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on Central and Western Asia |
| By: | Amitav Acharya (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper argues that the collective action in Asia by its regional organizations has historically suffered from a “capability–legitimacy gap†: a disjuncture between the capability (in terms of material resources) of major Asian powers to lead regional cooperation on the one hand and their political legitimacy and will as regional leaders on the other. Successful collective action requires leadership with both capability (as suggested by rationalist theories) and legitimacy (as suggested by constructivist approaches). A central point of the paper is that the putative or aspiring leaders of Asian regionalism throughout the post-war period never had both. Actors who were materially capable of providing leadership and direction (the United States [US]1 and Japan) have lacked the necessary legitimacy, while those who have possessed legitimacy (India and the People’s Republic of China [PRC])2 in the 1940s and 1950s, the Association of Southeast Asian Nations (ASEAN) since 1967, and Indonesia in the context of Asia as a whole) have lacked the necessary resources. The result has been that while the ASEAN-led Asian institutions have made a significant normative contribution to regional order, they have not proved to be effective instruments of regional problem solving. But the capability-legitimacy gap has both costs and benefits. While Asian regional institutions remain weakly institutionalized and attract criticism as “talk-shops,†they have helped to ensure that Asia does not degenerate into a hegemonic order or a concert of power. It remains to be seen whether regionalism in an era of a rising PRC and India could bridge this gap. It is theoretically possible that the PRC and India could develop and possess both the resources and political will and standing to provide collective goods and lead Asian regionalism, but their mutual rivalry might prevent this. |
| Keywords: | ASEAN, regional cooperation, collective action, Asian regionalism, capability–legitimacy gap |
| JEL: | F50 F51 F53 F54 F55 F59 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23192&r=cwa |
| By: | C. Fred Bergsten (Asian Development Bank Institute (ADBI)); Marcus Noland; Jeffrey J. Schott |
| Abstract: | This paper examines the prospect of realizing regional economic integration via the mechanism of a Free Trade Area of the Asia-Pacific (FTAAP). The FTAAP initiative represents a politically ambitious, high potential benefit option for achieving Asian regional integration. Among its desirable attributes, the FTAAP initiative could help revive and promote a successful conclusion of the Doha Round negotiations; constitute a “Plan B†hedge if Doha fails; short-circuit the further proliferation of bilateral and sub-regional preferential agreements that create substantial new discrimination and discord within the Asia-Pacific region; defuse the renewed risk of “drawing a line down the middle of the Pacific†as East Asian, and perhaps the Western Hemisphere, initiatives produce disintegration of the Asia-Pacific region rather than the integration of that broader region that the Asia-Pacific Economic Cooperation (APEC) forum was created to foster; channel the People’s Republic of China (PRC)-United States economic conflict into a more constructive and less confrontational context; and revitalize APEC, which is of enhanced importance because of the prospects for Asia-Pacific and especially the PRC-US fissures. An incremental approach to the FTAAP, explicitly embodying enforceable reciprocal commitments, offers the best hope delivering on the concept’s abundant benefits. |
| Keywords: | Regional Economic Integration, free trade area, the Asia-Pacific, Asian regionalism, APEC |
| JEL: | O16 O53 R11 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23200&r=cwa |
| By: | Philippa Dee (Asian Development Bank Institute (ADBI)); Anne McNaughton |
| Abstract: | There is a strong presumption among economists that domestic reforms are promoted by regionalism. Yet strong empirical evidence for this proposition is lacking. This paper examines both the theoretical arguments and empirical evidence on this issue, drawing on the relevant economic, political, and legal literature. The authors argue that in general, the case for reciprocity in domestic reforms is weak. In the one case where a regional agreement appears to have promoted domestic reform—the European Union (EU)—the enforcement mechanisms used by the European Court of Justice played a significant role. But those mechanisms are not unique. Instead, the authors argue that the EU’s success was because domestic constituents were empowered to take action against uncompetitive regulation. Thus the EU promoted economic reform in sensitive, behind-the-border areas because it overcame the problem of loss of sovereignty by internalizing the political battle to domestic interests, and yet still provided a non-political frame of reference for the debate. |
| Keywords: | domestic reforms, Regionalism, EU, regional institutions |
| JEL: | D02 D04 D78 F13 F15 F53 F55 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23224&r=cwa |
