Rapid Productivity Growth in Asia: Internal and External Financing

Developing Asia’s path to high-income status will hinge on sustained productivity growth and large-scale private investment, which are expected to raise domestic real interest rates and drive capital flows funded mainly by domestic savings but still dependent on global markets. Productivity gains generate spillovers across regions—slightly negative in the medium term due to higher interest rates, but positive in the long run as fast-growing economies import more—indicating that growth competition is not zero-sum. Progress will require ongoing improvements in policy, institutions, and governance, while climate change remains a major risk as it suppresses productivity and undermines investment and long-term growth.

Learn More About It Here