Beyond Factory Asia: Fuelling Growth in a Changing World

Factory Asia-these two simple words help define Asia’s phenomenal economic growth over the past 2 decades. A growing population eager to earn more provided relatively cheap and abundant labor in the last decade of the 20th century and the early part of the current century, producing many of the manufactured consumer goods the world needed. East Asia’s exports surged, particularly final goods destined for the United States (US) and eurozone economies. The array of goods produced and traded evolved rapidly-from agricultural to (low-value) manufacturing, and into services in a few cases. However, the global financial crisis and uncertain growth prospects in the United States and the eurozone have dampened demand for Asian exports. At the same time, rising wages threaten to erode the cost advantage that the region once had, managing supply chains has become more complex, and new technologies are transforming manufacturing. This paper aims to explore how Asia economies can move beyond Factory Asia. It will examine the strategies that Asian economies can pursue to meet these challenges. The paper concludes by discussing a range of policy, institutional, legal, and regulatory issues relating to reforms that will drive Asia’s economic and social transformation in its quest for a new Factory Asia model.