India & China to help Asia make up 30% of world GDP by ’20
INDIA’S growth story is set to contribute significantly to global GDP from now until 2020, according to a mid-August report of the International Labour Organisation (ILO). The report, which was discussed at the Asian Employment Forum at Beijing earlier this month, contends that if Asia continues to grow at the historical rate of 4.6-4.7%, it would account for a growing share of global GDP — up from 24.7% to around 30-31% in 2020. Within the region, India and China would be the big drivers of growth, as in the run up to 2006. India’s share of Asia’s GDP is expected to rise from 7.2% to 8.7-10% by 2020. India’s short-run share of the 2020 world GDP has been estimated at 3% and the long-run growth has been estimated at 2.7%, at a projected annual growth rate of 7.5% (short-run) and 6.3% (long-run). China’s share of world GDP in 2020, both short and long-run, has been estimated at 9.7% at an annual growth rate of 8.5% (shortrun) and 8% (long-run). “As Asia’s two giants grow and comprise an even larger share of regional output, other regional countries will see an increase in potential benefits...,” said the report Visions for Asia’s Decent Work Decade: Sustainable Growth and Jobs to 2015. It said surging demand from primary and intermediary inputs, energy, technology and investment goods should continue to fuel rising export and output growth in the region. India and China’s neighbours could benefit from the tremendous growth in the region’s consumer market by fuelling growth and increased investment flow. “As China and India grow and move towards higher valueadded production, countries at lower stages of development will have an opportunity to enter into some of the lower cost export markets currently dominated by them,” it said. Yet, there is strong reason to tread with caution. “...this also increases the danger of rising commodity inflation, which could have disproportionate adverse impact on the poor...,” the report warned. Here’s a peek at the stench-ridden underbelly of growth which pose the biggest challenges of the future: the continued vulnerability of millions to poverty despite a decline in thse numbers and the persistence of the informal economy. The latter will go up in S Asia from 25% of employment now to 35% in 2015. The most substantial population growth will, in fact, occur in South Asia, where the population is likely to expand by 211 million or 13.8%. Labour force growth will increase the fastest (by 134 m or 20.8%, accounting for 60% of the total in the Asia region) but significantly, labour force participation rates (the number of working age population that is actually employed) will be considerably lower than other parts of Asia and the gap between male and female participation rates will widen.. A good chunk of that labour force could come from farm backgrounds. Between 2006 and 2015, the total employment in agriculture is projected to contract in Asia by 160 million. The services sector will provide the highest (40.7%) of the region’s total employment. E Asia will see a 44.3% declines in farm employment by 2015.Compared to E Asia, though, India is unlikely to witness a sharp shift from the primary sector. (48% in 2006 to 40% of employment in 2015 in S Asia). to either manufacturing or the services sector. Here, the report maintains, two thirds of the population will still reside in rural areas in 2015. The future gains of the shift from agriculture to the services sector in the region, compared to E and SE Asia, would depend heavily on whether the increase in services sector jobs is more on the lines of lower productivity, informal jobs or continued high value added service-related jobs. Worse, the largest share of informal economy workers in total employment will be in the S Asia-India region, at more than 70%.. The persistence of the informal economy is not the only bad news for the S Asia-India region.