Transcending Asia’s Middle Income Challenge: The Role of Productivity and Innovation

Sustained rapid growth has transformed Asia from a low-income region to a middle-income region. The question now is how a largely middle income region can build on its past success to reach high income. As economies evolve from low to middle income, total factor productivity growth assumes a bigger role in economic growth. Productivity improvement, in turn, comes increasingly from innovation as traditional sources of productivity growth, such as shift of workers from agriculture to manufacturing and services, are gradually exhausted. Innovation is supported by a skilled workforce capable of coping with new technologies as well as advanced infrastructure. The experiences of many middle- income economies suggest that the middle to high income transition can be challenging. Investing in innovation, human capital, and infrastructure, coupled with economic stability, will be key to ensuring Asia’s continued expansion. Join us for a discussion on the latest Asian Development Outlook report with the Asian Development Bank’s principal economist to assess how Asia can attain high income status in coming years.