RTTNews - Wednesday, the Asian Development Bank or ADB in a report said that Asian economies' return to rapid regional growth would require stronger domestic demand, which in part would depend on the development and growth of the region's business sector.
In view of the weak outlook for the major global economies, it's unlikely that Asia can export its way out of this slump, as they did after the 1997-98 Asian financial crisis, ADB's Chief Economist, Jong-Wha Lee said.
As a result, some economies would need to accelerate the rebalancing process to boost domestic demand, and take necessary steps to remove the constraints on growth of the small and medium scale enterprises or SMEs, Lee noted.
As a consequence of the global crisis, many export-oriented enterprises were forced to scale down operations, reduce production and lay off workers. Smaller enterprises, which were more domestically-oriented, had been less affected, but the credit crunch and a slump in demand were now beginning to hurt, the Manila-based bank said. In seven out of eight East and Southeast Asian countries tracked by the report, manufacturing employment has declined by about 2% to 7% between the first quarters of 2008 and 2009.
The ADB highlighted the importance of government role in helping the SMEs to grow and become productive. The bank said governments could correct existing market failures, especially in the provision of finance. Further, governments through necessary policy measures, could help raise productivity and employment of smaller firms though innovation, by means of adopting new technologies, and diversifying into newer markets.
Further, governments could assist by providing information services on technology and markets, vocational training, and technical support services, and by fostering linkages between SMEs and large enterprises, the ADB said.
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