East Asia must liberalise services trade: World Bank economist
World Bank economist says region faces battle against slowing global growth
Developing economies in East Asia, which include most Asean nations, face an urgent battle against slowing global growth - especially in the trade of goods.
Following the success of their "East Asian Miracle" of the past 50 years, which saw hundreds of millions move out of poverty, countries should liberalise their trade in services and look into creating an ecosystem that supports innovation, said World Bank acting chief economist for East Asia and Pacific Andrew Mason.
Speaking to The Straits Times on the sidelines of a seminar last week, he noted the importance of reforms that open the services sector, upgrading the skills of the labour force and social protection as jobs transformed.
In reforming the services sector, countries should also look beyond tourism to professional services, such as that in finance or information technology.
"Growth in this region has been driven to a great extent by outward-oriented manufacturing," he said.
"When the global economy slows... that affects demand for countries' exports."
Despite trade in goods slowing, trade in services remains robust and will likely become increasingly important, said the economist.
"While developing econo-mies in this region have been very good at liberalising goods trade, they've been rather weak in liberalising trade in services," he added.
The reasons behind this include "a predominant focus on manufacturing as a driver for growth", as well as difficulty in reform, where institutions may be unwilling to give up the status quo, which would allow for greater productivity growth.
Apart from trade, developing East Asia - which includes most Asean countries except Brunei and Singapore, as well as China and Mongolia - face other challenges.
Rapid technological advancement risks displacing workers and resulting in growth that is less inclusive, said Mr Mason.
Rising affluence has also placed more demands on governments. But the region has potential to ride out its challenges, starting with its strength in sound economic governance.
Looking ahead, countries need to look for unexploited or under-exploited opportunities.
"Countries... in this region are going to need a labour force with more advanced skills," he said, highlighting the role of education.