| By: | Gregory Chin (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper examines the evolving dynamics between economic globalization and Asian regional interdependence, and asks whether and how the global financial crisis impacted Asian regionalism. The analysis suggests that the global crisis did trigger advances in regional policy cooperation from 2007 onwards, especially in the area of financial and monetary cooperation. Although the first order response of Asian countries was to join the broader global effort to contain financial freefall at the world level, there emerged a second order response at the level of regional institutional building, specifically to “multilateralize†the Chiang Mai Initiative, and to develop a regional trust fund to help strengthen Asian bond markets. This finding reconfirms the theoretical proposition in historical institutionalism that financial crises have a catalytic effect in stimulating regional innovation. At the same time, we see evolution in the pattern of Asian regionalism in two respects : first, the recent advances in Asian regionalism are being driven primarily, at this stage, by the rise of the PRC and India—although each in their own way, and to varying degrees. The current advance in regionalism also builds on momentum provided by pre-existing programs of regional financial cooperation, namely the Chiang Mai Initiative, and “regional connectivity†programs that have also been championed by Japan and ASEAN countries, such as the GMS, CAREC, and BIMSTEC initiatives. Second, Asian economies appear to be pursuing inclusive regionalism, which attempts to strike a balance between helping themselves and helping the global economy. Asia is striving for modes of regional cooperation that are, on balance, complementary with the current global macroeconomic rebalancing agenda of the G20, and supportive of global integration and openness. The main policy findings are that Asia’s future standing in an increasingly multi-centered world economy will be determined by its effectiveness in advancing a multi-layered international cooperation agenda. Yet achieving such international gains will depend on Asia’s willingness to make serious advances in regional collective action and global leadership, especially in areas of financial and monetary cooperation. |
| Keywords: | Economic Globalization, Asian regionalism, Asian regional interdependence, global financial crisis, regional cooperation |
| JEL: | F15 F33 F36 F51 F53 F55 F59 H87 O53 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23193&r=cwa |
| By: | Arslan Razmi (Asian Development Bank Institute (ADBI)); Gonzalo Hernandez |
| Abstract: | Many developing countries have attempted to pursue the East Asian growth model in recent decades. This model is widely perceived to have been based on export-led growth. Given that developed countries are likely to grow at a slower rate and be less willing to run trade deficits in the post-financial-crisis world, can this growth model be sustained? Using panel data for Asian countries, this paper contributes to addressing this question by distinguishing between different kinds of export- and tradable-led growth in order to more precisely identify the nature of growth in the pre-crisis decades. We find in particular that, among our variables of interest, the proportion of a country's manufactured exports that is destined for industrialized countries is the one most robustly associated with output growth. The results have implications for continued post-crisis growth in Asian developing countries. |
| Keywords: | export-led growth, Asian developing countries, post-crisis, global crisis |
| JEL: | F43 O11 O53 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:23207&r=cwa |
| By: | Wen-jen Hsieh (Asian Development Bank Institute (ADBI)) |
| Abstract: | The collapse of exports that has attended the current global economic recession threatens the export-led economic growth of the four Asian dragons. To better understand the economic performances and future prospects of the four dragons, this paper first examines the economic structural changes that have taken place in Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China, as well as the gradual shifting of the sources of economic growth away from the manufacturing sector and toward the service sector. Following this, a panel data set for the four dragons for the period 1995–2008 is constructed and a fixed-effects model applied to the data. The estimated coefficients deriving from the application of the model indicate that growth in the service sector, exports, and gross fixed capital formation each have a positive and statistically significant impact on economic growth. While the estimated coefficient is not significant, there is also a hint of a positive causal relationship between manufacturing sector growth rates and GDP. The empirical results confirm the shifts observed in industrial structures and the contribution of the service sector to economic growth. New service development (NSD), which integrates manufacturing output with high value-added services, is anticipated to be a new engine for economic growth and deserves more attention, especially in the realm of government policymaking within the four Asian dragons. |
