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A World Bank (WB) report released on Friday said that inequality, social cohesion, corruption and environmental degradation are urgent domestic challenges facing East Asian countries.

 

According to the report, An East Asian Renaissance: Ideas for Growth, the challenges arose from East Asia's economic success -- the World Bank says that in the 10 years since the 1997 financial crisis, the region has transformed itself by creating more competitive, more innovative economies.

 

The report points out that China's domestic policy priorities have shifted to sustainability of growth, ensuring equitable development, management of cities and government performance, said Bert Hofman, WB lead economist for China.

 

The report said that having successfully undergone two waves of integration -- first with global markets and then within the region itself -- East Asia now needs to move to a third integration -- at the domestic level.

 

The growth spurred by global and regional integration means that almost everyone in developing East Asia will be living in a middle-income country in a few years, said Homi Kharas, one of the authors of the report and a visiting fellow at the Brookings Institution.

 

The former WB chief economist for East Asia and the Pacific said that development challenges at the middle-income level are complex and countries need to adapt their strategies so that they are not squeezed between their high-income, high-tech neighbors and low-income, low-wage competitors.

 

East Asia is witnessing the largest rural-to-urban shift of population in history as 2 million new urban dwellers are expected in East Asian cities every month for the next 20 years, said Indermit Gill, the other author of the report and acting chief economist for East Asia and Pacific of the WB.

 

Kharas said what's going on in East Asia is a renaissance.

 

Old Asia saw mature industries move to low-wage countries, while new Asia is more innovative and networked, characterized by a competitive business environment that encourages new products and processes and a labor force able to absorb new ideas, he said.

 

The report argues that for the growing number of middle income countries in the region, focus is needed on improved management of small and mid-sized cities, broader access to social services and greater transparency and accountability in national and local governments.

 

(Xinhua News Agency June 8, 2007)