Asia's Developing Future

Fifty years after Japan launched its high-speed railway line, there’s no denying it’s been a game-changer. Run by Japan National Railways, the shinkansen cuts travel time between historical economic centers and connects a network of cities. It’s the spine of one of the most important regional economic belt developments in the world. It’s spurred economic growth in the cities it serves and transformed the country’s economy to what it is today. It’s no surprise other countries are looking at Japan’s experience in running bullet trains to make sure their huge investments will pay off in the long run. High-speed rail hubs are among the most expensive infrastructure in the world, and the challenges and opportunities of setting them up vary from country to country. Almost all countries with bullet trains have reported a dynamic change in urban systems associated with the projects within only a few years of the railway’s inauguration. Read the transcript https://bit.ly/2oIfEmE Read the post on ADBI’s blog https://bit.ly/2VT2GBn About the author Shreyas P. Bharule is an associate at the Asian Development Bank Institute. https://www.adb.org/adbi/about/staff-profiles/shreyas-bharule Know more about ADBI’s work https://bit.ly/2Cr4igz

Financial liberalization is typically associated with bringing benefits to emerging economies—cutting red tape, boosting growth, expanding trade, and creating jobs and opportunity. Is it just what China needs as the country’s leaders grapple with how to guide it to the next level? Or would it bring with it added risks to China’s economy? And could those risks trigger a crisis? Read the transcript https://bit.ly/2ok9jxy Read the working paper https://www.adb.org/publications/will-financial-liberalization-trigger-first-crisis-prc-lessons About the authors Qin Gou is an associate professor at the School of Finance, Central University of Finance and Economics. Huang Yiping is Jin Guang chair professor of economics and deputy dean of the National School of Development and director of the Institute of Digital Finance of Peking University. Both universities are in Beijing, the People’s Republic of China. Know more about ADBI’s work https://bit.ly/2ojI31O https://bit.ly/2wp9hZq https://bit.ly/2wpMYCa

Since at least the beginning of the 1990s, economists have noted that innovation is indispensable to competitive advantage. But what about for manufacturing? Conventional wisdom has long been hostile to altering proven production methods. But this is changing. Take the example of the People’s Republic of China. Twenty-two years after the government’s 1978 economic reforms, China’s global manufacturing output was one-quarter that of the United States. Eleven years later, China had eclipsed the United States to become the world’s greatest producer. Explanations for this surge highlight abundant labor, state subsidies, and growing local demand. Yet those could be found elsewhere, not just in China. The explanation must go deeper. Read the transcript https://bit.ly/2PGGFDb Read the working paper https://www.adb.org/publications/innovation-and-firm-performance-prc-structural-approach-spillovers About the author Anthony Howell is an assistant professor at the School of Economics of Peking University, Beijing, People’s Republic of China. Know more about ADBI’s work https://bit.ly/2wpN0dg https://bit.ly/2MzkTmJ https://bit.ly/2ojI31O https://bit.ly/2wp9hZq

For ambitious economies that have recently overcome historical economic obstacles and become stable and vibrant engines of growth, the question now is how to make growth sustainable and inclusive. For the People’s Republic of China and India, innovation is now the key to their economic futures. Yet the legacies of their growth present troubling issues, chiefly environmental degradation. Both economies are also striving to avoid the middle-income trap that can, in the case of China, undermine sustainability or, in the case of India, undermine inclusiveness. Although they share characteristics—a large population and territory, as well as a long history of civilization—they are different in important ways. Read the transcript https://bit.ly/2OXSwvr Read the working paper https://www.adb.org/publications/catching-economic-transition-innovation-prc-and-india About the author Peilei Fan is an associate professor of urban and regional planning at Michigan State University, Michigan, USA. Know more about ADBI’s work https://bit.ly/2MI2WSc https://bit.ly/2N5WyBt

