MBA White Paper - Understanding the significance of the Asian Century

Abstract

No topic in recent times has received more coverage than the question of how Australia positions itself for the Asian Century. The rapid rise of Asia has witnessed a major power shift from west to east of the international system. Europe and North America are still important players in international relations, but in the early part of the 21st century, Asia is the engine room of global growth. The 21st century will be the first in several hundred years where the importance of the trans-Atlantic will shift to the significance of the trans-Pacific as the centre for geopolitics and geoeconomics moves from Europe to Asia, from the Atlantic to the Pacific. Asia is the most populous region in the world and is home to 3.8 billion people, over half the world's population. Economically, Australia signed a free trade agreement with the Association of Southeast Asian Nations (ASEAN) in 2011, combining a population of more than 600 million people and a GDP of US$3.3 trillion. Further, China and India have in the last 20 years nearly tripled their share of the global economy and by 2025 the Asian region will account for almost half of the world’s output. In a few years, Asia will not only be the world’s largest producer of goods and services, but also the world’s largest consumer. Asia’s rise has been distinguished by significant shifts in power relativities that foreshadow potentially ground breaking power transitions among the region’s leading states in the twenty-first century. For most of the postwar era, it was unquestioned that North America and Europe, and from the 1960s, Japan, would drive economic growth and prosperity globally. By the 1980s it was clear that a shift was well underway. Despite the dramatic slowdown in Japan’s economic growth in the late 1980s, China’s meteoric rise in the wake of the Open Door policy being announced in 1978, and India’s impressive growth rates, have provided the foundation for Asia’s resurgence as the most dynamic economic region in the contemporary international system. Over the past two decades, Europe’s gradual decline in economic terms has been in stark contrast to Asia’s rapid economic rise. This was underscored by Asia’s apparent resilience in the face of the 2008 global financial crisis and the subsequent threat to the Eurozone triggered by poor economic management among some European states.