Asian Economic Integration Report 2018

Toward Optimal Provision of Regional Public Goods in Asia and the Pacific

This publication is the annual report of the Asian Development Bank (ADB) on Asia’s progress in regional cooperation and integration. It covers ADB’s 48 regional members and analyzes regional and global economic linkages. This year’s special chapter, “Toward Optimal Provision of Regional Public Goods in Asia and the Pacific,” examines how collective action among countries can help find solutions to growing transnational development challenges. It discusses how to best provide regional public goods (RPGs) that transcend the so-called “collective action problem,” which occurs when individual interests are too weak on their own to drive cooperation on common issues. The chapter suggests that multilateral development banks should act as honest broker in enhancing mutual trust and facilitating regional cooperation for RPGs.

  • The Asia and Pacific region maintains healthy economic growth outlook.

  • The Asia-Pacific Regional Cooperation and Integration Index shows that infrastructure and connectivity are the key drivers of regional integration in Asia.

  • Asia continues to lead a recovery in global trade.

  • Asia’s trade integration remained strong, providing the region a shield from potential headwinds.

  • Despite a slowdown in inward FDI to Asia, intraregional FDI continues to rise.

  • Global outward FDI decreased 2.9% in 2017, primarily due to a drop in FDI from developed economies; outward investment from Asia weakened only 1.4%.

  • Asia remains the largest source of international migrants.

  • A record $275.5 billion in remittances were channeled to Asia in 2017.

  • Tourism is the main source of income for many economies in the Pacific and Southeast Asia.

  • Intraregional tourism continues to expand but a growing share of Asian tourists is heading to non-Asian destinations.

  • Asia’s local bond and equity returns have become more sensitive to global shocks since the US monetary policy normalization began.

  • Increasing sensitivity to global shocks highlights Asia’s strong global links and reflects uncertainties surrounding the changes in global financial conditions.

  • Multilateral development banks can help increase regional public goods via knowledge generation, financing, enhancing mutual trust, and facilitating regional cooperation for the provision of regional public goods.

  • More effort is needed in measuring spillover benefits of regional public goods and identifying potential beneficiary countries.


Cover and Highlights

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Regional Economic Outlook and Development Challenges

  • Economic Outlook and Risks
  • Development Challenges: Vulnerabilities to Economic, Environmental, and Social Shocks
  • Regional Integration as Development Strategy
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Trade and the Global Value Chain

  • Recent Trends in Asias Trade
  • Asias Intraregional Trade
  • Progress of Global and Regional Value Chains
  • Updates on Regional Trade Policy
  • Trade Remedies
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Foreign Direct Investment

  • Trends and Patterns of Foreign Direct Investment in Asia
  • Outward Foreign Direct Investment
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Financial Integration

  • Asias Cross-Border Financial Assets and Liabilities
  • Inward Portfolio Investment
  • Outward Portfolio Investment
  • Inter- and Intra-Subregional Portfolio Investment
  • Bank Holdings
  • Analysis Using Price Indicators
  • Financial Spillovers
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Movement of People

  • Migration
  • Remittances
  • International Tourism Receipts and the Movement of Tourists
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Subregional Cooperation Initiatives

  • Central and West Asia: Central Asia Regional Economic Cooperation Program
  • Southeast Asia: Greater Mekong Subregion Program
  • East Asia: Support for RCI Initiatives under CAREC and GMS Subregional Programs and Knowledge-Sharing Activities
  • South Asia: South Asia Subregional Economic Cooperation
  • The Pacific: Building Regional Disaster Resilience through Contingent Financing
  • Improving the Provision of Public Goods through Regional Cooperation
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Toward Optimal Provision of Regional Public Goods in Asia and the Pacific

  • Introduction
  • Concepts, Typologies, and Issues in Efficient Provision
  • Regional Public Goods in Asia
  • Measurement Issues and Case Studies on Provision Mechanisms
  • Conclusions and Policy Considerations
  • Background Papers
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Statistical Appendix

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  • US Dollar Remains Dominant Currency

    US Dollar Remains Dominant Currency

    Trade and financial transactions continue being performed largely in US dollars. Over three-fourths of trade are in US dollars, while roughly 50% of financial transactions are in US dollars.

  • Evolving Patterns of Capital Flows in Asia and the Pacific

    Evolving Patterns of Capital Flows in Asia and the Pacific

    Nonresident capital inflows in Asia and the Pacific have doubled in the last decade, with notable changes in the composition and patterns of capital flows.

  • Global Semiconductor Chip Shortages

    Global Semiconductor Chip Shortages

    Producing semiconductors are highly specialized and geographically concentrated, rendering the sector vulnerable to supply chain disruptions. To ensure supply, an enabling environment research and development (R&D), investments, and skills development are key areas of government intervention.

  • The Regional Comprehensive Economic Partnership

    The Regional Comprehensive Economic Partnership

    RCEP is the most ambitious application of a rules-based trading system among economies in Asia and the Pacific.

  • Resilience of remittances to Asia and the Pacific

    Resilience of remittances to Asia and the Pacific

    Remittance inflows to Asia and the Pacific displayed resilience despite the pandemic, propping up limited fiscal space and providing a lifeline to many affected households in the region. Several factors have contributed to this, as explained in Chapter 5 of the AEIR 2022.

  • Merchandise trade and financial investment flows in Asia and the Pacific 2021

    Merchandise trade and financial investment flows in Asia and the Pacific 2021

    Strong recovery in merchandise trade and improved FDI inflows mirror the resilience and attractiveness of Asia and the Pacific and its stronger economic growth prospects. Chapter 1 of AEIR 2022 discusses in greater detail.