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Trade of developing countries in Asia and the Pacific that include the Philippines will continue to grow rapidly in the next few years on the back of rising domestic and regional demand.
This was highlighted in the "Asia-Pacific Trade and Investment Report for 2011: Post-crisis Trade and Investment Opportunities" released by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
The report noted that the expected intraregional final demand will continue to increase and partially offset weak long-term demand from the traditional economies of European Union, Japan and the United States, also known as the Group of Three (G3).
"With the expectation that demand by major economies for the Asia-Pacific exports will be sluggish in the long term, opportunities for export expansion will depend largely on the growth of intra regional demand," it stressed.
The ESCAP report identified various trends and opportunities that could support to growth of the Asia and the Pacific countries.
The expected rapid robust growth and massive urbanization in the region, especially in China and India, provides opportunities for the region. These most populous countries in the world are seen to gain almost 500 million urban residents during the next 20 years.
"This massive urbanization will provide plenty of opportunities for expanding production and exports of consumer and capital goods by the rest of the region," it noted.
Citing a paper, the report said that although China currently dominates exports from the Asia-Pacific region, rapidly rising labor costs in that country could create opportunities for other developing economies in the region to catch up.
Just 12 economies in the region that include China and India account for more than 90 percent of the total regional demand for imports.
Other major Asia-Pacific importers are Japan, Republic of Korea, Singapore, Russian Federation, Australia, Turkey, Thailand, Malaysia, Indonesia and Hong Kong, China.
"Thus, projections for the growth of imports by these 12 economies will provide a strong indication of the prospects for exports of their partners, including those in the region," it stressed.
However, the expansion of imports by these economies would also require the presence of trade complementarities between potential partners.
"If these complementarities are not very good, the exporting economies of the region will not only have to increase competitiveness in their current export products but also transform their export structure to better match demand from the importing economies of the region," it advised.
The ESCAP report stressed that enhancing the competitiveness of exported products through improved cost efficiency and quality is crucial in order to capture a larger share of world demand.
To enhance intra-industry exports, Asia-Pacific economies also need to build horizontal specialization in differentiated products or vertical specialization in different stages of the value chain.
The report also discussed the great potential for Asia-Pacific developing economies to expand trade and investment in services. The abundant availability of low and semi-skilled labor is a major input to tourism, construction and transport services.
And with the increasing awareness of climate change, that opens up new business opportunities for innovative producers to develop and export new goods and services, especially in the areas of water, energy and resource efficiency promotion, it added. -- Danielle Venz, PHILEXPORT News and Features
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