Asia's Developing Future

Brexit and a potential US withdrawal from the North American Free Trade Agreement could have large ripple effects on trade in Asia, helping some countries and hurting others, according to prominent trade economist Ben Shepherd. What’s more, Asia’s tightly integrated supply chains could be disrupted in the aftermath.

Shepherd told a seminar at the Asian Development Bank Institute that although the UK’s withdrawal from the European Union and a potential US pullout from NAFTA seem remote from Asia, any effects on trade flows will be keenly felt in the region.

The trading system is a great example of a global, closed, integrated network, meaning if you change something somewhere, you change everything everywhere. These distant trade policy changes are important for Asia, even though we are geographically distant from that going on.

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About the speaker

Ben Shepherd is a principal at Developing Trade Consultants.

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Improved transportation links help communities prosper financially, but there’s an unexpected social dividend that can compound that prosperity—lower rates of smoking and drinking and higher levels of school attendance.

The Philippine government started its “Ro-Ro” policy in 2003 to link up islands and other remote areas in the archipelago nation with a system of roll-on, roll-off ferries.

Family incomes grew around the ports, with agricultural workers picking up non-farm work and farmers on islands around the ports able to increase their incomes through better access to markets and inputs to improve their farms. Altogether family incomes around the ports grew by about 4%.

The increased access to jobs and rising incomes had an unexpected social impact—less smoking and drinking and more kids in school.

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Read the working paper

https://www.adb.org/publications/impact-improved-transport-connectivity-income-education-health-philippines

About the authors

Kris Francisco was a research associate at the ADB Institute at the time of writing

Matthias Helble is senior economist and co-chair of the Research Department at ADBI.

https://www.adb.org/adbi/about/staff-profiles/matthias-helble

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Transport: http://bit.ly/2zORvP6

The Philippines: http://bit.ly/2BKNRqM

Urban areas contribute nearly two-thirds of India’s gross domestic product, even though they account for only 31 percent of the country’s population. They are India’s growth engines.

More remarkable is that India leapfrogged the manufacturing revolution and transitioned from agriculture to a service-based economy, with services now contributing 60 percent of GDP.

In 2014, the “Make in India” policy was launched to boost manufacturing.

The issue for local and foreign companies will be to identify comparative advantages of India’s cities, and which local and state governments attract investment and improve competitiveness by encouraging and protecting facilities for making and selling goods.

Government knows that urbanization is important, and policies encourage new towns to grow around information technology, for example, or education or health.

Cluster development models and special economic zones are being discussed to promote manufacturing and industrial townships, which will bring firms together to share specialized infrastructure, labor markets, and services.

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Read the working paper

https://www.adb.org/publications/how-identify-specialization-india-cities

About the author

Kala Seetharam Sridhar is a professor at the Centre for Research in Urban Affairs, Institute for Social and Economic Change, Bangalore, India.

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India: http://bit.ly/2kcLIzH

Manufacturing: http://bit.ly/2BnOCoQ

Urbanization is associated with economic growth, but it’s a fine balance before rural poverty simply shifts to the cities and the cities become too big to sustain development, sucking growth out of gross domestic product.

Economic growth and development, urbanization, and energy and electricity consumption are all closely linked, but economic progress does not equal economic development if the poor simply move from one state of poverty to another.

Increases in GDP per capita lower poverty and narrow rural–urban gaps. Initially, increases in urbanization lead to improvements, but at higher levels of urbanization, increases worsen poverty and rural–urban gaps.

The United Nations reported that global urbanization broke the 50 percent mark in 2009, and will absorb almost all the projected 2.5 billion additional people over the next 40 years. Most of the people expected to move to urban areas will come from less developed regions.

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Read the working paper

https://www.adb.org/publications/urbanization-development-environment-and-inequality-nexus

About the author

Brantley Liddle is a senior research fellow at the Energy Studies Institute, National University, Singapore.

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Urbanization has accelerated in the past few decades as thousands daily move to towns and cities in search of a better life, or better education opportunities for their children. Economic development is a natural spur to internal migration, but other factors may be may be in play in recent rapid demographic shifts, not least wider access to information over the Internet.

Slums, overcrowding, traffic congestion, and pollution are familiar signs of urban decay in many major cities. We ask Yang Zhang, ADBI research project consultant, whether these are signs that migration and urbanization have grown too rapidly for urban authorities to handle.

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Read the working paper

https://www.adb.org/publications/accelerating-urbanization-explained-role-information

About the authors

Yan Zhang is an ADBI research project consultant.

Guanghua Wan is a principal economist at the Asian Development Bank.