Electric utilities around the world are expected to be greatly transformed by deregulation, climate change, the rise of renewable energy, new technologies, declining populations, and changing user needs. The transformation will eventually see the power grid’s integration with industries such as water, gas, transportation, among others, which ultimately could mean better service. A factor driving the changes is the need to reduce greenhouse gas emissions. Electricity and heat production is among the biggest sources of emissions, which is why energy producers have been adding more renewable sources such as solar, wind, geothermal, hydropower, and biomass into their power mix. Technology and changing demographics and user needs will also change utilities. Now that technologies can better track customers’ energy consumption, utilities will be able to predict when it is highest and ensure supply during those times. Utilities’ transformation will come in three waves. Read the transcript https://bit.ly/2Lg4AWG Watch the related video https://bit.ly/2ORTd9g About the speaker Hiroshi Okamoto is executive vice president of Japan’s Tepco Power Grid. Know more about ADBI’s work https://bit.ly/2Bsqbvp https://bit.ly/2zmmNQr

Asian economies and financial systems are becoming ever more integrated, but their monitoring has not kept pace and better safeguards are needed. This is especially true for cross-border issues. Peter Morgan, co-chair of research at the Asian Development Bank Institute, says that Europe can provide a valuable guide to developing the necessary institutions in Asia. Read the transcript https://bit.ly/2Mi3WII Read the book https://www.adb.org/publications/global-shocks-and-new-global-and-regional-financial-architecture-asian-perspectives Read the related blog post https://bit.ly/2Mv6cjP About the author and book editors Peter Morgan is co-chair of research at the Asian Development Bank Institute. He wrote Regional Financial Regulation in Asia, a chapter in Global Shocks and the New Global and Regional Financial Architecture, Asian Perspectives, a new ADBI book, which he edited with ADBI Dean Naoyuki Yoshino and Pradumna B. Rana of the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Know more about ADBI’s work https://bit.ly/2nCIC6N https://bit.ly/2AjebGY

Solar energy is growing fast as total capacity worldwide surges with the decline of solar-panel prices. It’s cheap and it works. How to further reduce the price of solar panels has become an important topic as solar electricity’s share of the overall energy supply grows globally. Several studies have focused on manufacturing and technological developments as the main reasons behind the most recent drop in global solar-panel prices. But a more recent study done for the Asian Development Bank Institute says that monetary variables, oil prices, and demand for solar panels due to environmental concerns also determine solar-panel prices. Read the transcript https://bit.ly/2waSto2 Read the working paper https://bit.ly/3s6Nhx7 About the authors Farhad Taghizadeh-Hesary is assistant professor of economics at Waseda University, Tokyo. Naoyuki Yoshino is the dean of ADBI. Yugo Inagaki is an alumnus of Keio University. Know more about ADBI’s work https://bit.ly/2MbErO1 https://bit.ly/2MlDL7P

The People’s Republic of China’s integration into the global economy and East and West Germany’s reunification show the Democratic People's Republic of Korea — or the DPRK — how it might become a market economy within 20 to 25 years. Naoyuki Yoshino, dean of the Asian Development Bank Institute, told the Foreign Correspondents Club of Japan that the DPRK could also look to the success of other Asian countries in using domestic savings to kick-start growth. Other key ingredients for a successful transition would be infrastructure development, education and training, as well as the promotion of student and worker exchanges between the DPRK and other countries. The country could start with a postal savings network similar to those used in Japan and China, which would help start the process of building a financial system. From that, insurance and pension funds could be developed. The money that was deposited could be used for economic development. Read the transcript https://bit.ly/2vK8AZH About the speaker Naoyuki Yoshino is dean of the Asian Development Bank Institute. Know more about ADBI’s work https://bit.ly/2vIYRmw https://bit.ly/2vIZ3lK

