Asia Seen as the Engine for World Trade Growth. INTERVIEW
ATTILA KARAOSMANOGLU is a big spender. Last year the World Bank's vice-president for Asia approved more than $7 billion for development projects in that populous region of the world. With the capital of the World Bank now doubled, Mr. Karaosmanoglu, a Turkish national, hopes to boost spending even more to help lift the 500 million of ``absolute poor'' in Asia out of their economic misery.
``For the next decade I am really optimistic that Asia will provide the engine of world trade growth,'' Karaosmanoglu says. ``There are great needs. But astonishing things are happening.''
Simplifying, the bank official divides his region into two groups of countries. One such group, the newly industrialized nations, is doing well economically. These countries, which include South Korea, Taiwan, Hong Kong, and Singapore, are close to ``graduation'' - that is, sufficiently prosperous that they will not receive any more World Bank loans.
South Korea, for example, repaid $900 million in loans to the bank last year. A few years ago Korean officials used to be ``pounding the table'' for more loans, Karaosmanoglu notes.
The second Asian group of countries is making more economic progress than generally realized. But they still have a long way to go to overcome their problems of poverty and burgeoning populations. Here's how Karaosmanoglu sees the situation in a few key nations:
India: Because of the green revolution, India is able to feed its 790 million people, even in a time of drought like last year. The dry weather knocked down farm output by 8 percent. Nonetheless, there was sufficient growth in industry and services that national output rose 3.4 percent in 1988. This year, with a good monsoon, Karaosmanoglu forecasts 10 percent growth. That's far above the 4 percent that some economists used to call the ``Hindu growth rate.''
Karaosmanoglu speaks of India's ``prudent macro-economic management of the economy and its reliance more on domestic, rather than foreign, saving to finance the country's development efforts.'' India is gradually dismantling its highly bureaucratized system of licensing private investment. Regulations, though, still often prevent the closure of unprofitable, capital-depleted enterprises.
Philippines: This island nation has rapid population growth, with the Roman Catholic Church opposing adequate birth-control measures. Moreover, it has a large external debt load of about $30 billion. That's equivalent to 66 percent of total national output, while Argentina's debt amounts to 46 percent of its output.
Yet the Philippines is not caught in a ``debt trap'' like some Latin American debtor nations, Karaosmanoglu says. This is because under President Corazon Aquino the private sector has become very dynamic, helping the economy grow at a 6 percent annual rate. Also, the Philippines is receiving substantial financial help from both the United States and Japan.
Indonesia: Though Indonesia has $53 billion in debts (equivalent to about 44 percent of national output), it has been able to manage this burden successfully. Karaosmanoglu credits this to the nation's ``disciplined and resolute response'' to such problems as the decline in the price of oil and other exports.
Indonesia, a country of 165 million people, has undertaken major economic reforms. Industry has been considerably deregulated. Foreign banks are given easy entry. Ports have been opened to international shipping, even for inter-island traffic. Protectionism has been reduced, including the breakup of import monopolies. Many subsidies have been eliminated.
As a result, industry has blossomed and exports grown handsomely.
Overall, Karaosmanoglu finds this ``second Asia'' distinguished by the ``overall competence of governments, the relatively steady if not spectacular growth of their economies.'' But he cautions: ``People in the field of development can't afford to be pessimists.''