the world's citizens.