Markets and mayhem

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The term 'Asian century', though challenged by some commentators, has been used quite often to refer to the economic weight of East Asia, particularly the rapid rise in its share of global GDP in the past twenty to thirty years.

According to the World Bank and the Asian Development Bank, Asia in real terms is projected to grow at 4.9 per cent from 2006 to 2020 compared to 3.5 per cent for the world as a whole. In Asia: China; India; Pakistan; and Vietnam are projected to grow at the most rapid pace.

India’s real GDP per head is expected to grow at an annual rate of 4-6 per cent from 2006 to 2020. This is exceeded by China where incomes are projected to rise by 5.4 per cent per annum, over the same period.

The pace of economic change is not only impacting Asia’s regional security ties, the increasing reliance on intra-regional supply is providing impetus for greater co-operation within the region itself.

An example of the increasing pressure on resources in region is the substantial rise in energy consumption growth which has fuelled the substantial economic expansion of the region over the past decade.

Continued economic development in countries like China and India will intensify competition for raw materials and push prices up, which could heighten geopolitical tensions. As European gas reserves become exhausted in a few decades time, the continent’s dependence on imports will increase from 30% in 2005 to more than 60% in 2050. The Middle East will assume an increasingly dominant role in oil production and Russia in gas production.

This growing dependence will make the energy system more vulnerable, and there is a fear that energy suppliers will use their power for economic or political gain. To the extent that the declining security of supply is reflected in higher prices, the effects on the industrialised countries will remain limited. The security of supply problem is therefore less urgent than the climate problem.

Sustainability policy implies that decisions need to be assessed inter generationally so as not unnecessarily contribute to economic and environmental problems in the future. The difficulty arises in striking a balance between improving global income distribution in the medium term and reducing ecological risks to human safety on a global scale for the remainder of the century.