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Can trade avert a water crisis? Part 2 Mar 14, 2018

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Water may be saved through trade provided it moves from countries that use water wisely to those lacking water, as a coming water crisis—driven by climate change, neglect of infrastructure, and misguided policies—threatens global economic growth in countries struggling to develop, and in developed countries. Savings don’t refer to the volume of virtual water of the imported product, but to the volume of water the importers would have required to produce the same quantity of product. Globally, savings represent on average 10% of the 352 cubic kilometers of global freshwater used each year. Most virtual water goes into agricultural exports rather than industry, and is heavily subsidized to make them competitive. There is no recognized way to price water, so it reflects demand and supply, and water, both surface and groundwater, is underpriced. The reality is that water resources are becoming more expensive to exploit, and this is not reflected in the price of a final product. Read the transcript http://bit.ly/2IqaFzt Read the book https://www.adb.org/publications/win-win-how-international-trade-can-help-meet-sdgs About the speaker Alexandre le Vernoy is a consultant at Groupe d’Economie Mondiale. Know more about ADBI’s work on trade http://bit.ly/2oTzgng http://bit.ly/2D3NTJH

Investors want flexibility in the law and its cultural drivers, which leads to innovation Mar 14, 2018

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Laws in developing countries generally reflect their unique cultures, which may restrict innovation and risk-taking, throwing obstacles in the path to development. Strong legal mechanisms, including intellectual property rights and patent protection, allow innovation to thrive. More than elsewhere in Asia, Southeast Asian countries emphasize the economic value of intellectual property rights on patents, but enforcement varies and so does their attraction for investors. Beyond legal mechanisms, innovation centers stimulate growth and innovation. Government-protected technology parks link universities and state companies, and investors know they have a degree of security and won’t have problems down the line. Innovation comes from a meeting of minds, and while there is a risk that specific research may lead nowhere, it’s outweighed by the potential profit from unanticipated spin-off results. The more freedom a country gives its enterprises, the more innovation it could produce. The People’s Republic of China and India offer a curious comparison. Read the transcript http://bit.ly/2ImPGxn Read the working paper https://www.adb.org/publications/law-culture-and-innovation Read the blog post http://bit.ly/2FAwIpe About the authors Douglas Cumming is a professor and Ontario research chair of the Schulich School of Business, York University, Canada Sofia Johan is an extramural research fellow of the Tilburg Law and Economics Centre, University of Tilburg, The Netherlands Know more about ADBI’s work on innovation http://bit.ly/2FL75Ov http://bit.ly/2FLuyPW

China’s “shadow banking” after the 2007 global crisis yields unexpected results Mar 07, 2018

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China’s 2009 economic stimulus program after the global financial crisis led to the growth of shadow banking as local governments scrambled to pay off their obligations under the program. Regulators loosened borrowing rules to avoid a debt crunch, posing risks to the financial system, but in doing so accelerated China’s financial liberalization. Asian Development Bank Institute research details the unintended effects of the four-trillion-yuan stimulus plan launched to insulate China’s economic growth from the global financial crisis. Much of the responsibility for funding the stimulus fell on local governments. They mostly took on bank loans to pay for the infrastructure projects that formed the bulk of the stimulus plans. It could take decades for those projects to start paying returns, but the loans came due after about four years on average, leaving local governments searching for ways to service their debts while keeping the stimulus going. Read the transcript: http://bit.ly/2FZnwrr Read the working paper https://www.adb.org/publications/financing-local-government-prc-stimulus-loan-wanes-shadow-banking-waxes About the authors Zhuo Chen is an assistant professor at the PBC School of Finance, Tsinghua University Beijing, People’s Republic of China (PRC). Zhiguo He is professor of finance at the Booth School of Business, University of Chicago, and NBER, Chicago, US. Chun Liu is associate professor of finance at the School of Economics and Management, Tsinghua University, Beijing, PRC. Know more about ADBI’s work on banking in the People’s Republic of China http://bit.ly/2Fj4XBu