| Keywords: | export-led economic growth, Asian dragon, Industrial Structure, Global Economic Recession |
| JEL: | F01 E6 O12 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eab:microe:23221&r=cwa |
| By: | Rupa Chanda (Asian Development Bank Institute (ADBI)) |
| Abstract: | Services have been a key driver of overall economic growth in South Asia since the 1990s. This paper examines how the growth of services output, trade and investment have affected service sector employment in South Asia and the extent to which countries in this region are proactively undertaking skill development, training, and human resource management policies that are targeted at the service sector. |
| Keywords: | Services Trade, Trade Liberalization, trade and investment, services employment, South Asia |
| JEL: | F14 F16 F22 F23 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:laborw:23197&r=cwa |
| By: | Mora, Jesse; Singh, Nirvikar |
| Abstract: | This paper examines the experience of 10 Asian countries with respect to growth, trade and FDI. It explores relationships between the nature of exports and imports and growth, as well as the relevance of FDI as a channel for these relationships. We find that FDI is often positively correlated with higher productivity levels in exports and imports. The effect for imports is particularly apparent for imported intermediate goods, reflecting the emergence of greater trade fragmentation. In turn, both imported intermediates and exports that are associated with higher productivity levels are positively correlated with per capita GDP. This paper therefore brings together empirical evidence that integrates discussions of FDI, trade fragmentation and improvements in the productivity of traded goods. |
| Keywords: | international trade; trade policy; product upgrading; trade fragmentation; vertical specialization; FDI and economic development |
| JEL: | O1 O24 F14 O33 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37127&r=cwa |
| By: | Joshua Aizenman (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper takes stock of recent research dealing with the degree to which the trilemma choices of Asian countries facilitated a smoother adjustment during the global crisis of 2008– 2009, and the way the region has been coping with the adjustment to the postcrisis challenges. We point out that emerging Asia has converged to a middle ground of the trilemma configuration : limited financial integration, a degree of monetary independence, and controlled exchange rate buffered by sizable international reserves. This configuration, with the proper management of balance sheet exposure and public finances, facilitated a smoother adjustment of emerging Asia to the crisis, and was instrumental in inducing the rapid resumption of growth. The swings of financial flows, from large deleveraging of foreign positions in 2008 to the renewed inflows in 2010, validate the insight of the public finance approach to financial integration : the gains from deeper financial integration should be balanced against the costs of growing exposure to turbulences. A key lesson of the crisis is the need to apply a comprehensive cost/benefit approach to prudential policies, to the regulation of external borrowing and of domestic financial intermediation, and to the accumulation and use of international reserves. We illustrate these results in the context of the challenges facing emerging Asia’s adjustment during the global financial crisis, and the postcrisis policy stance dealing with the renewed inflows of capital. |
| Keywords: | Financial Stability, emerging Asia, financial integration, monetary independence, controlled exchange |
| JEL: | F31 F32 F33 F36 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23219&r=cwa |
| By: | Reza Siregar (Asian Development Bank Institute (ADBI)) |
| Abstract: | New lessons, challenges, and debates have emerged from the subprime crisis in the United States. While the macroeconomic orientation is not new and has always been among the classic toolkits of central banks for ensuring financial stability, the current explicit articulation and specification of such a tool as a global standard is new. The objective of this study is to review and analyze the steps taken by the central banks and monetary authorities of select Asian countries to strengthen their prudential regulations, mainly the macro-prudential component of such regulations. |
| Keywords: | Banking Regulation, Macro-prudential approache, prudential regulations, Financial Stability, central banks, Asia |
| JEL: | E52 E58 G28 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23211&r=cwa |
| By: | Mangal Goswami (Asian Development Bank Institute (ADBI)); Sunil Sharma |
| Abstract: | The paper gives an assessment of the progress made in developing local debt markets in emerging Asia. Market development has been limited by hurdles confronting borrowers and lenders, current and potential liquidity providers, and insufficient support from government policies and regulations. Besides fostering a credit culture to deepen local debt markets, the issue of critical size can be addressed through an integrated regional market for local currency bonds that provides greater scale, efficiency, and access. With rapid economic growth in Asia, a key challenge is to generate financial assets that can provide the underlying collateral for expanding fixed-income markets, and hence domestic and regional investment opportunities. |
