Asia: it's not just intensive growth, but inclusive growth that's required

Banyan piece in The Economist.

Nice start:

SHINY Asia’s rapid economic growth over the past two decades, driven by cheap land and labour, technological change and the play of globalisation, has had a spectacularly improving effect on the lives of hundreds of millions. Since 1990 the number of those in extreme poverty, defined as earning less than $1 a day, has been halved, to under a fifth of developing Asia’s people.

So far so miraculous. Yet the shiny face has a tarnished flip side. Poverty and the vulnerabilities associated with it remain entrenched. Further, inequalities are rising fast. The realisation is spurring a rethink among development experts. Until recently, economic growth and social policy were thought of separately. Inequalities and social exclusion, as Sarah Cook of the United Nations Research Institute for Social Development puts it, were viewed as a residual outcome of necessary market-led growth. The development response was to get markets right first and then deal with any remaining pockets of the poor. Persistent poverty and growing social exclusion call the approach into question.

When you move up to the $2-day threshold, about half of Asia is still impoverished.

As for villains, many in the region still point fingers at the IMF for its harsh adjustment programs after the "flu" of 1998.  China here is given high marks for expanding its healthcare and low marks for treating as invisible the illegal rural folk now living in cities.

Most crucially, the advice is to "get your political house in order":

In China, with mounting inequalities and disparate interests that need accommodating, it is not clear that the country’s political system, top-heavy and authoritarian, is up to the task. Not that democracies have fared much better: witness India, Indonesia and the Philippines, where the presidential election this week underscored how power and wealth lie in the hands of a few families.

They do, however, offer the poor a better chance of genuine electoral retribution; unlike, for example, most Central Asian countries. Until April’s coup in abject Kyrgyzstan, the ruling clan attempted to commandeer almost the entire state economy. 

In short, Banyan is not buying any inherent superiority of the Chinese model.  The easy growth is done.  Now comes the hard part.