AMICsAdvanced Middle-Income Countries
Advanced Middle-Income Countries (AMICs)—defined as $4,000 to $20,000 GNI per capita—are currently experiencing robust economic growth and relative political stability, but sustaining high or even moderate rates of growth will require difficult structural reforms with substantial upgrades to key institutions and policies. These countries must also overcome the current trend toward political polarization and conflict that makes it hard to achieve consensus on reform. The Asia Foundation is committed to supporting the region’s AMICs in their efforts to overcome the many development constraints that lie ahead.
Advanced Middle-Income Countries will play a pivotal role in determining the future of the Indo-Pacific region. China, Malaysia, Thailand, Sri Lanka, Fiji, and Maldives have already reached AMIC status. In the next two to six years, Mongolia, Indonesia, and Philippines will join this group, and Vietnam will follow within a decade. The degree of their success going forward will define the Asian Century.
Regional & global trends
While deeply integrated into international trade and communication networks, AMICs today are vulnerable to global economic shocks and other negative external influences. Regional and global trends that can make successful AMIC transition more difficult than in the past include: a slowing pace of globalization, unfavorable demographics, effects of automation, uncertainties over the rise of China, and the rising costs of climate change.
Investing in innovation-driven growth
Shifting to more entrepreneurial, innovation-driven growth requires upgrading a wide range of service-related institutions, including education, finance, taxation, and law. This only happens at scale when governments signal clear commitment to change and have the capacity and will to follow through on those commitments over time.
Economic challenges & political constraints
Most AMICs and near-AMICs in the Indo-Pacific are struggling to implement the reforms most essential for maintaining long-term growth and stability. The technical challenges and costs of economic upgrading are substantial, but the greater constraints are often political. Rising conflict along major social fault lines, political polarization, and heightened partisan competition make consensus on economic reform and effective political management of reform processes increasingly difficult. And since many of challenges faced by AMICs today are new, greater dialogue and cooperation is needed among AMICs themselves.
Cooperation among AMICs & international community
Most of the process of upgrading reform in AMICs will take place at the national and local level, but regional approaches and international support can play an important role. International actors including the World Bank, ADB, APEC, and ASEAN, and major research centers and think tanks have much to contribute, but they must adjust their approaches to meet the needs and expectations of more advanced developing countries. The Asia Foundation’s established offices and programs across the region, solid network of partners, and close cooperation with major institutions, makes it well-positioned to support reform in Asia-Pacific AMICs. Recent regional initiatives by the Foundation include: ASEAN as the Architect for Regional Development Cooperation and Asian Views on America’s Role in Asia.
Asia Foundation work on AMICs
Despite general optimism regarding their continued progress, AMICs face a combination of growing challenges that could reduce their long-term growth and stability prospects.
The Asia Foundation’s Senior Advisor for Program Strategy Dr. William Cole gave a presentation at the Asian Development Bank’s Insight Thursday series, focusing on growth and stability challenges facing AMICs.
“Stronger cooperation is essential for APEC as economies address inequality, environmental health, and the digital economy—the region’s critical challenges”— APEC Secretariat Executive Director Rebecca Sta Maria
Despite general optimism regarding their continued progress, AMICs face a combination of growing challenges that could reduce their long-term growth and stability prospects. While research by the World Bank and others has begun to clarify the institutional, policy, and infrastructure changes needed to ensure successful AMIC transition, the political challenge of securing technically sound policy reforms is daunting.
While Asia has made great progress in reducing poverty, more than 550 million Asians continue to survive on less than $1.25 per day; and most of the world’s poor are in middle-income countries, not in poor countries. As labor costs rise in AMICs, countries must shift to upgrading their economies to avoid the “middle-income trap” through highly productive, technology-intensive, and innovation-driven industries in order to remain globally competitive. The Asia Foundation’s Senior Advisor for Program Strategy Dr. William Cole gave a presentation at the Asian Development Bank’s Insight Thursday series, focusing on growth and stability challenges facing Asian countries as they experience economic slowdowns in later stages of development.
Stronger cooperation is essential for APEC as economies address inequality, environmental health, and the digital economy—the region’s critical challenges—said APEC Secretariat Executive Director Rebecca Sta Maria during a visit to the United States to bolster collaboration with The Asia Foundation and the tech community.
Along with The Asia Foundation, APEC also consulted organizations including LinkedIn, the World Economic Forum’s Center for the Fourth Industrial Revolution, and the Economic Institute of the Bay Area.