Much has been argued about the ascendancy of Asia in the emerging global economy. Publications, commentaries, documentaries and broadcast resources abound, putting Asia’s rising profile in perspective as the next global economic hub. The nascent Asian tigers, emerging at the twilight of the last century, rode on the back of the popular press and the newly evolving information and communication technologies, particularly the internet.
The Japanese flourishing economy, rated second only after the USA then, the Chinese growing regional influence and the burgeon- ing elephant called India: all were basking in the upward economic swing when the Asian Tiger sing-song rented the global economic air. At that time, their economic exploits got more media and global investors’ attention than the brewing East Timor crisis, the on- going hostilities in Laos, the lingering Islamic insurgency in the Philippines, the protracted Indonesia-West Papua conflicts and the ensuing South Thailand insurgency.
The 26-year civil war and military campaign in Sri Lanka, which ended in the defeat of the Tamil Tigers in May 2009, did not discourage the beckoning investment opportunities within the region. The Nepalese Civil War, an armed conflict between the Communist Party of Nepal (Maoist) (CPN-M) and the government of Nepal, fought from 1996 to 2006, was seething when Asia’s economic profile was rising. The over-60 decade unresolved Kashmir conflicts, despite fuel- ling the conventional and nuclear arms race between India and Pakistan, did not deter big investors from committing their investments into either of the two countries.
Of particular note was the war between Vietnam and the neighbouring China, involving full-scale military invasion of the former’s northernmost provinces by the latter, resulting in colossal devastation. The border bloody military conflict, with all its attendant destruction of lives on both sides, was, until recently, a strictly taboo topic in public discussion. The 1979 border conflict, just as the massacre a decade earlier, was subsequently no longer taught in schools, raised in political discourse or mentioned in Vietnam’s highly censored state dominated media.
Yet, investors into Asian economies were coming in droves. European and American corporate entities were jostling for a growing consumer market, a business space in an era of increase in the growth of cities, a rising middle class, a forward looking and upwardly mobile youthful population and a burgeoning regional economy, with a greater focus on the urban populace. They were attracted by expanding market prospects, growing preference for fast moving consumer goods, in form of personal care products, electronics, or in lifestyle products, or automobiles.
While the new romance with Asian lasted, Western investors were enamoured with new business models of outsourcing and offshoring labour, production, raw material supplies and management functions. A new genre of supply chain was born. China was the biggest of beneficiaries, if nothing else, for its huge population. The countries, particularly China, wasted no time or opportunities in taking advantage of the new found prospects for prosperity. A World Bank report noted that, in the ten years to 2010, China alone received about 20 per cent of all FDI to developing countries and over $100 billion in 2008. Sub- sequently, inbound FDI played an important role in China’s economic development and export success.
Western corporate organisations, from manufacturing to services, saw it as a matter of strategic priority to have their presence in Asia. And the inflow continued. But these all happened at a cost. Competition became fierce, brands of products and services soon became commoditised and, without delay, a slowing down followed. Some organisations that walked strictly by the textbook prescrip- tion got stuck. Some managed to get by and many others were simply left with tweaking the same old rules of competition. In China, the allure of cheap labour faded sooner than expected and cost structure of manufactur- ing underwent swift but irreversible change. The dream of cheap products from offshore operations began to give way to ironic realities of rising product prices. Fixed assets became stuck just as investment drive began to slow down with the changing economies.
The ensuing financial crisis and the complications TNC experienced could be a matter chicken and egg; which one came first? Perspectives are bound to vary as to possible causation, correlation or association. The United Nations Conference on Trade and Development (UNCTAD), in an April 1999 report, affirmed that the Asian financial crisis that began in 1997 was mitigated in large measure by the transnational corporations within the region. The report stated that “foreign direct investment (FDI) flows to developing Asia as a whole have weathered the crisis, according to new data compiled by the United Nations Conference on Trade and Development (UNCTAD). A modest decline in 1998 of 7 per cent — the first since the mid-1980s — was due almost entirely to sharply decreased inflows into two economies: Indonesia and Taiwan, Province of China.
Despite the economic crisis, according to UNCTAD, FDI flows into East, South and South-East Asia in 1998 were $78 billion, $84 billion in 1997, $76 billion in 1996, and an average of $44 billion from 1991 to 1995. Despite the contraction and a downturn in overall private capital inflows during the financial crisis, “Transnational corporations (TNCs), particularly those from the United States and Europe, continued to be very active in the region. Some are restructuring their production networks in Asia to respond to changes in supply and demand patterns in light of the crisis. Further FDI liberalisation and the availability of cheap assets in some countries have been the main driving force behind TNC decisions to expand in developing Asia,” the report added.
While all these happened, global pundits gloated over Africa, pronounced it as a political pariah, a distressed continent and an economic dead end. Even UN top institutions did not give serious consideration to Africa’s possible rise, socially, politically or economically. Experts seemed oblivious of the fact that Asia was having pockets of turmoil, backwardness and squalour. They pointed all ten fingers to Africa’s infrastructural deficit (particularly for transportation, communication and power generation), unsanitary water, wars, despotic leadership, hunger, poverty, famines, desertification, epidemics, particularly HIV/AIDS, low life expectancies, poor health care delivery systems, low level of industrialisation, malnutrition, unemployment and weather induced crop failures or low agricultural yield, resulting in food shortage. The litany was long, all indicating self-fulfilling prophecies.
The global response was as dismal as the situations they sought to rectify. The development and humanitarian communities had a wrong diagnosis of the situation and, in their response, resorted to aid, which gulped trillions of dollars and, in some cases, aggravated the crisis they sought to control. As food aid and funds were getting into wrong hands, exacerbating corruption and sharp practices among the local operators, development and other intervention funds were mismanaged by non-state actors, government officials and, in some cases, the hands of the despots were strengthened and their hold on power became stronger.