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A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

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ADBI News 2012 Volume 6 Number 4

Outlook for Growth and CONFERENCE

Regional Cooperation in Asia

Dean Kawai (center) joins a panel of experts to assess policy choices for sustainable growth in the Asia and Pacific region.

The aftermath of the 2008 global financial crisis and Bruce Miller, Australia Ambassador to Japan.
continues to present challenges for achieving Discussions focused on the regional impact of the
sustainable and inclusive growth in Asia. Growth growth slowdown in the Peoples Republic of
in the major export markets in Europe and the China (PRC) and India, the eurozone crisis, and
United States (US) is likely to remain subdued for shifts in regional trade and financial integration.
several years, prompting the need for more robust
trade integration within Asia to take advantage of In this issue
the growing regional market. Greater financial
integration in the region is needed to facilitate the ADBI Annual Conference 12
deployment of regional savings to support
Connectivity between
investment, including infrastructure, while
ensuring that such integration has safeguards to South and Southeast Asia 2
control destabilizing volatile capital flows. As the ADBI Reaches Two Key Milestones 2
European Union is considered the most advanced 2012 DAJA Competition 3
example of regional economic and financial Eurozone Crisis 4
integration, the eurozone crisis presents lessons for
Breaking the Diabolical Loop 4
further integration in Asia.
To take stock of these developments in growth Recent Books 5
and regional integration, as well as to explore Top downloads in 2012 5
prospects and assess policy choices for sustainable Growth Constraints on
growth, the ADBI Annual Conference on Small Companies in Myanmar 6
Growth and Regional Cooperation and
Promote Financial Inclusion 6
Integration in Asia and the Pacific 2012 and
Beyond was held in Tokyo on 30 November 2012. ADBI in the News 6
The event attracted more than 100 participants, Selected Events 7
including: Haruhiko Kuroda, President, ADB; Recent Working Papers 7
Masahiro Kawai, Dean, ADBI; Zhang Yunling,
Effective Policies and Experiences 8
Professor, Director of International Studies, CASS;

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Papers presented will be published as ADBI risk of the noodle bowl, or overlapping regional
working papers and in a book. trade agreements, and facilitate a WTO Doha deal.
The conference covered several key issues. Third, optimism is growing that the eurozone crisis
First, the slowdown in the PRC and India is being will be managed and that the US will avert the
driven by endogenous factors. Because of their so-called fiscal cliff. Fourth, Asia would need to
increasing importance as sources of export be prepared in the event of a worst-case scenario.
demand, an output drop in the PRC or India will Macroeconomic policy space may be available for
lower output in the G-3 economies (Japan, EU, some Asian countries, but not all. Therefore,
US) and other Asian economies. However, macroprudential policies, including regional
extra-regional shocks are more important in liquidity support systems like the Chiang Mai
explaining output fluctuations in ASEAN. Second, Initiative, are vital and need to be strengthened.
trade and financial integration will continue to be Asian economies have to deepen trade and
an important agenda for Asian economies. Asia has investment integration, strengthen the financial
a multi-track trade liberalization approach with a system, and integrate the financial markets.
focus on FTA-led liberalization to support
For more information on this event please visit:
deepening production networks, but challenges
remain. A region-wide Asian FTA can reduce the pacific.2013/.

Connectivity between South and WORKSHOP

Southeast Asia

Over the past decade, Southeast Asia and South in Southeast and South Asia. The expected
Asia were two of the fastest growing regions in the outcome of the project is that public and private
world with annual average growth rates of 5.5% stakeholders will have a greater understanding and
and 7.6% respectively. In 2011, the two regions appreciation of policy steps required for effective
accounted for 6% of total world output. economic integration and cooperation between the
Nevertheless, economic integration between the two regions. This project would also help
two regions is low. developing member countries and ADB devise
To address this issue, an inception workshop strategies for effective regional economic
for the ADB/ADBI flagship study, Connectivity integration and cooperation, and support ADBs
between South and Southeast Asia, was held in role as a catalyst of regional cooperation and
Manila on 17 December 2012. integration. It is critical that the identified projects
The objective of this project is to facilitate and strategies be driven by realistic estimates of
more effective economic integration and prospective demand, rather than being
cooperation between developing member countries supply-driven.

