Asia's Developing Future

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. Read the transcript http://bit.ly/2j6m649 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. Know more about ADBI’s research on 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. Read the transcript http://bit.ly/2AvMIpa 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. Know more about ADBI’s research on inequality http://bit.ly/2k91onD

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. Read the transcript http://bit.ly/2zvIni4 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. Know more about ADBI’s research on urbanization: http://bit.ly/2B1ByVS

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. Read the transcript http://bit.ly/2ADwwmi 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. Know more about ADBI’s research on aging http://bit.ly/2hTzeMV

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. Read the transcript http://bit.ly/2hx4vRU 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. Know more about ADBI’s research on 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. Read the transcript http://bit.ly/2zFdkno 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. Know more about ADBI’s work on monetary policy http://bit.ly/2hw4DRs

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. Read the transcript 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. Know more about ADBI’s research on People’s Republic of China http://bit.ly/2ArkHMV

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. Read the transcript http://bit.ly/2ApDze8 Know more about ADBI’s research on energy http://bit.ly/2zq1SeV Watch Let's Turn on the Lights http://bit.ly/2m4oqg8

Since the early 20th century, emerging Asia has been subjected to the ebb and flow of lending from advanced economies. Since then the region has become more integrated into the global financial market, which has been exposed to the risk of capital flow reversals. In the aftermath of the 2008 global financial crisis, capital has flowed into emerging economies, especially in Asia, in search of higher returns on investment. Low interest rates in advanced economies made Asia more attractive, with its higher interest rates promising bigger returns. This worries the region’s policy makers. Portfolio investments are more volatile and short-lived than long-term foreign direct investments. A surge in inflows harms recipient countries, as asset prices soar, and a sudden withdrawal of capital destabilizes markets. Read the transcript http://bit.ly/2yniDUp Read the working paper https://www.adb.org/publications/correlations-equity-markets-asia-and-impact-capital-flow-management-measures Author Pornpinun Chantapacdepong was an ADBI research fellow and now assistant director at the Monetary Policy Group of the Bank of Thailand. Know more about ADBI’s research on Global Financial Crisis: http://bit.ly/2zpwYRR Economic Integration: http://bit.ly/2AjebGY

Poverty among the elderly in developing countries such as India is on the rise as the traditional extended family unit dissolves, fertility rates decline, migration to urban jobs rises, and government attempts to improve aged care have left many falling through the gaps. A small minority of workers in the formal sector are secure, but the vast majority of informal sector workers face poverty in their old age because they lack social protection. To improve the income security of the elderly poor, the Indian government introduced the National Old Age Pension Scheme in 1995, a cash transfer to mitigate poverty faced by the elderly. Read the transcript http://bit.ly/2zy3pMA Read the working paper https://www.adb.org/publications/targeting-social-transfers-are-india-elderly-poor-left-behind Author Viola Asri, a PhD candidate at the University of Zurich and a visiting doctoral researcher at the Laboratory for Effective Anti-Poverty Policies at Bocconi University in Milan Know more about ADBI’s research on pensions http://bit.ly/2f84CWy

It’s been nearly a decade since the 2008 global financial crisis, and world economic growth rates are almost back where they were after a long, painful but instructive haul, and both developed and emerging economies have added a lot to their financial tool kits. The International Monetary Fund predicts growth in developed countries will drop from the pre-crisis 2.2 percent to 1.5 percent, and in emerging economies from 7.5 percent to 5 percent between 2015 and 2020. While high unemployment, huge debt in developed countries, excessive debt of enterprises in emerging economies, and overcapacity are to blame, declining productivity is another major culprit. Read the transcript http://bit.ly/2z45gNb Read the blog post https://www.asiapathways-adbi.org/2017/09/what-are-the-policy-options-for-reversing-productivity-decline/ Author Li Xu is a research fellow at ADB https://www.adb.org/adbi/about/staff-profiles/li-xu Know more about ADBI’s research on productivity growth http://bit.ly/2gCi99o

