Asia's Developing Future

The idea of sharing future tax revenues with private investors is being promoted by the Asian Development Bank Institute—the ADBI—in Tokyo to help finance the region’s huge demand for infrastructure. But Naoyuki Yoshino, the dean of the institute, warns that future revenues need to be sustained for such financing to succeed in the longer term. Japanese private railway companies played a major role in expanding the country’s transport sector in the 20th century. These companies were much more profitable than Japan National Railways, the public railway operator that was split up into seven private companies three decades ago after incurring massive public debt. Read the transcript http://bit.ly/2yV3gCA About ADBI dean, Naoyuki Yoshino https://www.adb.org/adbi/about/dean Watch an ADBI video about spillover effects http://bit.ly/2eZaTQM Know more about ADBI’s work on spillover effects http://bit.ly/2vVF81w

Remittances to developing countries in Asia help improve their economies with the net gains from exporting labor, and improve the lives of the poor people forced to work overseas—often for decades—because jobs are lacking at home. A small gain in the contribution of remittances to gross domestic product has led to huge declines in poverty in 10 developing countries, notably Bangladesh, India, Nepal, Pakistan, and Sri Lanka in South Asia; and the People’s Republic of China, Indonesia, Malaysia, the Philippines, and Thailand in East and Southeast Asia. A 1% rise between 1981 and 2014 parallels with a 22.6% decline in the poverty gap ratio and a 16.0% decline in the poverty severity ratio—taking into account the average poor household’s spending and the minimum income needed to pay for basic everyday needs. Read the transcript http://bit.ly/2xtH4Do Read the blog post https://www.asiapathways-adbi.org/2017/08/international-remittances-and-poverty-reduction/ Read the working paper https://www.adb.org/publications/international-remittances-and-poverty-reduction Authors Naoyuki Yoshino is the ADBI dean https://www.adb.org/adbi/about/dean Farhad Taghizadeh-Hesary is a professor of economics at Keio University, Tokyo https://www.asiapathways-adbi.org/author/farhad-taghizadeh-hesary/ Miyu Otsuka is a graduate student of economics at Keio University, Tokyo, and Science Po University in Paris https://www.asiapathways-adbi.org/author/miyu-otsuka/ Know more about ADBI’s work on remittances http://bit.ly/2zb1wpK

Economic corridors forming around the Greater Mekong Subregion have opened the way to greater development as better infrastructure leads to improved roads and bridges between neighbors. The corridors are boosting economic growth in the GMS, and promoting intraregional trade and investment for Cambodia, Lao People’s Democratic Republic, Myanmar, Viet Nam, Thailand, and Yunnan Province and the Guanxi Autonomous Region in the People’s Republic of China. Questions remain about the net benefits after the high cost of infrastructure; how evenly the benefits are spread; and how border security can be maintained in the face of trafficking of people, drugs, timber, wildlife, weapons, and black market goods. Read the transcript http://bit.ly/2xvHJ2l Read the working paper http://bit.ly/2y6Etia About the author Manabu Fujimura, a professor at Aoyama Gakuin University, Tokyo. Know more about ADBI’s work https://bit.ly/2SkWboG

Ha Noi, the Vietnamese capital, is renowned for its congested traffic. The government wants to build a third ring road around the city. But it doesn’t have enough money for such a major project, with two other ring roads already under way. Some of the construction is being funded on a BOT basis—build, operate, transfer, whereby the investor constructs and maintains the ring road and gets the toll revenue for a certain period before handing it back to the public—and official development assistance from the Japan International Cooperation Agency. However, private investors aren’t much interested because the expected returns on investment are too low. How can the government increase the returns to make investment more attractive to private companies? Read the transcript http://bit.ly/2wsCssC About ADBI dean, Naoyuki Yoshino https://www.adb.org/adbi/about/dean Watch an ADBI video about spillover effects http://bit.ly/2eZaTQM Know more about ADBI’s work on spillover effects http://bit.ly/2vVF81w

Think tanks try to influence the powerful—people who hold government office and make decisions—by independently speaking the truth and not being afraid to do so. Adam Posen, president of the Peterson Institute for International Economics, a Washington think tank, says that doesn’t seem to be enough these days. Read the transcript http://bit.ly/2kfLNSX Watch the complete presentation http://bit.ly/2yCzvGD Know more about the Global Think Tank Summit https://www.adb.org/news/events/global-think-tank-summit-2017

Japanese banks, insurance companies, and pension funds are investing in the US and other financial markets, due to the low or even negative interest rates at home. But their demand is pushing up the price of hedging, so when their dollars get converted back into yen, they lose money along the way. Robert McCauley, senior adviser at the Bank for International Settlements, told the audience at the Asian Development Bank Institute’s Annual Conference 2016 that strong demand by Japanese entities was pushing up the price of yen–dollar swaps, an instrument to hedge foreign investment. In short, it’s becoming more expensive for Japanese investors to get out of yen and into dollar. Read the transcript http://bit.ly/2yieiFV Watch the full presentation http://bit.ly/2xTMvdW Know more about ADBI’s work on low interest rates http://bit.ly/2xMCRI1