| Keywords: | Debt markets, Asia, financial markets |
| JEL: | E44 F36 G18 H63 O16 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23210&r=cwa |
| By: | Ramkishen S. Rajan (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper revisits the issue of exchange rate regimes in emerging Asia. It is divided into two main parts. The first part compares de jure and de facto exchange rate regimes in Asia over the decade 1999–2009. It finds that while Asia is home to a wide array of exchange rate regimes, there are signs of gradual movement towards somewhat greater exchange rate flexibility in many of the regional countries. However, the propensity for foreign exchange intervention and exchange rate management among regional central banks remains fairly high in many instances. Beyond a general reluctance of many Asian economies to allow for a “benign neglect†of their currencies both in terms of managing volatility as well as in terms of “leaning against the wind,†the sustained stockpiling of reserves in developing and emerging Asian economies since 2000 (interrupted only briefly by the global financial crisis) suggests that they are more sensitive to exchange rate appreciations than to depreciations. This is the focus of the second part of the paper. We find there to be evidence of an apparent “fear of appreciation†which is manifested in asymmetric exchange rate intervention—i.e., a willingness to allow depreciations but reluctance to allow appreciations. This policy of effective exchange rate undervaluation is rather unorthodox from a neoclassical sense, but is consistent with a development policy centered on suppressing the price of non-tradable goods relative to tradables (i.e., real exchange rate undervaluation). The paper concludes with a few observations on the management of Asian currencies in light of the global financial crisis and concerns about global imbalances. |
| Keywords: | exchange rate regime, emerging Asia, global financial crisis, foreign exchange intervention, central bank |
| JEL: | F14 F31 F41 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23214&r=cwa |
| By: | Takashi Kihara (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper examines several indicators of effective development aid, focusing on the contributions of major bilateral donors. The empirical analyses of selectivity for effective aid delivery revealed that, taking a long-term and regional perspective, some major donors including Japan have been as selective in delivering their aid as some countries well-known for their selective aid delivery, such as Denmark. Japan has provided higher aid for the countries with better policy and governance, and higher grant aid for the countries with lower income, particularly in Sub-Saharan Africa. Indexes for donor proliferation and aid fragmentation, which measure increased transaction costs of recipient countries, were calculated using methods set out in existing studies on the topic, but over the longer term and by region. It is demonstrated that aid from some major donors in Asia, the Pacific, and Europe, including Japan, has proliferated less than the aid programs of most other countries. Official Development Assistance (ODA) provided by Japan since 1990 has been more closely correlated with the growth of GDP per capita of recipient countries than that of other donors. The growth acceleration effects of short-impact aid (SIA) such as aid for infrastructure have been stronger than those of other categories of aid such as aid for education, aid for health, or humanitarian emergency aid. While other major donors reduced the share of SIA in their total ODA in the 1990s and the early 2000s, Japan maintained its share of such aid to sustain the growth of recipient countries. The aid-growth nexus also demonstrates the larger contribution of Japan than those of other major donors to the growth of recipients. Overall, aid from some donor countries, including Japan, that ranked lower in short-term assessments has turned out to be of good quality in the longer run or from regional perspectives, a finding confirmed by recent literature on the quality of aid. |
| Keywords: | development aid, bilateral donors, aid fragmentation, aid-growth nexus, ODA |
| JEL: | F35 O10 O40 O43 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:23194&r=cwa |
| By: | C. R. Ranganathan (Asian Development Bank Institute (ADBI)); K. Palanisami; K. R. Kakumanu; A. Baulraj |
