Asia Rising
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Asia Rising

Growth and Resilience in an Uncertain Global Economy

Edited by Hal Hill and Maria Socorro Gochoco-Bautista

The centre of global economic activity is shifting rapidly towards Asia, driven by a combination of the economic dynamism of China, India and other middle-income Asian countries, and sluggish growth in the OECD economies. The rapid growth and rising global prominence has raised a range of major challenges for Asia and for the rest of the world. This comprehensive, forward-looking book examines these issues through in-depth studies of major Asian economies and an analysis of the key development policy options.
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Chapter 4: Productivity and capital accumulation

Kyoji Fukao


It has been well documented that the major countries of the Association of Southeast Asian Nations (ASEAN) – Indonesia, Malaysia, the Philippines, and Thailand – as well as the Republic of Korea have experienced sharp declines in the ratio between gross fixed capital formation and gross domestic product (GDP) following the Asian financial crisis (AFC) of 1997–98 (Figure 4.1). Many studies have tried to answer why capital accumulation declined in crisis- hit Asia. The Asian Development Bank’s Asian Development Outlook for 2007 and 2008 (Asian Development Bank 2007, 2008) contains excellent surveys and analyses of this issue. It shows that in many countries the working- age population continued to grow, except in Indonesia; total factor productivity (TFP) rebounded; and financial markets recovered. In addition, saving rates remained high, capacity utilization rates recovered, and there was no sharp decline in public investment.

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