As the People’s Republic of China — the PRC — develops its “Go Global” suite of policies, it has expanded international capacity cooperation as a way to adjust to the “new normal” of low industrial growth. It’s a novel approach to overcapacity — where an industry is capable of building or producing more than it can sell — which was caused in the PRC by the 2008–2009 spending stimulus that flooded traditional industries. Steel, cement, aluminum, paper, glass, and everything from pork production to robots are in 2017 overwhelmed by cyclical overcapacity. Extending the lifespan for reform in the PRC’s industrial economy by moving production offshore from industrial-policy-protected provinces into the global system is an innovative solution to the country’s industrial slowdown. Read the transcript http://bit.ly/2xqb1Dv Read the blog post https://www.asiapathways-adbi.org/2017/07/the-prcs-international-capacity-cooperation-exports-both-industrial-capacity-and-financial-risk/ Author Tristan Kenderdine https://www.asiapathways-adbi.org/author/tristan-kenderdine/

Obesity and overweight are among the main risk factors of noncommunicable diseases that kill millions of people worldwide. How much do these diseases cost health systems and economies? In the United States, every obese person spends about $2,741 a year for additional health care. In Japan, overweight and obesity cost $1,537 a person. US businesses spend about $66 billion because of the absenteeism and lower productivity caused by overweight and obesity. The numbers are similar for European countries. Read the transcript http://bit.ly/2xtM7k6 Read the report https://www.adb.org/publications/imminent-obesity-crisis-asia-and-pacific-first-cost-estimates Authors Matthias Helble, ADBI senior economist and co-chair of the Research Department https://www.adb.org/adbi/about/staff-profiles/matthias-helble Kris Francisco, ADBI research associate at the time the report was published Know more about ADBI’s work on overweight and obesity https://www.adb.org/adbi/search/year/2017?keywords=obesity Read a related ADBI blog post Obesity in Pacific Island countries and territories: How big a problem is it? By Jillian Wate bit.ly/2xqE5b5

Developing country economies are proving to be a competitive market for investment in local bonds because they offer relatively high yields and long maturities, which limit the risk of fluctuations in the US dollar, although not the risk to the developing economy. The lessons of the Asian financial crisis 20 years ago have shown that the movement of capital can be a gamble. The reality of international finance is complex, said Hyun-Song Shin, economic adviser and head of research at the Bank of International Settlements (BIS) at a recent Asian Development Bank and ADBI conference, 20 Years After the Asian Financial Crisis. Read the transcript http://bit.ly/2xzrZyz Watch the full presentation https://youtu.be/ZA6l-aBJ44Y Know more about the conference http://bit.ly/2oYbBk6 Know more about ADBI’s work on the Asian financial crisis http://bit.ly/2xq2S22

Coal as an energy source in power plants will continue to increase in ASEAN and East Asia in the coming decades in the absence of a viable energy alternative, stoking fears of an upsurge in carbon dioxide emissions and greenhouse gases. Signals coming from Washington of lessened concern in the US over pollution issues, and President Donald Trump’s withdrawal from the Paris Agreement on climate change, gives developing Asia little option but to continue down the same path. But many of the ASEAN economies are looking at new technologies that use coal in a cleaner way, such as the ultra-supercritical boiler type—USC—which makes more efficient use of coal, leading to minimal waste of the energy source and curbs carbon dioxide emissions. Read the transcript http://bit.ly/2h8mZLv Read the blog post https://www.asiapathways-adbi.org/2017/06/propelling-asean-towards-clean-coal-technology/ Author Han Phoumin, energy economist at the Economic Research Institute for ASEAN and East Asia, Jakarta, Indonesia https://www.asiapathways-adbi.org/author/han-phoumin/ Know more about ADBI’s work on coal http://bit.ly/2jslQ23

Spillovers are the additional economic activities created by new infrastructure. A new highway will often attract new businesses and create jobs. As a result, governments will receive more revenue from property taxes, corporate taxes, income taxes, and sales taxes. So, to attract private companies with higher returns, governments need to share those future tax revenues with investors. ADBI Dean Naoyuki Yoshino explains further in this episode. Read the transcript http://bit.ly/2wfswGN About Naoyuki Yoshino https://www.adb.org/adbi/about/dean Know more about ADBI’s work on spillover effects http://bit.ly/2vVF81w Watch Let's Build a Highway http://bit.ly/2eZaTQM

