This economic model organised Asia for decades. Now it’s broken.

12 July 2017

Automation in the manufacturing industry is threatening Asia’s poorer countries' economic growth and development. In the past, textile manufacturing in Asia was labour-intensive and provided the first stepping stone for economies such as China, Japan and South Korea to reduce poverty. The next step was moving into more sophisticated industries while the poorer countries took over low-cost textile manufacturing, providing employment opportunities. This model has worked like a well-oiled machine for decades. However, with the introduction of automation, businesses in Asian countries with developed economies are now able to use human-free manufacturing instead of utilising low-wage labour.

This trend can have devastating consequences for poorer nations in Asia. Automation threatens to break the established economic model for countries such as Cambodia, Bangladesh and Myanmar. This means poorer Asian countries will not have the same opportunities to grow their economies as developed Asian nations. More than 80% of textile workers are at risk of losing their jobs to automation within the next two years. Automation can also mean that factories can be moved closer to consumers in Europe or North America, reducing the costs and delays of shipping from Asia. This, along with increased speed and efficiency of manufacturing, means that some countries will benefit from automation. However, with the economic model broken, poorer Asian economies will struggle to ascend from poverty and will face a high risk of civil unrest.

Read the full article on the Bloomberg website.

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