We recently compiled a list of the 20 Most Industrialized Countries in Asia and in this article, we will talk about the most industrialized country in Asia.
Current State of Development and Outlook of Asia
Asia has observed phenomenal growth in industrialization and manufacturing, particularly in the first quarter of 2024, driven by strong domestic demand and export growth in electronics. Developing Asia’s growth forecast for 2024 is revised up to 5.0% which also speaks volumes about the highly stable performances across multiple sectors. Countries like China, with its recovery in services consumption and strong exports, have played a key role in this growth. Moreover, the strong performance of sectors like construction and public investment in countries like Azerbaijan and the Kyrgyz Republic has further fueled this expansion.
The region’s inflation is also on a positive trajectory and is forecasted to ease from 3.3% in 2023 to 2.9% in 2024 and will stabilize at 3.0% in 2025. This decline is attributed to stable exchange rates and tight monetary policies in key economies. For example, Kazakhstan’s inflation rate slowed from 18.5% in early 2023 to 9.0% in the same period of 2024. Similarly, Armenia experienced a 0.8% deflation in early 2024. Despite the positive outlook, the region faces several downside risks, including geopolitical tensions and property market fragility in China.
Speaking of China, it is worth highlighting that it is Asia’s most powerful economy in 2024. Beyond Asia, South Africa and Morocco are the most industrialized countries in Africa.
Performance of Manufacturing in Asia in 2024 and the Growing Importance of South Asia
Asia’s manufacturing sector continues to exhibit strong performance as the Purchasing Managers’ Index (PMI) exceeded 50 for seven consecutive months. This consistent growth confirms a resilient industrial base across the region. For instance, China’s PMI for June stood at 51.2, while Japan’s reached 52.4. Moreover, Southeast Asian economies are also contributing largely to this growth. Vietnam’s PMI hit 53.1 and similarly, Thailand and Indonesia reported PMIs of 52.7 and 51.8, respectively. The region’s manufacturers are capitalizing on technological advancements and increased foreign investment.
Southeast Asia has become a key hub for businesses diversifying supply chains which is truly driven by the “China Plus One” strategy. With the growing US-China tensions, companies are shifting operations to the region to mitigate risks associated with heavy reliance on China. This strategy has largely boosted foreign direct investment (FDI) into ASEAN countries, with FDI rising to $236 billion in 2023, up from an annual average of $190 billion between 2020 and 2022. Countries like Vietnam and Indonesia are benefiting the most from this shift.
Hence, Vietnam has appeared as an integral manufacturing location, especially for tech giants like Apple Inc (NASDAQ:AAPL), which now assembles MacBooks, iPads, and Apple Watches in the country. Vietnam’s competitive labor costs and extensive free-trade agreements have made it a preferred destination for supply chains. In addition to Apple Inc (NASDAQ:AAPL), Samsung has established a major research and development presence in Vietnam.
Moreover, Malaysia and Indonesia are also seeing tremendous growth. Malaysia, with its skilled labour force in semiconductor manufacturing, has attracted investments from companies like Intel and GlobalFoundries. Meanwhile, Indonesia is capitalizing on its abundant resources of copper, nickel, cobalt, and bauxite to develop an integrated electric vehicle (EV) hub.
Tech Industry Giants Tapping Into Asian Economies
NVIDIA Corp (NASDAQ:NVDA) is expanding its presence in Asia with major investments in Indonesia and Singapore. In April 2024, NVIDIA Corp (NASDAQ:NVDA) announced plans to build a $200 million artificial intelligence centre in Surakarta, Indonesia in partnership with Indosat Ooredoo Hutchison. This facility aims to enhance local telecommunications infrastructure and develop digital talent. The initiative follows Indosat’s integration of NVIDIA Corp (NASDAQ:NVDA) next-generation chip architecture, Blackwell.
In Southeast Asia, NVIDIA Corp (NASDAQ:NVDA)’s partnership with Singapore’s telecom provider Singtel further confirms its regional ambitions. By deploying AI capabilities in data centers across the region, Singtel aims to provide businesses access to NVIDIA Corp (NASDAQ:NVDA)’s cutting-edge AI computing power without the need for heavy infrastructure investments. Southeast Asia has indeed emerged as a major revenue driver for NVIDIA Corp (NASDAQ:NVDA).
On the other hand, Intel Corp (NASDAQ:INTC) is making a strategic investment to automate chip packaging with the involvement of 14 Japanese companies, as reported by Nikkei Asia. Led by Intel Corp (NASDAQ:INTC) Japan president Kunimasa Suzuki, this collaboration aims to develop a working prototype by 2028. The US chipmaker plans to invest tens of billions of yen in this initiative by capitalizing on Japan’s substantial 30% share in global chipmaking equipment. By advancing front-end processes like circuit formation, Intel Corp (NASDAQ:INTC) seeks to enhance back-end applications, such as chip stacking, to boost overall chip performance. This decision is made to reduce reliance on manual assembly in low-cost regions and shift manufacturing to the US and Japan. The effort is timely, as China currently holds over a third of global back-end chipmaking capacity.
Photo by David Veksler on Unsplash
Is China the Most Industrialized Country in Asia?
To identify the most industrialized countries in Asia, we used two key metrics: the value-added manufacturing output (in current dollars) and employment in industry (percentage of total employment). We chose the value-added manufacturing metric as it measures the contribution of manufacturing to the overall economy, and a higher value indicates a stronger and more developed manufacturing sector, which is a core component of industrialization. We chose the employment metric because it represents the proportion of the workforce employed in industrial sectors. It provides insights into the labour market structure and the importance of industrial activities in the employment landscape. A higher percentage indicates a larger industrial workforce, suggesting a more industrialized economy.
We ranked each country from highest to lowest for both metrics, with a rank of 1 indicating the highest manufacturing output or highest employment in industry. To determine the overall level of industrialization, we assigned a weight of 0.8 to the manufacturing output rank and 0.2 to the employment in the industry rank. We then calculated a weighted average rank for each country. The countries are presented in ascending order of their weighted average rank, where 1 indicates the highest level of industrialization and 17 the lowest. Our methodology revealed that China is indeed the most industrialized country in Asia.
With a weighted average rank of 1.3, China is the most industrialized country in Asia. As of 2022, around 32% of the Chinese workforce is employed in the industrial sector. Moreover, the value-added manufacturing output for China for the year 2023 was $4,658,781, making it the country with the highest manufacturing output in the world. Moreover, China has prioritized manufacturing as a key driver for its economy by allocating 10.4 billion yuan ($1.45 billion) from the central government to rebuild industrial foundations and promote high-quality development.
In 2024, China’s industrial sector showed a massive recovery as production increased by 7% year-on-year in January and February. This rebound provided a much-needed boost within the ongoing challenges in the property sector, which has seen substantial declines in investment and new construction. Despite a 9% year-on-year drop in property investment, the government’s focus on stability and incremental support measures has fostered cautious optimism.
To check out the extensive list of the most industrialized countries, please visit the 20 Most Industrialized Countries in Asia.
You can also check out the list of the 20 Most Advanced Countries in the World and 25 Countries that Spend Most on Education Per Capita
Disclosure: 20 Most Industrialized Countries in Asia is originally published on Insider Monkey.