Asia development plan worth considering

Can a region as complex and fast-changing as Asia devise and implement a comprehensive development plan? The Jakarta-based Economic Research Institute for ASEAN and East Asia, which just released its third Comprehensive Asia Development Plan, thinks so.

The plan deserves serious consideration. Drawing on the research and insights of experts from the Association of Southeast Asian Nations' Secretariat and institutes from 16 countries — including Australia, New Zealand and East Asian nations — it maps out how Asia could deepen regional economic integration, narrow development gaps and advance sustainable development.

The third Comprehensive Asia Development Plan represents a major step forward from its predecessors. The first plan, published in 2010, focused largely on transportation infrastructure, from roads to airports. The second plan, released in 2015, recognized that true connectivity — essential to regional integration — also depended on information and communications technology. The third plan takes this further, examining the role of digitization in supporting integration, innovation, inclusiveness and sustainability.

This sequence mirrors the "three unbundlings" that economist Richard Baldwin has described, each of which defines a phase of globalization. The first — the separation of production and consumption — occurred when advances in transportation drastically lowered the costs of moving goods. The second — the separation of various parts of the production process — arose when information and communications technologies reduced the costs of moving ideas, enabling coordination across any distance.

The third unbundling is the separation of service delivery and use. From teleconferencing to telerobotics, technology increasingly enables people to provide services without having to travel. This means that service workers in developing countries can increasingly do knowledge work for customers in advanced countries, but at a much lower cost. As Baldwin points out, wage rates in the services sector represent the "greatest remaining global arbitrage opportunities". At the same time, professionals in advanced economies can also provide services to developing-country clients at high rates.

The third Comprehensive Asia Development Plan seeks to seize the opportunities that the third unbundling creates. It urges countries in East and Southeast Asia to invest in artificial intelligence and industrial robots, expand 5G broadband networks and build on the Regional Comprehensive Economic Partnership to improve data standards and digital rules. Ultimately, East and Southeast Asia would create a digital single market, underpinned by shared data infrastructure and common rules and standards.

It is difficult to argue with the logic behind this vision. But in a region as diverse as Asia, translating it into reality would be difficult, to say the least, especially at a time of deepening ideological and geopolitical fault lines.

The main barrier to success is neither technological nor financial. Instead, it is the implementation capacity — or lack thereof — of local, national and international institutions.

Comprehensive Asia Development Plan 3.0 is a broad strategy to advance simultaneously a large number of complex and interconnected goals in areas ranging from rural poverty and aging population to water safety and pollution. The level of on-the-ground coordination the plan demands may well be beyond the capabilities of most developing countries' bureaucracies, not least because of their siloed structures.

Multilateral development banks and aid agencies, for their part, are well equipped to handle large-scale projects and programs. But they have considerable operational weaknesses when it comes to managing large numbers of projects involving diverse micro, small and medium-sized enterprises.

No matter how elegant and compelling a top-down development plan for Asia might be, it is unlikely to be implemented. Instead, we must embrace a bottom-up approach.

Digital technologies should play a central role in such an approach. For example, they can provide the data and processing power (through AI) to deliver bottom-up feedback and facilitate coordination. In addition, connectivity hubs — from regional financial centers like Singapore and Hong Kong to new technology platforms — can improve the allocation of funding and knowhow. Direct engagement and consensus-building will be essential to avoid collective-action traps.

Narratives are vital here. Top-down plans often lack the appeal to emotion and sentiment that are needed to change human behavior. But bottom-up efforts reflect people's ideas and aspirations. This supports the creation of narratives capable of inspiring and empowering social movements and triggering a huge number of small changes, thereby creating systemic change.

The relatively slow pace of ASEAN integration is probably frustrating to those who believe that a clear plan is the key to progress. But integration can never be a neat and efficient process in a region comprising highly diverse countries at vastly different stages of development. Actors need time to learn how to work with one another, build local and regional consensus, and develop the necessary design, implementation and oversight capabilities.

Development is a complex adaptive process, and we are living in a time of profound geopolitical, technological and environmental changes. As attractive as top-down plans like Comprehensive Asia Development Plan 3.0 might be, they cannot deliver what Asian integration requires: bottom-up institutions that advance compelling narratives and can respond nimbly to new information and imperatives.

The views do not necessarily reflect those of China Daily.

Andrew Sheng is a fellow at the Asia Global Institute of the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance. Xiao Geng is chairman of the Hong Kong Institution for International Finance and director of the Institute of Policy and Practice at the Chinese University of Hong Kong, Shenzhen.