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Report: Economic Success Leads to Jobless Growth in Asia-Pacific

  • Lisa Schlein

A new U.N. Development Program report shows free trade in Asia is not creating enough jobs for the region's poor. The report is being released as trade ministers meet to try to revive the Doha-round trade negotiations.

The report finds a strong link between the right kind of trade growth and human development. It says the Asia-Pacific region is at the forefront of globalization, which has led to phenomenal expansion of trade.

U.N. Assistant Secretary-General Hafiz Pasha says developing countries in Asia have increased their share in world trade from 6.1 percent in the early 1990s to more than 10 percent.

"If we take the whole region now, including the developed countries, Asia has become or is becoming the factory of the world," he said. "Already 30 percent of goods are being exported out of Asia, and you have some of the fastest growing exports, like telecommunications equipment, where Asia has already got the major share in the world market."

The report predicts in 10 years Asia-Pacific exports will capture more than 50 percent of the global trade export market.

Pasha says that meanwhile the region is becoming, what he calls, the back office of the world because of the emergence of outsourcing. He says countries such as India, the Philippines, China, Vietnam and Bangladesh have acquired a particular dynamism in this area.

While the economy is booming, Pasha says employment has stagnated. He says job creation is lagging behind work force expansion. He says highly paid skilled workers are benefiting more from free trade than are unskilled workers, who are being left behind.

"In East Asia, the rate of creation of jobs fell to less than one-third during the 1990s despite this phenomenal growth of 10 percent," he said. "What we have seen is the emergence of the phenomenon of jobless growth. You look at agriculture, there has actually been a decline in employment in agriculture in East Asia and a stagnation in South Asia."

The report says agriculture in the Asia-Pacific region has stagnated because of trade barriers, subsidies, price distortions, and official neglect.

As a consequence, Hafiz Pasha says the region has become a net agricultural importer.

He warns this is imperiling food security and deepening rural poverty.

"Given the kind of demand that China and India could place in international food grain markets, the likelihood that food prices could escalate, of the kind of escalation that we saw in oil prices, in years to come unless Asian agriculture comes back very vigorously," he said.

Pasha says the region has moved from a $7 billion surplus 20 years ago to an $18 billion deficit in agricultural trade today.

The report calls for a renewed focus on agriculture and rural development. It says tariffs on food imports should be maintained and countries should ensure that global trade negotiations that now are underway should agree on special safeguard mechanisms.

The report calls for strategies to combat jobless growth by adopting labor-market policies to encourage flexibility and retraining.

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