Asia Regional Integration Center

In the future, many Asian economies may not accumulate huge trade surpluses or foreign financial assets as quickly as now.

On his latest ADB Blog, Jong Woo Kang, ARIC's Project Leader and Principal Economist, talks about the evolving relationship between export performance and production network or value chains.

Jong Woo Kang, ARIC's Project Leader and ADB's Principal Economist, explains why the remaining 11 countries still have good reason to maintain the #TPP momentum.

On the one hand, the global economy is enjoying a robust and synchronized recovery. On the other hand, however, central banks are maintaining an extremely cautious stance on acting on this and switching gears back to the normal policy level.

The global trade slowdown of 2015-2016 had several causes. The first and main one is the weak global economic recovery. Yes, the global economy has been in an expansion phase. And yes, we are seeing sustained and synchronized global economic growth both in rich and emerging economies.

Hold your breath for the bad news: air pollution imperils Asia and the Pacific. Rapid carbon-intensive growth puts the region in a precarious position, where 4 of the 10 biggest polluters and 5 of the 10 most vulnerable countries to climate change reside together. The biggest polluters also happen to be the most productive in the region.

The policy regime as reflected by the business environment appears to help attract FDI, particularly greenfield investments, especially for economies with low scores for governance. This does not mean, however, that improving the business environment can substitute for governance reforms.

Good governance is too broad a concept to be covered under a single political system in any country. But the crucial factor underpinning effective governance is where the decision-making authority lies, and how it is exercised. Authority should be accompanied by accountability and responsibility, without which good governance cannot be enshrined into any system.

Recent improvement in global economic outlook, largely due to better growth prospects in major economies and increase in trade flows, can be a boon for FDI. But as some countries pursue more inward looking economic policies, how would this bear on the link between international trade and investment?

Against the backdrop of rising bilateralism in the West, where does Asia stand? Is the region moving towards the same direction or is it charting its own unique course? Understanding the evolution of Asia’s FTA landscape holds the key to these questions.

US President Donald Trump recently signed executive orders to withdraw the US from the Trans-Pacific Partnership (TPP) and renegotiate the North American Free Trade Agreement (NAFTA). Both moves suggest his pre-election rhetoric of criticizing the current international trade regime is being translated into concrete action.

The outcome of the US presidential election on 9 November was historic in that it provides a yardstick against which to assess where popular sentiment is heading on important issues such as globalization, inequality, and international trade.

It has yet to be probed whether the global economic slowdown has led to the rise of protectionist trade policies, or it’s the other way around. Either way, the fact that protectionism is growing around the world should concern economists and practitioners alike.

The key to boosting the region’s potential growth is to continue structural reforms. These are policy actions that eliminate impediments to efficient resource allocation, reduce technical and managerial inefficiency, enhance an economy’s ability to respond to shocks, and lay the foundations for greater private investment and innovation.

Wall Street bashing is always in vogue during election time, as we are observing in the run-up to the US presidential election. Is this because financiers and bankers deserve punishment for their greedy and reckless behavior that adds no value to the economy? Or are they simply political footballs?

So what drives this new trend? ADB’s recent Asian Economic Integration Report 2015 highlights cyclical factors such as weak global demand, as well as potential structural factors like slower expansion of global value chains, and growth moderation and structural transformation in the People’s Republic of China (PRC).

The decision of the Republic of Korea to shut down the Kaesong Industrial Complex on 10 February in the wake of North Korea’s nuclear test and subsequent long-range missile test rattled the Republic of Korea’s stock market.

FTAs appear to be the shape of things to come for Asia given the slow progress of the World Trade Organization (WTO) Doha Round in delivering a global trade deal.

Since the early 2000s, labor productivity growth, or the growth of output per worker (measured by GDP divided by employment), has been declining in most economies in Asia. This means that economic growth in these economies may also fall, along with the growth of workers’ incomes and standards of living.