Economies in the Asia-Pacific are on the road to recovery, but they still need to improve production efficiency and create more innovation-friendly conditions for businesses to accelerate their growth and bridge gaps in employment and living standards, according to the latest “APEC Economic Trends Analysis” report.
The 21 economies within the Asia-Pacific Economic Cooperation (APEC) account for about half of global trade and 60 percent of total gross domestic product. Economic growth among them is forecast to increase from 3.7 percent in 2013 to 4.2 percent in 2014. A further uptick to 4.4 per cent is expected in 2015.
Nonetheless, the global financial crisis and post-crisis uncertainty continue to slow down economic recovery across the Asia-Pacific, as exports “remain sluggish and are not contributing to growth in an optimal way,” said Alan Bollard, executive director of the APEC Secretariat.
“At the same time, the region is facing the twin challenges of decelerating labor productivity and employment growth,” he continued.
“Production efficiency has dropped among firms in emerging and developing economies while companies in industrialized economies have increasingly turned to layoffs,” noted Quynh Le, a macroeconomist at the APEC Policy Support Unit and lead author of the “APEC Economic Trends Analysis.”
She said an economic turnaround is not sufficient to raise regional productivity and generate job employment. This will have to be supplemented by “higher production efficiency based on greater innovation across different business sectors.”
She added: “Technological innovation, for example, can cultivate markets for new products and, in turn, seed employment opportunities and expand production frontiers.”
The report encourages APEC economies to work together with the private sector to foster an environment that provides incentives to firms to undertake more research and development. This includes easing the cross-border movement of people to drive science and technological innovation as well as cutting administrative burdens on start-up firms.
A well-functioning intellectual property rights system that legally protects inventions and fiscal and taxation instruments to promote more private sector research and development investments are likewise imperative, the report noted.