Asia’s long-term transformation and the eradication of poverty in the region will require more than simply high economic growth rates if Asia is to reach its full potential—a scenario referred to by many as the “Asian Century.”

The draft report, “Asia 2050—Realizing the Asian Century,” identifies six key drivers of transformation in the region: technical progress, capital accumulation, demographics and the labor force, the emerging middle class, climate change mitigation and the competition for resources, and the communications revolution.

In its march toward prosperity, Asia faces several key challenges and risks. Yawning inequalities must be narrowed and—as home to over half of the world’s population—Asia must confront a massive wave of urbanization and changing demographic profiles.

Asia’s long-term competitiveness will depend heavily on how it controls the intensity of its resource use, including water and food, and manages its carbon footprint. It is in Asia’s best interest to encourage and invest in innovation and clean technology to maintain its impressive growth momentum, the draft report says.

“Asians face formidable challenges. Our leaders must be aware that future prosperity will need to be earned in the same way that developed economies have earned their success,” said ADB President Haruhiko Kuroda.

Fast-growing economies like the People’s Republic of China (PRC), India, Indonesia, and Viet Nam cannot afford to fall into the middle income trap when seeking to move from resource-driven growth that is dependent on cheap labor and capital to growth based on high productivity and innovation.

Then there is the great challenge of governance and institution building—an Achilles heel for most Asian economies. Asia must modernize its governance systems and retool its institutions to ensure transparency, accountability, and the enforceability of rules and regulations, the draft report says.

These issues are not mutually exclusive and could impact one another in ways that multiply existing tensions or even create new difficulties that could threaten Asia’s rapid growth, as well as its stability and security.

To meet these challenges, Asian leaders need to devise bold and innovative national policies while pursuing regional and global cooperation to successfully manage regional public goods, energy security, infrastructure connectivity, food supplies and water resources, and to maintain long-term peace and stability.

The overview of the draft report was unveiled at ADB’s 44th Annual Meeting in Ha Noi, Viet Nam. It will be discussed by participants in the Governors’ Seminar, including the finance ministers of Bangladesh, France, India, and the Republic of Korea; the vice finance minister of the People’s Republic of China (PRC); the governor of the State Bank of Viet Nam; the parliamentary secretary for finance of Japan; and ADB President Kuroda.

With inputs from the meeting’s discussions, the draft report will be expanded into a comprehensive book set for publication in August.