Asian emerging market economies adopted a range of measures after the Asian financial crisis in the late 1990s to shelter themselves from economic and financial contagion. So far, those moves have succeeded. But with new challenges rising, some of the tools they turned to may need readjusting so that they don’t cause more problems than they cure. Hans Genberg, executive director of the Southeast Asian Central Banks Research and Training Centre, in Kuala Lumpur, Malaysia, suggests that, at the very least, more and better coordination is needed among various supervisory agencies. He also calls for an examination of whether central banks have taken on too much responsibility as their jobs have expanded. Writing in a new Asian Development Bank Institute publication, Global Shocks and the New Global and Regional Financial Architecture, Asian Perspectives, Genberg suggests that Asian central banks went with a palette of solutions to the problems exposed by the Asian financial crisis. Peter Morgan, co-chair of research at ADBI, is an editor of the book. He explains that emerging Asia’s response to the crisis helped it get through relatively unscathed during the 2008–2009 global downturn that followed about 10 years later. Read the transcript https://bit.ly/2nleZ9X Read the book https://bit.ly/396ET7J Read the related blog post https://bit.ly/2Mv6cjP About the author and editors Hans Genberg is the executive director of the Southeast Asian Central Banks Research and Training Centre, Kuala Lumpur, Malaysia. The book editors are Peter Morgan, co-head of research at ADBI; ADBI Dean Naoyuki Yoshino; and Pradumna B. Rana of the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Know more about ADBI’s work https://bit.ly/2KyV7JB https://bit.ly/2OSN1Ps

The People’s Republic of China’s gradual shift from a currency policy pegged to the US dollar to one that tracks the movements of a range of currencies was the correct choice given the challenges, and neighbors Malaysia and Singapore were best served by reacting in a similar way. That’s the conclusion of research presented in Global Shocks and the New Global and Regional Financial Architecture, Asian Perspectives, a new book by the Asian Development Bank Institute. The vulnerability of the currency regimes used in Asia came into focus after the Asian financial crisis of 1997–1998, when the many Asian countries that had pegged their currencies to the US dollar found they had opened themselves to significant economic and financial risks. Since the crisis, countries have either chosen to let their currencies trade more freely against the dollar—Indonesia, Thailand, and the Republic of Korea, for example—or shifted to other methods that still retain significant control over the value of their currencies. One of the most popular of these is the basket peg, where the local currency moves in a range against a basket of currencies, rather than being pegged directly to the moves of a single one. Read the transcript https://bit.ly/2vrdKcH Read the book https://www.adb.org/publications/global-shocks-and-new-global-and-regional-financial-architecture-asian-perspectives Read the related blog post https://bit.ly/2Mv6cjP About the authors Naoyuki Yoshino the dean of the Asian Development Bank Institute. Tamon Asonuma is an economist in the Research Department of the International Monetary Fund. Peter Morgan is a co-head of research at ADBI. Know more about ADBI’s work on currency policy https://bit.ly/2LPB3r3 https://bit.ly/2LQpGiI

A brewing trade war over steel is threatening to bring the world back to the economic “dark ages” when countries used trade curbs to retaliate politically against rival governments. The World Trade Organization and its members must find ways to ease tensions between rival countries and look for innovative ways to ensure global trade rules remain relevant and adaptive to the challenges of the present and the future. It may mean revisiting the WTO and the role it can play in trade governance. One of the reasons the WTO was formed was to make sure global trade is balanced and fair by isolating international trade from government intervention. Revisiting the WTO has become urgent in the wake of US President Donald Trump’s decision to slap tariffs on steel imports to protect the United States’ national interest, which is purportedly endangered by dependence on imported steel. The US acted before the WTO could consider its complaints of dumping, and the European Union and the People’s Republic of China are considering retaliatory tariffs. Read the transcript https://bit.ly/2v5Z5nZ Read the blog https://www.asiapathways-adbi.org/2018/04/impact-of-retaliatory-trade-enforcement-actions-on-the-world-trade-organization-and-trade-governance/ About the author Soo-hyun Lee is a research associate of International Law and Dispute Settlement at the Asian Institute of Policy Studies in Seoul, Republic of Korea. Know more about ADBI’s work on trade https://bit.ly/2mZ5tsQ https://bit.ly/2ytVl1X

When India started opening its markets to international trade in the 1990s, what impact did it have on manufacturing and labor’s share of income? The answer lies in an analysis of plant-level data, which requires classifying industries as labor, human capital resource, or technology intensive. But first, what pushed India to open its doors? Read the transcript https://bit.ly/2Ofyop5 Read the working paper https://www.adb.org/publications/adjustment-trade-opening-labor-share-india-manufacturing-industry About the authors Prachi Gupta was a research associate at the Asian Development Bank Institute at the time the work was published. Matthias Helble a senior economist and co-head of research at ADBI. Know more about ADBI’s work https://bit.ly/2JUjwsC https://bit.ly/2LF86y8

