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By Anuradha Rajivan

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The subsequent switch to a managed float has allowed the currencies of these countries to depreciate at a faster rate compared to previous periods. The upshot was that East Asian countries have built up massive foreign exchange reserves and are now showing symptoms of the “Dutch disease” currency appreciation resulting from the massive accumulation of foreign exchange reserves. Between 2001 and 2003, the extent of appreciation in REER was 7 per cent in China, 34 per cent in Indonesia, 10 per cent in Malaysia and 15 per cent in Thailand.

Over recent decades, Asia-Pacific has been the world’s fastest-growing region. 1, during the period 1990–2003 Gross Domestic Product (GDP) grew annually on average by more than 7 per cent. As a result of population expansion, growth of per-capita GDP was somewhat slower – around 5 per cent – but still far higher than the 3 per cent in the OECD countries. fell more rapidly, and by 2000 average tariffs in South Asia had fallen to 18 per cent – with the process having gone furthest in Sri Lanka. 1 REGIONAL GROWTH PERFORMANCE GDP growth (average annual %) Trends in International Trade Much of this rapid economic growth has taken place during a period of steady trade liberalization – initially transforming import quotas into tariffs, and then consolidating tariff rates into narrower ranges.

Successful industrialization requires not only capital and technology but also a capable labour force – one that can manage that capital and technology and display the discipline demanded by factory production. That capability is directly related to literacy, education, and status of health. In the now-advanced countries, for example, social programmes in health and education helped to buttress industrial development and raise productivity. If growth limits or reverses human ASIA-PACIFIC HUMAN DEVELOPMENT REPORT 2006 development gains, then growth itself may not be sustainable.

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