| Abstract: | Many rural poor people in developing countries depend on agriculture and are highly influenced by climatic change. Hence, sustainable livelihood approaches are used at both policy and project level to initiate new poverty reduction activities and modify existing activities to improve livelihood incomes. Practices relevant to climate change adaptation around the world are wideranging and include development of technology, management, infrastructure, livestock, groundwater, and knowledge. Both structural interventions (such as building flood embankments, dikes, or seawalls or enhancing the natural setting or landscape) and nonstructural interventions (policies, knowledge development, awareness, methods and operating practices, including participatory mechanisms) have helped to reduce the impact of climate change. Further, market-based instruments such as credits and crop insurance were also developed to help poor households in many developing countries to cope with the uncertainties. The uptake of such adaptation practices is lagging, however, but informal institutions are playing a key role as they rely on enforcement methods and are not supported by the government. Mainstreaming adaptation and enhancing adaptive capacity could be increased by encouraging partnerships between informal processes and formal interventions to facilitate adaptation by the poor. The cost of adaptation is also significantly higher in developing countries. Nonetheless, more attention is needed in addressing future climate scenarios through agricultural research and development, irrigation development, infrastructure, and improved irrigation efficiency. |
| Keywords: | Climate change, Adaptation, vulnerability, the poor, developing countries, climate change effects |
| JEL: | N55 O13 Q54 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:microe:23203&r=cwa |
| By: | Venkatachalam Anbumozhi (Asian Development Bank Institute (ADBI)); Mari Kimura; Kumiko Isono |
| Abstract: | As an integral part of sustainable development, the impacts from climate change, including increasing water stress, more extreme weather events, the potential for high levels of migration and the disruption of international markets are critical challenges for all Asian countries. With rapid economic growth and modernization, the countries in the region are increasing production and consumption, calling for critical adaption measures. With the Asian countries and the energy sector exceedingly accounting for a large share of CO2 and GHG emissions, businesses in Asia need to increase efficiency in energy use, offset emissions, and use more low carbon or renewable energy resources. Businesses are no longer considered part of the environmental problem as they are progressively becoming part of the solutions, and if furthered by an ideal regulatory disposition this would encourage corporations to strive for zero emissions. To address these issues, this paper reviews selected initiatives taken by Asian countries to comply with emerging global sustainability standards, reporting, and management systems, and tracks the response of Asian businesses to global environmental concerns, examines market based innovations including new regulations that augmented corporate excellence, and identifies future directions for business that lead low carbon society. It recommends governments and business to join forces in supporting low carbon initiatives, drawing upon market mechanisms through reconfiguring national environmental policies and strategies. |
| Keywords: | sustainable development, Climate change, Asian countries, environmental policies, environmental strategies |
| JEL: | M19 Q3 Q48 Q56 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23201&r=cwa |
| By: | Karlan, Dean (Yale University) |
| Abstract: | We use randomized program offers and multiple follow-up survey waves to examine the effects of entrepreneurship training on a broad set of outcomes. Training increases short-run business ownership and employment, but there is no evidence of broader or longer-run effects. We also test whether training mitigates market frictions by estimating heterogeneous treatment effects. Training does not have strong effects (in either relative or absolute terms) on those most likely to face credit or human capital constraints, or labor market discrimination. Training does have a relatively strong short-run effect on business ownership for those unemployed at baseline, but not at other horizons or for other outcomes. |
| JEL: | D04 D14 D22 H32 H43 I38 J21 J24 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:yaleco:95&r=cwa |
| By: | Tim Hatton |
| Abstract: | Over the last decade the locus of policy-making towards asylum seekers and refugees has shifted away from national governments and towards the EU as the Common European Asylum Policy has developed. Most of the focus has been on the harmonisation of policies relating to border control, the processing of asylum claims and reception standards for asylum seekers. But this still falls far short of a fully integrated EU-wide policy. This paper examines the basis upon which a joint EU policy can be justified. I then ask whether superior outcomes can be achieved by harmonisation alone or if more centralised policy-making is necessary. I chart the progress of harmonisation and burden-sharing in the development of the Common European Asylum System and explore its effects. I also study the political feasibility of deeper policy integration by analysing public attitudes in the European Social Survey. I conclude that deeper integration is both desirable and politically possible. |
| Keywords: | Refugees, Asylum seekers, Asylum policy, Harmonisation, Burden-sharing |
| JEL: | F22 F53 F55 H77 H87 J15 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:660&r=cwa |