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Steel trade war threatens to bring back “dark ages” in world commerce Aug 02, 2018

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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

Using diversified energy in agriculture can protect food security Jul 25, 2018

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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

Trade opening transformed Indian industries Jul 25, 2018

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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

Global and Asian financial oversight needs updating before the next crisis hits Jul 18, 2018

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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

Crisis to opportunity—Asia and the Pacific are more integrated since 2008 Jul 18, 2018

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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

Lessons from the Asian contagion helped the IMF tackle global financial crisis Jul 11, 2018

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The International Monetary Fund learned a thing or two from the 1997 Asian financial crisis, which helped it respond better to the 2008 global financial crisis. Thanks to IMF assistance, troubled countries were in a better position to weather the global crisis. The IMF provided financing to more than 30 countries that saw investors and capital flee financial markets. On average, IMF financing after the global crisis was larger than after the Asian crisis by more than 3 percentage points of gross domestic product. The IMF lent to countries beyond normal limits and increased the size of assistance in several instances when the initial amount wasn’t enough to curb capital outflow and stabilize exchange rates. The bigger financing packages and other innovations it introduced from 2008 to 2011 showed the IMF had learned its lesson from the Asian financial crisis, when inadequate financing contributed to the failure of IMF programs to stop capital outflows and currency free-falls. Read the transcript https://bit.ly/2uiB0JC Read the working paper https://www.adb.org/publications/assessing-effectiveness-imf-programs-following-global-financial-crisis About the authors Carlos De Resende is a senior economist at the Institute for Capacity Development of the International Monetary Fund. Shinji Takagi is professor emeritus of economics at Osaka University and visiting research professor at the Asian Growth Research Institute, Fukuoka, Japan. Know more about ADBI’s work on the global financial crisis https://bit.ly/2m8OSlL https://bit.ly/2J6XC5e

Australia, New Zealand have “green” policies but neither has reached its renewable-energy potential Jul 11, 2018

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Strong and consistent incentives and greater policy stability and coordination between levels of government are needed to engender green energy financing in New Zealand and Australia, according to the Asian Development Bank Institute. New Zealand, on the face of it, looks impressive with a generating mix of over 80% renewables, but this is largely the legacy of state intervention in decades past and masks high per-capita greenhouse gas emission due to intensive agriculture. Much more could be done to encourage distributed generation (such as houses with rooftop solar panels) and electrification of transport. Australia, however, still has a system dominated by coal, and although it has had more policies to promote renewables, their effect has been muted: renewables’ contribution stands at just 17%. The reasons: political instability and policy fragmentation between state and federal administrations. Commitment to energy transition is lacking across all parties and regulators. Read the transcript https://bit.ly/2L0ZNsB Read the working paper https://www.adb.org/publications/green-energy-finance-australia-and-new-zealand About the authors Ivan Diaz-Rainey is co-director at the Otago Energy Research Centre and associate professor of finance at the Department of Accountancy and Finance, University of Otago, New Zealand. Greg Sise is managing director at Energy Link in Dunedin, New Zealand. Know more about ADBI’s work on green energy https://bit.ly/2KNcWtz https://bit.ly/2u6kZXF

China may be about to repeat the financial mistakes of Japan in the 1980s Jul 04, 2018

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China’s financial system is developing rapidly, swelling the country’s bank assets to become the largest in the world, and there are worrying similarities with the global dominance of Japan’s banks in the late 1980s. Japan’s experience ended in tears with the bursting of a domestic and international financial and real asset bubble, heralding the economy’s descent into on-and-off recessions for the next 3 decades and stubborn deflation. Research done for the Asian Development Bank Institute found that, despite the rapid development of capital markets since the 1990s, China’s financial system continues to be dominated by bank lending. Read the transcript https://bit.ly/2z8u1sp Read the working paper https://www.adb.org/publications/development-and-transformation-prc-financial-system About the authors Damian Tobin is a lecturer on Chinese business and management at the School of Finance and Management, SOAS University of London. Ulrich Volz is head of the Department of Economics at the same institution. Know more about ADBI’s work on the People’s Republic of China’s financial system: https://bit.ly/2KuB9o4 https://bit.ly/2lUj0BD

Tighter immigration rules threaten India’s IT talent exports Jul 04, 2018

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One of India’s major exports can readily be seen in computer science faculties, at information technology events, or among programmers and developers in most parts of the world—the IT professional. India is a major global supplier of IT professionals, especially to Organisation for Economic Co-operation and Development member countries, but stricter immigration policies in countries, including the US and the UK in the wake of Brexit, may dent their job prospects, forcing an increased focus on the People’s Republic of China and Japan. An Asian Development Bank Institute report by Anthony D’Costa of the University of Melbourne found the entire Indian IT industry is estimated to employ directly 2.5 million to 3 million people, with another 10 million or so indirectly in low-wage services. But with much of the domestic industry focused on the lower end of the market, going abroad is one of the few attractive options for upward mobility. Restrictive immigration policies mean this is not always feasible. Read the transcript https://bit.ly/2KLIz2v Read the report https://www.adb.org/publications/labor-migration-asia About the author Anthony P. D’Costa is chair and professor, Contemporary Indian Studies Director, Development Studies Program, University of Melbourne, Australia. Know more about ADBI’s work on labor https://bit.ly/2LYGzF5 https://bit.ly/2LYGKQL

Good credit markets and banking can drive innovation in developing economies Jun 27, 2018

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Developing economies often lack sophisticated equity markets, meaning that firms that are focused on innovation must rely on bank lending. But tight bank policies can undermine the culture of innovation that is essential to growth. Research conducted for the Asian Development Bank Institute concludes that deregulation creates a dynamic banking sector that, depending on the development stage, can either aid or hinder innovation. The gradual deregulation of US banks over 20 years since 1970 is particularly instructive. During this period, some US banks responded to deregulation by making credit more available to out-of-state firms. Others consolidated locally by opening new regional branches. Comparing the two patterns shows how extending credit markets aided innovation, while regional expansion generally hindered it. Read the transcript https://bit.ly/2lAx1Uw Read the report https://www.adb.org/publications/banking-and-innovation-review About the authors Chen Lin is a professor at the University of Hong Kong. Sibo Liu is a PhD candidate at the University of Hong Kong. Lai Wei is an assistant professor at Lingnan University, Hong Kong, China. Know more about ADBI’s work on banking https://bit.ly/2K8n5AH https://bit.ly/2K8ncfB

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