Title page 1

Contents 1

EXECUTIVE SUMMARY 2

1. INTRODUCTION: A NEW GROWTH MODEL FOR THE ASIA-PACIFIC 3

2. CENTRALITY OF PRODUCTIVITY 4

3. PRODUCTIVITY GAPS IN THE ASIA-PACIFIC 6

3.1. How Multinationals and SMEs Cope with Competitive Rivalry 6

3.2. Demographics 7

3.3. Structural Weakness in Capital Formation 8

3.4. Exhausted Connectivity Dividends 8

3.5. Compound Regulatory Costs 9

4. NEW PRODUCTIVITY LEVERS SINCE 2015 11

4.1. What Drives Total Factor Productivity? 12

4.2. Unleashing SMEs for Regional Growth 13

5. CONCLUSIONS: A CAPABILITY-DRIVEN GROWTH MODEL 14

REFERENCES 17

6. TECHNICAL ANNEX 19

6.1. Regression Results: TFP of the Total Economy 19

6.2. Regression Results: Labor Productivity of Small Businesses 20

TABLE 1. NOTABLE COMPETITIVENESS STRATEGY WHITE PAPERS ACROSS ASIA-PACIFIC 5

TABLE 2. RECENT DATA SOVEREIGNTY, DIGITAL MARKET AND AI REGULATIONS 10

FIGURE 1. TOTAL FACTOR PRODUCTIVITY LOST (RELATIVE TO THE US = 1.00) SINCE 2015 4