Asia's two economic powerhouses, India and the People's Republic of China (PRC), are lagging behind in terms of economic well-being and living standards, despite accounting for 64 percent of GDP in a surveyed list of 23 Asian countries, according to a study by the Asian Development Bank has revealed.
If the size of these economies is adjusted by population, rather than dominating the rankings, the PRC and India drop to tenth and eighteenth positions, respectively, out of the 22 economies participating in the full GDP comparison, the new study released last week titled, International Comparison Program (ICP) in Asia and the Pacific: Purchasing power Parity Preliminary Report.
Among the 23 countries, Maldives was the only one which did not participate in the GDP comparison.
However, when economies are compared based on actual final consumption of households (AFCH) - a better measure of economic well-being of the population â€“ the results are slightly different: China falls to 15th position and India rises to 17th position.
The AFCH is a measure of what households actually consume, comprising what they purchase and what they are supplied for individual use by the government (principally education and health). The economic well-being of the population is obtained by comparing household consumption expenditure per capita.
Five economies that topped the list are Hong Kong, with a per capita consumption expenditure of $16,000 (11,700 euros), Taiwan with $13,395 (9,807 euros), Singapore with HK$99,706 ($12,750; â‚¬9,300), Brunei with HK$81,744 ($10,500; â‚¬7,700) and Macau with HK$67,639 ($8,600; â‚¬6,300).
The five economies that are at the bottom of the survey are Nepal, Bangladesh, Laos, Cambodia, and Vietnam.
As for the people living in the world's two fastest growing economies, in China a person spends an average of $1,470 (1,000 euros) per year, while an Indian consumes an average of $1,194 (875 euros), the study showed.
Purchasing Power Parities (PPP) is an idea popularized by The Economist's Big Mac Index which prices hamburgers in global cities for a quick and crude comparison of living standards.
The ADB said the ICP was more comprehensive as it covered a broader range of commodities.
Based on the price level index (PLI), which is the ratio of the PPP to the exchange rate, Fiji Islands and Hong Kong, China are the two costliest places to live in. They are followed by Macao, China; Singapore; and Taipei, China.
China ranks eighth, and India ranked 16th in terms of PLIs. Price levels in the Philippines, Thailand, and Indonesia are very similar and are close to the Asian average. The cheapest places are Laos, Vietnam, Islamic Republic of Iran, Cambodia, and Nepal.
The results provide the most comparable information on breakdown of GDP expenditures across the Asia Pacific, ADB Chief Economist Ifzal Ali said. Purchasing Power Parities are a more appropriate currency converter to compare living standards and the structure of economies than market exchange rates.
The results are deployed for investment strategies, the global campaign against poverty and national policies such as appropriate spending on schools or infrastructure in Asia.
Using real GDP, estimates were done using assumed growth rates and how long it will take some countries to reach certain levels of per capita real GDP. For example, it will take the Philippines more than 20 years to reach Thailand's present per capita real GDP level if it grows at an average annual per capita rate of 3.7 percent.
Looking at China, it needs only 16 years to reach the $HK100,000 per capita real GDP level but nearly 30 years to catch up with Brunei, based on an annual per capita growth rate of 9.2 percent.
India needs more than 30 years to come up to the $HK100,000 per capita real GDP level, and almost 50 years to match Brunei's per capita real GDP, if India continues to grow at an annual per capita rate of 6.5 percent, the study said.
The ICP Asia Pacific is part of a global initiative managed by the Asian Development Bank in collaboration with the ICP Global Office and other regional agencies across the world.
The ICP results, for the first time, enable a robust cross-country comparison of major macroeconomic indicators across diverse economies of Asia and the Pacific.
EDUCATION, HEALTHCARE IN SOUTH ASIA STRUGGLING
In a separate report last week, ADB warned that education and healthcare are lagging seriously behind even as India and other South Asian economies take off.
Despite the rapid economic growth of recent years, South Asiaâ€™s quality of education and healthcare remains worse than all other parts of the world except sub-Saharan Africa, ADB said in its biannual South Asia Economic Report.
The region's education systems must be transformed for the countries to be able to adapt to the new realities, said Kunio Senga, Director General of ADB's South Asia Department. Quality education is needed at all levels, and technical, vocational, and higher education should be aligned with global market demands.
Identifying the education and training strategies that will allow youth to take advantage of growing domestic and international economic opportunities is critical, the report said.
The report warned that the region's competitiveness could be undermined unless governments address the growing mismatches.
The region remains on a solid track of high economic expansion led by India, but changing educational and health needs must be met if it is to remain an engine of economic growth, the South Asia Economic Report said.
Clearly, rapid economic growth alone will not take care of human development in the region, said Juan Miranda, head of the Philippines-based lender's Central and West Asia department in the report, adding, Successfully tackling these challenges requires strategic choices in crucial policy areas.
The region faces significant challenges to meet the relevant Millennium Development Goals (MDGs) by 2015.
The report offers broad actions for governments in the region that would help them to meet the dual challenges of accelerating progress toward the MDGs and simultaneously capitalize on opportunities and mitigate risk posed by six broad global and regional trends highlighted in the report. These include preparing for a borderless world through better regional cooperation and making better use of information and communication technology.