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Developing Asian countries must introduce more comprehensive public welfare programs for the elderly as their economies transition from traditional filial altruism and the extended family to parental altruism and the nuclear family.

As an economy develops, increasingly large amounts of resources are transferred from working adults, who produce more than they consume, to their parents and children, who consume more than they produce.

Gone is the time when elders and children counted as parts of the labor force—children stay in school longer, and elders spend more and more time in retirement.

Working adults in advanced economies transfer more of their income to dependent family members.

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Read the working paper

https://www.adb.org/publications/intergenerational-transfers-demographic-transition-altruism

About the authors

Yoshitaka Kodais a postdoctoral fellow of the Faculty of Economics at Chulalongkorn University, Bangkok, Thailand.

ManachayaUruyos is an assistant professor at the Faculty of Economics, Chulalongkorn University.

Siwapong Dheera-Aumpon is an assistant professor of economics, Kasetsart University, Bangkok.

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Indonesia’s economy grew rapidly over the past 30 years, in large part due to sweeping political and institutional reforms, the right mix of economic policy packages, and the development of fairer economic institutions, but progress made in reducing poverty and income inequality is faltering.

In 1996, the richest Indonesians had six times more income than the poorest. In 2014, the richest had ten times more. The top 10 percent got more than 32.4 percent, with the top 20 percent getting 47.8 percent of income.

Inequality in Indonesia and its economic growth over the past 2 decades is a consequence of the country's shift from agriculture to services without safeguards to protect vulnerable members of society.

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Read the working paper

https://www.adb.org/publications/two-decades-structural-transformation-and-dynamics-income-equality-indonesia

About the authors

Teguh Dartanto is head of the Poverty and Social Protection Research Group at the Institute for Economic and Social Research (LPEM), Faculty of Economics and Business, Universitas Indonesia.

Edith Zheng Wen Yuan is research associate

Yusuf Sofiyandi is research assistant at LPEM.

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Indonesia: http://bit.ly/2mwSyAP

Income inequality: http://bit.ly/2zIl87A

Hit by the 1997–1998 Asian financial crisis, economies in Southeast Asia adopted unconventional monetary policy measures to ride out the financial storm, and were the stronger for it, teaching a few unorthodox lessons to developed economies left reeling by the global crisis a decade later.

Central banks were initially at a loss about what to do, as share prices and asset values plunged, currencies and exports weakened, and investment capital fled—much as some central banks in advanced economies were during the global financial crisis of 2008.

In Asia, Thailand chose to recapitalize struggling banks, while in Hong Kong, China, the strategy was to buy falling stocks on the share market, which it later sold carefully back into the market, distributing the profit to every taxpayer as a bonus of some $1,000.

Public funding of bank recapitalizations in Thailand and the extraordinary purchase of equities in Hong Kong, China have elements of the unconventional monetary policy known as quantitative easing, which has received so much attention in major advanced economies in recent years.

During the Asian crisis, Western economists were skeptical about the macroeconomic benefits of government purchases of risky assets.

Since 2008, they have been far more sympathetic to the view that financial markets may not be efficient and may at times be destabilizing if left to themselves.

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Read the post on ADBI’s blog

https://www.asiapathways-adbi.org/2017/09/unconventional-monetary-policy-in-the-asian-financial-crisis/

About the authors

Tamim Bayoumi is a deputy director at the International Monetary Fund.

Joseph Gagnon is a senior fellow at the Peterson Institute for International Economics.

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Around the world, researchers and analysts are closely watching the economic performance of the People’s Republic of China in the wake of its recent slowing growth and the possible impact of that downturn on developed and developing economies.

The Asia and Pacific region is anxious, and the rest of the world has reason to worry about the consequences of a slowdown in the world’s second-largest economy.

But the slowdown allows countries to fine-tune their trade and currency policies to better benefit from the PRC’s next growth cycle.

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http://bit.ly/2zwuqmX

Read the working paper

https://www.adb.org/publications/impact-prc-slowdown-global-economy

Author

Soumyananda Dinda is a professor at the Department of Economics, University of Burdwan, West Bengal, India.

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Developing countries are relatively well positioned as they expand their energy capacity, with a banquet of climate-clean, sustainable, and renewable sources to choose from, while developed countries try to overcome centralization and replace long-established fossil and fissile sources bound up in laws and regulations, a French energy expert says.

About the speaker

Magali Dreyfus has been a researcher at the French National Center for Scientific Research since 2013, and is affiliated with Center for European Research on Administration, Politics and Society, Lille University. She is a visiting fellow at the National Graduate Institute for Policy Studies in Japan.

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Watch Let's Turn on the Lights

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