By DPA
Singapore : Asian governments were urged Monday to cultivate innovation as a key strategy enabling them to successfully compete in the global arena.
"We're no longer in a Cold War," Jim Goodnight, chief executive officer of a software service firm SAS, told 300 delegates from 25 countries attending the World Economic Forum on East Asia.
The current race is for minds. "Whichever region can create the greatest set of minds" will eventually dominate the world, said the head of the US-headquartered firm.
Ten years after the Asian currency crisis rocked the region, Asia is awash with cash. Capital flows to emerging markets are now six to seven percent of gross domestic product, or back to the levels they were before the crisis that started in Thailand in July 1997.
The ability to innovate has been essential to Singapore's success, said Lim Siong Guan, chairman of the Economic Development Board. Without natural resources and labour costs higher than surrounding countries, the city-state has turned to innovation to attract investment.
Among those looking ahead is Vietnam's Deputy Prime Minister Nguyen Sinh Hung, who said he hoped more foreign investors will sink money directly into companies as opposed to their own operations "so that these companies become not Vietnamese, but international."
By partnering them, the Vietnamese will hopefully learn to hone management skills, he added.
Warnings of social and political tensions resulting from the widening income gap between Asia's rich and poor have pervaded the two-day meeting of political and business leaders.
"There is an Asia that is growing well and another that is struggling behind," Rajat Nag, managing director of the Asian Development Bank, told the World Economic Forum on East Asia.
This "has in itself the seeds of some very grave social tensions and political tensions which actually can threaten the entire prosperity of this region," he said.
Some 1.9 billion Asians are living on less than two US dollars a day. More than two billion people are without adequate access to sanitation and clean water.
The stalled Doha Round of trade talks was also seen as a risk to Asia's prosperity.
Governments and businesses hindering progress in the talks have forgotten that it was free trade that led the world to enjoy its unprecedented level of prosperity, said Neville Isdell, chairman and chief executive officer of The Coca-Cola Company.
"Free trade is what has allowed the global economy to grow," he said.
An attempt last week to restart negotiations failed.
Asia needs to examine its role in helping to unwind global imbalances, said Thailand's Minister for Finance Chalongphob Sussangkarn.
"Maybe there is too much apathy or a sense of helplessness," he said. "But eventually I think it's an issue, particularly in East Asia which holds most of the world's foreign reserves."