Parents in developing Asia tend to spend more on sons but receive higher returns from daughters, turning on its head an age-old belief that sons—not daughters—take care of their aging parents. This is true in the People’s Republic of China, where children are expected to help their parents based on Confucian philosophy, which values filial piety and altruism. Data show that investments in daughters paid off better than money spent on sons. Daughters gave back to their aging parents financial support, and helped with tasks like shopping, housekeeping, accounting, food preparation, telephone calls, and transportation. Read the transcript http://bit.ly/2zyDip4 Read the working paper https://www.adb.org/publications/son-biased-investments-and-old-age-support Author Christine Ho, School of Economics, Singapore Management University Know more about ADBI’s research on supporting the elderly http://bit.ly/2z39tkb

Low-skilled workers in Viet Nam are hardest hit by market reforms and technology, with efficiency coming at the cost of jobs. Exposure to foreign markets and access to digital technologies raise demand for different types of skills, and while it has been good for the economy, more and more workers are being left behind. Read the transcript http://bit.ly/2iiGGkd Read the original report https://www.adb.org/publications/impact-trade-and-technology-skills-viet-nam About the authors Jennifer Poole, American University and Institute of Labor Economics (IZA) Amelia Santos-Paulino and Maria Sokolova, United Nations Conference on Trade and Development Alisa DiCaprio, ADBI research fellow at the time the report was published Read more about ADBI's research on Trade: http://bit.ly/2ytVl1X Viet Nam: http://bit.ly/2zeIo9M Technology: http://bit.ly/2ijiqyr

Asia and the Pacific are home to 4.3 billion people, and half the world’s urban population, with 120,000 people moving to cities every day, creating daily demand for 20,000 affordable homes. Some cities, where housing is scarce and costly because they don’t have enough land or they’re where the jobs are concentrated, find it hard to provide enough public housing for a continuously rising urban population. Hong Kong, China; the Republic of Korea; and Singapore have wrestled with this problem for decades. Read the transcript http://bit.ly/2goPbKh Read the original blog post https://www.asiapathways-adbi.org/2017/08/housing-policy-in-the-republic-of-korea/ About the authors Kyung-Hwan Kim is vice minister for land, infrastructure and transport, Republic of Korea Miseon Park is an associate research fellow, Korea Research Institute for Human Settlements. Additional information is from the following From Slums to Sustainable Communities (https://www.habitat.org/sites/default/files/issue-paper.pdf) Tackling Affordability in Asia (https://urbanland.uli.org/economy-markets-trends/tackling-affordability-asia/) Waiting time to get into Hong Kong public housing shoots up a full year over past 12 months (http://www.scmp.com/news/hong-kong/education-community/article/2070493/waiting-time-get-hong-kong-public-housing-shoots). Know more about ADBI’s research on housing in 2017 http://bit.ly/2x1WOJJ Know more about ADBI’s research on housing in 2016 http://bit.ly/2hYPM24 Read The Housing Challenge in Emerging Asia: Options and Solutions By Naoyuki Yoshino and Matthias Helble https://www.adb.org/publications/housing-challenge-emerging-asia-options-and-solutions

Peer-to-peer lending is an emerging form of finance enabled by the Internet, matching investors with borrowers to get around rigid bank requirements faced by small and medium-sized enterprises—SMEs—and start-ups. Borrowers apply to a peer-to-peer—P2P—platform of investors. The platform assesses the borrower’s credit risk and gives a credit score based on the platform’s own credit rating model. Investors then split up their money and lend it to borrowers, usually depending on the maturity of the loan and the risk entailed. Read the transcript http://bit.ly/2xL5QyY About the speaker David Storey was an analyst at the Asian Development Bank Institute at the time he presented his research. He is pursuing further studies at Warwick University, UK. Know more about ADBI’s research on SMEs http://bit.ly/2kVLk8U