Many emerging Asian economies will likely face a pension fund crisis by 2030 if they fail to set aside sufficient money in a gradually aging region to care for their elderly. The fiscal burden of public pensions in most Asian emerging economies is relatively small, reflecting comparatively young populations and limited coverage of the retired-age population, which has traditionally been left to families to handle. The Asian Development Bank Institute—ADBI—looked more closely at the extent of the looming pension crisis to identify the current status of public pension spending in Asia; develop models to explain public pension spending in Asia in terms of basic economic and demographic variables; and use the models to forecast the likely developments in spending on public pensions in 23 emerging economies through 2030 as a result of demographic and income trends. Read the transcript http://bit.ly/2h5pAGc Read Costs and Potential Funding of Expanded Public Pension Coverage in Asia https://www.adb.org/publications/costs-and-potential-funding-expanded-public-pension-coverage-asia Authors Peter Morgan, ADBI co-chair of research https://www.adb.org/adbi/about/staff-profiles/peter-morgan Long Q. Trinh, ADBI research associate https://www.adb.org/adbi/about/staff-profiles/long-trinh Know more about ADBI’s work on pensions http://bit.ly/2f84CWy

It’s been almost 2 decades since the central bank moved to clean up the country’s private banks. Back then, Cambodia didn’t have a single ATM. Today, branches with ATMs are common in provincial areas, deposits have increased, and credit has grown quickly. Minimum capital requirements have been raised. And in a country where cash was once king, electronic payments are now widespread. With an extremely young population, Cambodia has seen the numbers of bank depositors grow enormously in recent years. Most are too young to remember the three bank closures of 1999. And, unlike their parents or grandparents, many young Cambodians are wary of keeping their savings in gold or in cash at home under the bed. The move toward deposit insurance in Cambodia is being spearheaded by Naoyuki Yoshino, dean of the Tokyo-based Asian Development Bank Institute, which provides input to policy makers in member countries. Read the transcript http://bit.ly/2ePuSBn Read Fair Premium Rate of the Deposit Insurance System based on Banks’ Creditworthiness https://www.adb.org/publications/fair-premium-rate-deposit-insurance-system-based-banks-creditworthiness By Naoyuki Yoshino https://www.adb.org/adbi/about/dean Farhad Taghizadeh-Hesary https://www.asiapathways-adbi.org/author/farhad-taghizadeh-hesary/ Farhad Nili

“The US exit from the Trans-Pacific Partnership (TPP) has paved the way for the People’s Republic of China (PRC) to dominate and have a greater influence in the Asia-Pacific region,” said Geethanjali Nataraj of India’s Institute of Public Administration at a recent Asian Development Bank Institute seminar. Japan has picked up the baton and is trying save the TPP, without the US, and is open to inviting the PRC and the Republic of Korea, initially excluded from the negotiations, to join late-stage talks. Some members are shifting back to bilateral deals with the US. The Asian economic region is scrambling to build alternative multilateral and bilateral trade agreements, but none will have the consensus of or be as comprehensive and expansive as the TPP. One that is growing in popularity is the PRC’s “One Road One Belt” initiative, a 21st century land and sea Silk Road linking Asia through Central Asia to the European Union, and expected to involve 60 economies accounting for 40% of global GDP. It is a centerpiece of the PRC’s foreign policy and timed to be in place by 2049, the country’s centenary. Economists say it will relieve the pressure of overcapacity on the PRC’s economy by allowing it to spread its production base and bypass protectionism by importing and exporting finished products. Read the transcript http://bit.ly/2vZMdSY Watch the complete presentation https://youtu.be/a-GMkiRYctU Know more about ADBI’s work on the TPP http://bit.ly/2xb3lEH

Win-Win—How International Trade Can Help Meet the Sustainable Development Goals was recently published by ADBI and edited by ADBI senior economist Matthias Helble and Ben Shepherd, principal at Developing Trade Consultants. The book looks at what can be realistically achieved after the 2015 United Nations Sustainable Development Summit, where some 150 world leaders adopted the 2030 Agenda for Sustainable Development, including the Sustainable Development Goals, or SDGs. The 17 SDGs, also known as the Global Goals, aim to end poverty, hunger, and inequality; act on climate change and the environment; improve access to health and education; build strong institutions and partnerships; and ensure that all people enjoy peace and prosperity. Twenty-five economists and analysts examined the UN goals in the real context of developing economies, picking apart such areas as poverty, hunger, the role of women, job creation, inequality, the environment and climate change, fisheries, food safety, education, health care, urbanization, and infrastructure. Read the transcript http://bit.ly/2xfEZcL Read the book https://www.adb.org/publications/win-win-how-international-trade-can-help-meet-sdgs Edited by Matthias Helble, ADBI senior economist and co-chair of the Research Department https://www.adb.org/adbi/about/staff-profiles/matthias-helble Ben Shepherd, principal at Developing Trade Consultants Know more about ADBI’s work on the Sustainable Development Goals http://bit.ly/2xb7XuB