30 September 2021

Will the World be Asian?

For much of the world, the 21st century has been a challenging period. Already this century, the world has experienced the 9/11 terrorist attacks and the impact that these have had on global security. Furthermore, the Global Financial Crisis in 2008 and 2009 shook the global economy and sapped confidence in many of its strongest countries and industries. Add to this a range of regional crises and it is easy to see how many regions of the world view the 21st century as a period of instability and stagnation. Now, the Covid-19 pandemic has added to this sense of instability and stagnation and has furthered the notion that the modern world is something less than what came before. In fact, most regions of the world have suffered significant setbacks in recent years. However, one region stands out for its continued economic expansion, its growing confidence and its ever-increasing role in the world. Of course, this region is Asia, and it is little surprise that many people are already referring to the 21st century as the Asian Century.

 

Asia's Been on Top Before

It is easy to forget that, for much of our history, Asia has been among the most important regions in the world, both in terms of economics and geopolitics. From the middle of the 19th century until the middle of the 20thcentury, Asia’s role in the world fell dramatically, with Asia’s share of global economic output falling to less than 18% by the year 1950. This was a far-cry from the estimated 60% of global economic output that was generated in Asia on the eve of the Industrial Revolution and represented the low-point in Asia’s role in the world. However, many times throughout history, Asia was in the lead in terms of global economic output and military might, such as during China’s Tang Dynasty or during the Mongol Empire. In fact, the decades after Asia reached its nadir following the Second World War have witnessed a remarkable rebirth of Asian power and influence, led first by Japan and now characterized by China’s rise to superpower status.

It is Asia’s vast scale that make the region so impressive and so important for the rest of the world. Asia (in this case including South Asia), accounts for 55% of the world’s total population, with more than half of this population living in two countries, China and India. In terms of its share of global economic output, it has risen from the low point of 18% in the post-World-War-Two era to nearly 35% today, nearly doubling its share of global GDP in the process. Likewise, Asia’s share of global merchandise exports has risen from just 12% in 1970 to 37% today. Furthermore, Asia is now a much more important import market, with its share of global merchandise imports rising from 13% in 1970 to 33% today. Finally, Asia is now home to a larger share of the world’s technological innovations than at any time in the last 500 years, and this trend appears set to continue as many Asian countries dramatically outspend their counterparts in other areas of the world in terms of research and development.

 

Growing Faster Than the Rest of the World

It is not just Asia’s scale that is impressive, so too is the region’s ability to generate economic growth in recent decades. Japan, and later South Korea and other East Asian economies, were able to generate much higher rates of economic growth than other economies around the world in the 1970s and 1980s. Since the 1990s, Asian economic growth has been increasingly generated by China and other emerging markets in the region. Regardless, Asia’s economy has grown much faster than most of the rest of the world for a prolonged period of time. Moreover, this trend has continued. Since 2014, Asia’s economy has grown more than twice as fast as that of any other region in the world. As a result, Asia is now generating nearly half of the world’s additional economic output.

Asia’s growing importance is not just the result of Asia’s recent economic success, but also the result of the struggles experienced by many other parts of the world. In fact, many of other important economic centers of the world have been struggling in recent decades. For example, Europe has generated very little economic growth during this time in which Asia has been rising, with many European manufacturing centers struggling to compete with their Asian rivals. Commodity-based emerging market economies have also been struggling in recent years due to lower-than-expected commodity prices. Even the United States, which has managed to generate higher rates of economic growth than most other developed economies, has experienced a high level of political upheaval and economic uncertainty, some of which has been influenced by the rise of Asia. All of this has served to further increase Asia’s role in both the global economy and the international geopolitical landscape.

 

The Asian Century?

The fact that Asia’s global role has increased dramatically in recent decades looks increasingly like a long-term trend, and not a short-term aberration. In fact, there is little to suggest that Asia’s role in the world will not continue to increase in the years and decades to come. This will have a massive impact on the world economy, on global security and on the everyday lives of billions of people around the globe. We have already witnessed how global trade and investment has shifted to Asia. Furthermore, an increasing number of businesses are growing increasingly dependent upon Asian markets and investments to generate growth. Likewise, the share of the world’s skilled labor that is now found in Asia is higher than ever. Similarly, Asia accounts for more and more of the technological innovations that are changing our world.

Of course, Asia’s rise also brings many challenges. For example, security risks in Asia are rising, often in conjunction with China’s rising military power and regional ambitions. Furthermore, many Asian countries face a looming demographic decline that will challenge their ability to generate economic growth over the longer-term. Nevertheless, the rest of the world is finding itself having to adjust to the reality of Asia’s growing power and influence and this will be one of the dominant themes of the rest of the 21st century, a century that might just live up to its billing as the Asian Century.