ADBI Reaches Two Key Milestones

ADBI passed two milestones in December 2012 Mohammad Yunus, founder of Grameen Bank;
with the publication of post number 50 on Asia and Tarisa Watanagase, former Governor of the
Pathways and working paper number 400. Bank of Thailand. The South China Morning Post,
Urbanization can be good for the environment, by The Japan Times, and China Daily are among the
Guanghua Wan, was the 50th post to be published newspapers to have republished Asia Pathways
on Asia Pathways, the blog launched by ADBI at posts. December also saw the publication of the
the beginning of 2012. Asia Pathways has grown 400th paper in the well-regarded ADBI working
in influence and its authors have included paper series, The Persistence of Current Account
Ambassador Tommy Koh, former President of the Balances and its Determinants: The Implications
United Nations Conference on the Law of the Sea for Global Rebalancing, by Erica Clower and Hiro
and chair of the Earth Summit; Nobel laureate Ito.

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Bangladesh Journalist Wins 2012 AWARDS

Developing Asia Journalism Awards

Twenty-five journalists from the Asian and Pacific region participated in the DAJA Forum held at ADBI on 27 November. The annual
awards honor the work of journalists engaged in dissemination of knowledge on poverty reduction and growth in the region.

Syed Zain Al-Mahmood, a journalist with the The shrimp industry is the second-biggest
Dhaka Courier in Bangladesh, was named winner export earner in Bangladesh behind garments,
of the 2012 Developing Asia Journalism Awards with shrimp farms covering around 243,000
(DAJA) for his article Pink Gold Rush, which hectares of farmland, according to the article. But
explores the impact of large-scale shrimp farming the industry has taken a heavy toll on the
on the environment and livelihoods in local environment as salinity and pollution have
communities of the Sundarbans area. The award damaged the soil fertility of more than 405,000
was present to Al-Mahmood at ADBI in Tokyo on hectares of coastal agricultural land.
27 November as part of the 2012 DAJA Forum. Pramod Kumar Tandan, a journalist based in
The DAJA competition is a unique Nepal, won the award for Young Development
opportunity to highlight the significant Journalist of the Year (under age 30) for his article,
contribution of journalism and individual Himalayas Can Change into Blackstone Very
journalists to the development process in Asia, Soon.
said Dean Kawai. Zains article is an excellent Twenty-five journalists from across Asia and
example of this contribution. It sheds light on the the Pacific were selected as finalists by an
challenge of balancing the growth of an important international panel of judges and participated in
job-creating industry and the need to protect the the DAJA Forum.
environment. The Developing Asia Journalism Awards
were established by ADBI in
2004 to build capacity
among journalists working
on key development issues.
The annual awards honor the
work and contributions of
journalists actively engaged in
the responsible dissemination
of knowledge related to
poverty reduction, and other
areas that support long-term
growth in the Asia and Pacific
For more information on this event
please visit:
DAJA participants visited Japans Tohoku Region to survey recovery efforts following the
11 March 2011 earthquake and tsunami. awards.2012/.

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Eurozone Crisis: a Test for SEMINAR

International Financial Cooperation

ADBI and the Reinventing Bretton Woods issues implied by creating the four unions in
Committee organized a joint seminar on Europe and their international implications.
Adjusting the World to the New Realities of the Speakers from Northern Europe, including Klaus
International Financial System at ADBI on 12 Regling, CEO of the European Financial Stability
October in conjunction with the IMFWorld Bank Fund, and Peter Praet, member of the European
Annual Meetings. The background is that the Central Banks policy board, took a positive view
eurozone sovereign debt and banking sector crisis of the prospects for resolving the eurozone crisis.
poses a major threat to global economic growth
and financial stability, while at the same time the
process of economic and financial integration in
the European Union (EU) provides an important
benchmark for similar processes in Asia, although
the latter are still at a much earlier stage.
Therefore, it is important to understand the
ADB President Haruhiko Kuroda (left) joins a panel of
lessons, both positive and negative, from the EU distinguished economists to discuss how economic and
integration process and the eurozone crisis. financial integration in the European Union provides a
ADB President Haruhiko Kuroda delivered benchmark for similar processes in Asia at the seminar,
Adjusting the World to the New Realities of the International
welcoming remarks. The first panel focused on the
Financial System, held at ADBI on 12 October.
eurozone crisis as a test for regional and
For more information about this event please visit:
international financial cooperation. The second
panel, chaired by President Kuroda, addressed intl.cooperation/.

