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Manufacturing, services, investment, innovation, and good governance are the five keys to sustainable, inclusive, and high-quality growth in the ASEAN+3 region.
Recent research has shown that the ASEAN+3 region, which includes the 10 ASEAN nations plus China, Japan, and Korea needs to rethink how it grows.
According to the ASEAN+3 Macroeconomic Research Office (AMRO), fast growth is not enough. Future growth must also be fair, environmentally sustainable, and resilient against challenges such as ageing populations, climate change, and global trade shifts.
In its Regional Economic Outlook 2025, AMRO highlights five key policy areas to help economies in the region achieve long-term, high-quality growth.
1) Improve and upgrade manufacturing
Manufacturing remains important for economic growth in ASEAN+3. But it must evolve. The region needs to invest in advanced manufacturing, especially in clean energy, electronics, and sustainable products.
Digital technology and automation can help countries stay competitive, even as workforces age. Manufacturing will also play a key role in the green transition.
Countries in the region are well-positioned but must continue to upgrade their manufacturing ecosystems to attract investment and stay in global supply chains.
2) Develop high-skill and high-quality services
Services are growing in importance, but they must provide quality jobs. ASEAN+3 economies need to focus on sectors that require high skills, such as digital services, healthcare, and tourism.
AMRO says services should not replace manufacturing rather, they should grow together. Better use of digital tools and training can boost service sector productivity and create more job opportunities, especially for women and small businesses.
3) Close investment gaps in infrastructure and human capital
There are still large gaps in investment across the region, especially in infrastructure and workforce development. AMRO estimates that USD 1.9tn is needed over the next 20 years.
Capital investment is still the biggest driver of growth in ASEAN+3. But investment should not only go into physical assets. It also needs to support skills training, healthcare, and education.
Technology will play an important role in improving how ASEAN+3 invests in its people. It can help make education more accessible to different groups and support more inclusive job opportunities especially as the population gets older.
4) Support innovation and technology adoption
Innovation and technology are crucial for improving resource allocation and sustaining growth in ASEAN+3. Since the mid-2000s, declining total factor productivity (TFP) has significantly slowed global growth, with 80% of ASEAN+3’s growth decline between 2001 and 2023 attributed to weak TFP. Structural reforms that promote competition, innovation, and better access to finance and talent are key to addressing these challenges. Revising public procurement rules, trade barriers, and outdated competition frameworks can further enhance competitiveness.
Technological advancements can help narrow productivity gaps, especially in middle- and late-stage ASEAN+3 economies. Future growth will rely on adopting new technologies, such as artificial intelligence (AI) and precision farming, to boost productivity. These technologies also facilitate global integration across sectors like agriculture, manufacturing, and services.
However, rapid adoption may lead to job displacement and inequality, particularly in economies reliant on routine jobs. Governments should invest in STEM education, digital skills, and ethical frameworks, while fostering regional cooperation for equitable technological progress.
5) Strengthen government capacity
A strong, capable state is crucial for ASEAN+3’s growth and structural transformation. State capacity involves effectively implementing policies to mobilise investment, drive innovation, and develop key sectors. As these economies progress, strengthening state capabilities is vital for achieving macroeconomic stability and productivity-enhancing infrastructure. Efficient public administration and collaboration with the private sector are key to ensuring successful policy execution and adapting to new challenges.
To boost long-term growth, ASEAN+3 should focus on enhancing TFP through technology adoption, such as artificial intelligence. Effective policy implementation could raise growth by 1% annually from 2025 to 2050. Strong state governance and multilateral cooperation are essential for fostering economic openness, accessing new technologies, and securing financing.
By combining robust state mechanisms with targeted policies and regional cooperation, ASEAN+3 can achieve sustained, high-quality growth and become a global model for inclusive, sustainable development.
With the right policies and cooperation, ASEAN+3 can remain a key engine of global growth — one that is more inclusive and sustainable for the future.
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