Energy price shocks—negative and positive—can have a powerful economic knock-on effect, especially on food prices where food is scarce. Even though great strides have been made since 1945 in feeding Asia’s huge populations, more than 500 million people still face food insecurity. Of the world’s undernourished, almost 65% live in Asia. Food insecurity stems from the link between energy prices and food prices, among other causes. A survey of Bangladesh, the People’s Republic of China, Indonesia, India, Japan, Sri Lanka, Thailand, and Viet Nam from 2010 to 2016 proposed a model with eight variables affecting agricultural food prices—land prices, GDP, inflation rates, oil prices, biofuel prices, employment in agriculture, labor costs, and real interest rates. Farhad Taghizadeh-Hesary, one of the authors of ADBI’s research on this topic, sums up the survey’s findings. Read the transcript https://bit.ly/2LPmZuB Read the working paper https://www.adb.org/publications/volatility-linkages-between-energy-and-food-prices-asian-countries About the authors Naoyuki Yoshino is the dean of the Asian Development Bank Institute. Farhad Taghizadeh-Hesary is an assistant professor of economics at Waseda University, Tokyo. Ehsan Rasoulinezhad is an assistant professor of economics at the University of Tehran, Iran. Know more about ADBI’s work https://bit.ly/2uLfdva https://bit.ly/2mFk3Wa

Recent financial crises have highlighted the need to update the global institutions for financial and economic oversight that were founded more than 70 years ago, and their Asian counterparts that have been developing over the last 20 years. The evolution of financial markets and monetary policy makes it increasingly obvious that the coordination between organizations as well as the organizations themselves need to be better suited to modern reality. Peter Morgan, co-chair of research at the Asian Development Bank Institute, is one of the editors of a recent ADBI book, Global Shocks and the New Global and Regional Financial Architecture, Asian Perspectives, and an author of two of its chapters. The book investigates the issues and suggests possible remedies. Read the transcript https://bit.ly/2L3tLAy Read the book https://www.adb.org/publications/global-shocks-and-new-global-and-regional-financial-architecture-asian-perspectives Read the related blog post https://bit.ly/2Mv6cjP About the authors Peter Morgan is co-chair of research at the Asian Development Bank Institute. Pradumna B. Rana is associate professor at the Centre for Multilateralism Studies, S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Know more about ADBI’s work https://bit.ly/2uqt2iw https://bit.ly/2zLY35j

Asia and the Pacific have deepened economic integration through trade and foreign direct investment since the early 1990s. But financial market integration within the region has not progressed as quickly. ADBI research examining cross-border portfolio assets and liabilities in Asia and the Pacific from 2001 to 2017 shows that rapid increases in portfolio foreign assets and liabilities have taken place, particularly after the global financial crisis of 2008–2009. The crisis and the subsequent unconventional monetary easing adopted by the United States, Europe, and Japan have affected the movement of cross-border portfolio capital flows in Asia and the Pacific. When the crisis started, portfolio investment flowed out of the region. Later on during the crisis, when advanced economies eased monetary policies, and after the crisis, a new wave of cross-border portfolio investment from the United States and Europe flowed into the region in search of higher yields. ADBI researcher Eric Alexander Sugandi collaborated with ADBI visiting scholar Sayuri Shirai on the study. Sugandi summarizes their findings. Read the transcript https://bit.ly/2Lekmp5 Read the working paper https://www.adb.org/publications/cross-border-portfolio-investment-financial-integration-asia-pacific-region About the authors Sayuri Shirai is a visiting scholar at the Asian Development Bank Institute and former member of the Bank of Japan’s policy board. Economist Eric Alexander Sugandi, an ADBI consultant, formerly with Standard Chartered Bank, Citibank, and Bank Mandiri in Indonesia. Know more about ADBI’s work https://bit.ly/2utTCXR https://bit.ly/2NnknEe