Breaking the Diabolical Loop SEMINAR

ADBI organized a seminar titled, The Eurozone needed for legacy debt from the crisis, while a
Crisis and Its Implications for Asian banking union was an important step to break the
Economies, on 12 October in conjunction with the diabolical loop and regain democratic
International Monetary FundWorld Bank Annual legitimacy.
Meetings. The objective of the seminar was to Masahiko Takeda, deputy director of the Asia
provide further insight on the factors underlying and Pacific Department of the IMF, took a
the eurozone crisis, policy suggestions for ending relatively optimistic view about the implications of
the crisis, and the implications of the crisis for the eurozone crisis for global and Asian economic
economic and financial stability in Asia. Erik and financial stability. He argued that, although
Berglof, chief economist, European Bank for short-term prospects have deteriorated, so far
Reconstruction and Development, analyzed spillovers in Asia from the eurozone crisis have
solutions to the eurozone crisis, arguing that it was been limited, and there remains ample policy
necessary to separate legacy problems and steady space to react to a larger external shock.
state solutions. Some burden sharing would be Nonetheless, structural reforms are needed over
the medium-term to increase resilience and
prevent slowdowns. During the panel discussion,
Masahiro Kawai, Dean of ADBI, also emphasized
the need for structural reforms and regional
cooperation to increase economic and financial
resilience in Asia.
Dean Kawai (center) said structural reforms and regional For more information on this event please visit:
cooperation are needed to boost economic and financial
resilience in Asia. economies/.

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Recent Books

The Global Financial Crisis and Asia: Implications and Challenges

A new book, edited by Dean Masahiro Kawai, policy, real sector issues, infrastructure, labor
Mario Lamberte, Yung Chul Park, aims to identify market and social policy, financial sector reform
and analyze the impact of the 20072009 global and regulation, and regional cooperation and
financial crisis on Asian economies and to assess financial architecture. And it gives detailed
the short-term and longer-term policy responses to information of how countries were affected by the
the crisis in terms of their effectiveness and global financial crisis and their policy responses.
sustainability. This book is the first to be The Global Financial Crisis and Asia draws
copublished with Oxford University Press. The lessons on how best to avoid or mitigate future
volume highlights that Asian economies have crises and to identify structural
recovered strongly from the crisis, reflecting their policy recommendations that
aggressive moves to ease monetary and fiscal can help guide Asian
policy. However, the biggest challenge lies ahead. It policymakers to expand the
asserts that, given that it is unlikely that the US and growth potential of domestic
Europe will be engines of global growth, Asian and regional demand in
economies should contribute to global economic coming years, and thereby
adjustment by creating their own growth engines. create a basis for sustainable
This book features a unique collection written and inclusive long-term
by international experts from developed economies growth.
in the West and emerging economies in Asia. It To order a copy please visit:
offers comprehensive coverage of macroeconomic

Infrastructure for Asian Connectivity

This book, edited by Biswa Nath Bhattacharyay, effective new projects and regional and national
Dean Masahiro Kawai, and Rajat M. Nag, institutions, strengthening financing, and
addresses the prospects and challenges concerning improving coordination in infrastructure in Asia.
soft and hard infrastructure development in Asia To address the great infrastructure financing gap,
and provides a framework for achieving Asian the study advocates the promotion of
connectivity through regional infrastructure public-private partnerships in regional
cooperation towards a seamless Asia. infrastructure development in Asia.
This book builds upon the findings and This insightful book will serve as a definitive
recommendations of Infrastructure for a Seamless knowledge product for policymakers, academics,
Asia, the most downloaded private sector experts and infrastructure
book on the ADBI website. It practitioners interested in the regional and national
looks at regional infrastructure infrastructure demand, investment and benefits in
in Asia until 2020, provides the region. Concerned officials from private and
examples of national and public sectors, and other experts involved in
regional and global best environmental and natural resources studies will
practices, and also presents also find this compendium invaluable.
policy recommendations.
This book was copublished with Edward Elgar. To order a copy
The study offers several please visit:
measures, including creating

Top downloads in 2012

Infrastructure for a Seamless Asia was the most downloaded during the year.
downloaded publication from the ADBI website Asias Wicked Environmental Problems, by
in 2012, a position it has held since its publication Stephen Howes and Paul Wyrwoll, was, at 19,000,
in 2009. A total of 72,000 copies were the most downloaded working paper of 2012.

