|
on South East Asia |
| By: | Giovanni Capannelli (Asian Development Bank Institute (ADBI)); See Seng Tan |
| Abstract: | The formation of regional production networks in East Asia has occurred mainly through market forces, without much help from regional institutions in promoting the creation of a single Asian market. While this approach has served the region well in the past, the drastic changes experienced since the 2008–2009 financial crisis and the challenges Asian countries are facing—growing inequalities and competition, on the one hand, and enhanced threats to the environment and people’s health on the other—have rendered more urgent the need for intergovernmental cooperation at global and regional levels. Asia’s institutions for regionalism need strengthening through reform and innovation such as better governance and resourcing, greater and more effective participation and delegation of powers, overall streamlining of regional architecture, including the phasing out of outdated or irrelevant institutions and, where needed, the creation of new ones. Ultimately, given its rootedness in regional order, institutional efficacy is a function of the ability and willingness of its members, especially influential stakeholders, to collaborate. |
| Keywords: | Asian integration, regional institutions, Regionalism, Asian market, intergovernmental cooperation, regional production networks |
| JEL: | F15 F55 F59 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23326&r=sea |
| By: | Yung Chul Park (Asian Development Bank Institute (ADBI)); Shinji Takagi |
| Abstract: | The paper uses the emerging Association of Southeast Asian Nations (ASEAN) Economic Community as a motivation to explore the issue of capital flow management in an economic community. Although there is an increasingly shared view that capital flow management measures should be part of the routine policy toolkit of emerging market economies, the logic of an economic community appears incompatible with extensive controls on capital flows. Substantial, if not complete, capital account liberalization must therefore take place across ASEAN. Few ASEAN countries are expected to have dismantled all capital account restrictions by 2015, thus requiring little need to introduce an entirely new set of capital flow management measures. Over the longer term, the ultimate requirements of an economic community seem to dictate that any remaining measures be market-based and not residency-based. Regional cooperation would be useful in enhancing individual country efforts, including collectively agreeing on the definition of a crisis and affirming the right of a member country to introduce an emergency measure in the event of a crisis. Our assessment is that most of the inflow restrictions could be removed quickly without creating additional risks; controls on private capital outflows could also be relaxed, albeit more judiciously, if for no other reason than to promote regional financial integration. |
| Keywords: | ASEAN Capital Account Liberalization, capital flows, economic community, regional cooperation, regional financial integration |
| JEL: | F33 F36 O53 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23329&r=sea |
| By: | Yung Chul Park (Asian Development Bank Institute (ADBI)); Shinji Takagi |
| Abstract: | The paper uses the emerging Association of Southeast Asian Nations (ASEAN) Economic Community as a motivation to explore the issue of capital flow management in an economic community. Although there is an increasingly shared view that capital flow management measures should be part of the routine policy toolkit of emerging market economies, the logic of an economic community appears incompatible with extensive controls on capital flows. Substantial, if not complete, capital account liberalization must therefore take place across ASEAN. Few ASEAN countries are expected to have dismantled all capital account restrictions by 2015, thus requiring little need to introduce an entirely new set of capital flow management measures. Over the longer term, the ultimate requirements of an economic community seem to dictate that any remaining measures be market-based and not residency-based. Regional cooperation would be useful in enhancing individual country efforts, including collectively agreeing on the definition of a crisis and affirming the right of a member country to introduce an emergency measure in the event of a crisis. Our assessment is that most of the inflow restrictions could be removed quickly without creating additional risks; controls on private capital outflows could also be relaxed, albeit more judiciously, if for no other reason than to promote regional financial integration. |
| Keywords: | ASEAN Capital Account Liberalization, capital flows, economic community, regional cooperation, regional financial integration |
| JEL: | F33 F36 O53 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23329&r=sea |
| By: | Jacob Gyntelberg; Subhanij Tientip; Mico Loretan |
| Abstract: | We present empirical evidence that the Thai baht’s value is driven in part by investors’ cross-border equity portfolio rebalancing decisions. Our results are based on comprehensive datasets of FX and stock market transactions undertaken by nonresident investors in Thailand in 2005 and 2006. Higher returns in the stock market relative to a reference stock market are associated with net sales of equities by these investors and a depreciation of the Thai baht. Net purchases of Thai equities lead to an appreciation of the Thai baht. Foreign investors do not appear to hedge the foreign exchange risk related to their stock market positions. |
| Date: | 2012–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/214&r=sea |
| By: | Masahiro Kawai (Asian Development Bank Institute (ADBI)); Peter J. Morgan |
| Abstract: | The Great East Japan Earthquake on 11 March 2011 was the biggest earthquake recorded in Japanese seismic history, and the fourth largest recorded in the world. The scope of the disaster far exceeded that of the Hanshin Earthquake of 1995. The repercussions of this disaster spread far beyond the geographical areas directly affected. For example, Electric power supply capacity in the Kanto area, which accounts for about 40% of Japanese gross domestic product (GDP), fell at one stage by about 40% from the normal peak—a severe constraint on economic activity, and the supply of nuclear-generated electric power has largely been cut off since then. Production supply chains were significantly disrupted, not only in Japan, but all over Asia. The disaster also highlighted Japan’s many other structural challenges besides reconstruction needs, including persistently low growth, population aging and low fertility, burgeoning government debt, declining international competitiveness, and uncertain energy supplies. Moreover, the global financial crisis and the ongoing euro area financial crisis suggest that Japan needs to create its own growth momentum without relying excessively on markets in the United States (US) and Europe. This paper discusses the scope of these challenges and sets out a long-term strategy for overcoming them and putting the Japanese economy on a stable growth path. Domestically, key areas that need to be focused on are supply-side reforms, including support for R&D in high-technology, knowledge-intensive, green growth areas; deregulation to promote growth in service sectors and agriculture; corporate tax reduction; and increased energy security; as well as fiscal and social security reforms to put the public debt to GDP ratio on a sustainable basis. Externally, Japan needs to link its economy firmly with the strong growth track of emerging Asia and its rapidly growing middle class. It needs to promote greater economic links with the rest of Asia, including moves toward an East Asian FTA and support for the TPP that could eventually develop into a trans-Pacific FTAAP. |
| Keywords: | Japan, growth strategy, The Great East Japan Earthquake, the Japanese economy |
| JEL: | E58 E62 F13 H2 H53 J13 L4 O25 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23327&r=sea |