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Growth Barriers on SEMINAR

Small Companies in Myanmar

Myanmar has been experiencing a great political Myanmar, held at ADBI on 11 December 2012, by
and economic transformation. The business climate Dr. El-hadj Bah, a lecturer of economics at the
is improving, but while University of Auckland, New Zealand.
entrepreneurship in Bah conducted a survey of small firms in
Myanmar is high, most Northwest Myanmar to shed light on the economys
companies are small and stagnant growth and constraints to business growth.
make very little profit. He found that a lack of credit is the biggest
What are the constraint for companies to expand in the country.
constraints that keep Myanmar needs credible financial services,
companies from growing including facilities and service programs, but the
in the Southeast Asian design and administration of such programs must
A lack of credit in country? This question was avoid a one-size-fits all development agenda.
Myanmar is the biggest
constraint for companies
addressed at the seminar, For more information on this event please visit:
to expand in the country, Growth Constraints on
said Dr. El-hadj Bah. Small Companies in myanmar/.

Developing APEC and CONFERENCE

Other Regional Economies

The conference, Regulatory Environments to The conference consisted of formal presentations,

Promote Financial Inclusion in Developing structured discussions, and country case studies
APEC and Other Regional Economies, was held presented by experts from policy and regulatory
in Melbourne, Australia, 1719 October, to discuss agencies from the region, international organizations,
effective financial inclusion regulations for the banks, and non-bank financial institutions. Topics
developing countries of the Asia-Pacific region. discussed included stronger and sustainable linkages
This event served as a knowledge sharing between policymakers, regulators, and financial
platform for regional policymakers to develop and institution, enhanced capacities of regional
adopt relevant policies in their countries. The supervisors and regulators, and concrete policy
conference brought together government officials recommendations for financial inclusion. In addition,
from APEC economies and non-APEC developing the forum highlighted the best regulatory standards
member countries, and experts on financial and practices, especially those that support
inclusion. The event was sponsored by ADBI, technology and IT systems in delivering financial
Australian APEC Study Center at RMIT services to the regions developing economies.
University, AusAid, and Association of
For more information on this event please visit:
Development Financing Institutions in Asia and
the Pacific. economies/.

ADBI in the News

Dean Kawai was cited in the Thai News Service article, Deputy Dean Jae-ha Park was cited in the Thai News
Establishment of Asian free trade zone positive on Service articles: Yuan alternative backed; Yuan
trade. The Business Times cited the Dean in the article, unlikely to rule in short term; ASEM Finance Ministers
BOJs yen for cheap loans. And The Phnom Penh Post to consider regional currencies; and Asia-Europe
interviewed the Dean in the article, ADB Institute: too Editors Roundtable begins.
much focus on 2015.
Senior Consultant for Research
The ADBI book, Capital Market Reform in Asia, was Peter Morgan appeared on
reviewed by The Hindu website. NHK World to discuss the
outlook for the global economy.

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Selected Upcoming Events

ADBI-FSA Conference (Tokyo)

The objective of the conference is to engage high-level academics, think tank scholars, policymakers and
8 March practitioners in thinking about the effective design of regulatory and policy frameworks that will promote financial
system development and stability.

Recent Working Papers

Regional Financial Arrangements and the Impact of Changes in the Global Financial Regulatory
International Monetary Fund Landscape on Asian Emerging Markets
Author: Barry Eichengreen Author: Tarisa Watanagase
The rise of regional monetary arrangements poses a challenge for This paper discusses the relevance of Basel III to Asian emerging
the International Monetary Funds (IMF) global surveillance markets. It reviews some of the proposed regulations of Basel III
efforts. This paper reviews how the IMF has responded to earlier in order to evaluate their likely implications for, and their ability to
regional initiatives, from the European Payments Union of the enhance, the stability of the banking and financial system. This is
1950s and the Gold Pool of the 1960s to the CFA franc zone and followed by a discussion on the challenges faced by the regulators
the European Monetary System. The penultimate section draws of Asian emerging markets in effectively managing their financial
out the implications for monetary regionalism in East Asia. regulations, given their capacity and institutional constraints.
Read Working Paper 394 at Read Working Paper 391 at
11/06/ 10/26/

The World Bank and the Asian Development Bank: Establishing Monetary Union in the Gulf Cooperation
Should Asia Have Both? Council: What Lessons for Regional Cooperation?
Author: Vikram Nehru Author: Shinji Takagi
This paper examines the complementary and competitive roles of The paper reviews the experience of regional economic
the World Bank and the Asian Development Bank in Asia given the cooperation in the Gulf Cooperation Council (GCC). Conceived
backdrop of a changing world in which development priorities and as a regional security alliance, the GCC has evolved to become a
challenges are changing rapidly and the rapid expansion of financial common market in the making. All six GCC countries participate
flows to developing countries is challenging the influence of these in the common market project, and additional countries may join.
organizations. The paper highlights changes to the international aid But the timing of introducing a common currency, initially
architecture, its increasing fragmentation, the rise of non-traditional targeted for 2010, remains uncertain, especially in the light of the
donors, and recent efforts at improving aid coordination. ongoing euro area crisis.
Read Working Paper 385 at Read Working Paper 390 at
10/02/ 10/19/5268.monetary.union.gulf.cooperation.council/.

The Peoples Republic of China and Global The Persistence of Current Account Balances and its
Imbalances from a View of Sectorial Reforms Determinants: The Implications for Global Rebalancing
Authors: Hiro Ito and Ulrich Volz Authors: Erica Clower and Hiro Ito
This paper examines the impact of sectorial reforms on current This paper examines the statistical nature of the persistency of
account imbalances, with a special focus on the Peoples Republic current account balances and its determinants. With the assumption
of China (PRC). In particular, we investigate to what extent that stationary current account series ensures the long-run budget
reforms pertaining to the financial sector, social protection, and constraint while countries may experience local non-stationarity
healthcare may contribute to a rebalancing of the PRCs persistent in current account balances, the authors examine the dynamics of
current account imbalances. current account balances across a panel of 70 countries.
Read Working Paper 393 at Read Working Paper 400 at
11/02/ 12/13/5386.persistence.current.acct.bal.determinants/.

The Emerging Post-Doha Agenda and the New Historical Sources of Institutional Trajectories in Economic
Regionalism in the Asia-Pacific Development: China, Japan, and Korea Compared
Author: Michael Plummer Author: Masahiko Aoki
This paper considers emerging commercial policy challenges This essay provides a game-theoretic, endogenous view of
facing the Asia-Pacific region in light of the impasse reached at institutions, and then applies the idea to identify the sources of
the Eighth World Trade Organization (WTO) Ministerial Meeting institutional trajectories of economic development in China,
in December 2011. It underscores that, while marginal Japan, and Korea. It stylizes the Malthusian-phase of East Asian
liberalization of trade barriers under the Doha Development economies as peasant-based economies in which small families
Agenda may not be forthcoming in the short- or even allocated their working time between farming on small plots
medium-term, the WTO has been successful in erecting a leased or ownedand handcrafting for personal consumption and
rules-based system of global governance and continues to be markets. It then compares institutional arrangements across these
important to the future health of the international trading system. economies that sustained otherwise similar economies.
Read Working Paper 384 at Read Working Paper 397 at
10/02/ 11/30/

A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Innovative Poverty Reduction Strategies WORKSHOP

ADBs recent poverty data found that Asia and the Economies, Yunnan University. In addition to
Pacific region experienced a significant reduction presentations by experts in the field, 41 senior
in poverty from 2005 to 2008. About 150 million government officials from 12 developing member
people exited extreme poverty during this period, countries exchanged their countrys poverty
bringing the percentage of people living under the reduction experiences and explored the impact of
extreme poverty line of $1.25 per day to 22% from government policies and programs on poverty
27%. Despite the big drop in the number of reduction. Two sessions were also dedicated to
extreme poor, the reduction for the moderately understanding how poverty data governance
poor, those living on $2 per day, was marginal at differs between countries and identified
only about 18 million in the region. opportunities and challenges in poverty data
In light of the new poverty data, ADB and governance methodologies. A follow-up training
ADBI organized a joint workshop, Effective program will be held in mid-2013.
Policies and Experiences for Poverty Reduction
in Asia, in Kunming, Peoples Republic of China,
For more information on this workshop please visit:
2325 October. The event was sponsored by ADB,
ADBI, and Research Institute for Indian Ocean

Attendees from 12 developing member countries gathered at the conference, Effective Policies and Experiences for Poverty Reduction
in Asia, in Kunming, Peoples Republic of China, 2325 October, to exchange ideas and strategies on lifting people out of poverty.

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