Can trade avert a water crisis? Part 1 Mar 07, 2018

Show notes

A coming water crisis, driven by climate change, neglect of infrastructure, and misguided policies, is threatening global economic growth in countries struggling to develop, and in developed countries, too. The water crisis is partly due to climate change and the increasing unpredictability of weather, but a lot has to do with the behavior of global trade, trade policies, and institutions that believe water is inexhaustible. It is not. By 2050, global demand for water will have risen by 55% from current levels, and wastewater discharges of growing urban populations will increase nitrogen effluents into rivers and seas by 180%—almost triple—compared with today’s rates, creating severe water stress that will affect the livelihoods of 4 billion people. Alexandre le Vernoy, a consultant at Groupe d’Economie Mondiale, identifies four major concerns about water: scarcity aggravated by climate patterns, declining water quality, weak management and regulations, and infrastructure gaps that make it hard to get water to where it is most needed. Read the transcript http://bit.ly/2Fxu1nu Read the chapter http://bit.ly/2EmIRg0 About the speaker Alexandre le Vernoy is a consultant at Groupe d’Economie Mondiale. Know more about ADBI’s work on trade http://bit.ly/2oTzgng http://bit.ly/2D3NTJH

Developing countries need to fix domestic problems to best benefit from globalization Mar 01, 2018

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Developing countries can benefit from globalization if they fix potential problems at home before opening their economies. Failing to do so can multiply local problems as money streams across borders, suggests ADBI research. For a number of reasons, developing countries might end up worse off if they allow their currencies to float freely and remove controls on money flowing in and out of their country before putting in place strong financial foundations. Economists generally agree that imposing controls on capital flows acts as a tax on an economy. Those controls can make it harder for companies to find investors and for local investors to seek better returns for their money. What’s more, greater integration into the global financial system means a developing economy is less exposed to any volatile growth swings at home. Read the transcript http://bit.ly/2ozkJha Read the working paper https://www.adb.org/publications/managing-financial-globalization-guide-developing-countries Read the blog post http://bit.ly/2GtrUiC About the author Shang-Jin Wei is a professor at Columbia University’s School of International and Public Affairs and Graduate School of Business. Know more about ADBI’s work on global finance http://bit.ly/2FGnWmH http://bit.ly/2owtvww

Who would have thought that punctuation could influence borrowing and lending? Mar 01, 2018

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Peer-to-peer or P2P lending is a way of financing debt online so that people can borrow and lend money without going through a financial institution, like a bank. P2P, also known as social lending or crowd lending, has no need for a middleman and has emerged as an alternative to traditional lending institutions around the world. An Asian Development Bank Institute study using data from Renrendai, one of the largest P2P lending platforms in the People’s Republic of China, found something interesting about the use of punctuation marks in P2P lending. Who would have thought that the number of punctuation marks used in borrowers’ text could influence funding probability, borrowing rate, and default of loans in the peer-to peer lending market? Read the transcript http://bit.ly/2HVBmM7 Read the working paper https://www.adb.org/publications/role-punctuation-p2p-lending-evidence-prc About the authors Xiao Chen is a PhD student at Jinan University, People’s Republic of China. Bihong Huang is a research fellow at ADBI. Dezhu Ye is a professor of finance at Jinan University. Know more about ADBI’s work on peer-to-peer lending http://bit.ly/2GTNFqP

Urbanization in India, lessons from Korea, food insecurity, US trade imbalance, inequality in China Feb 22, 2018

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Analysts and economists explain: How India’s government pushes for more urbanization by creating towns that will grow along with information technology. Read the transcript: http://bit.ly/2j6m649 What emerging economies can learn from South Korea, and how it weathered the Asian financial crisis and came out of it even stronger. Read the transcript: http://bit.ly/2G4YerO How corruption and weak national institutions can undermine food security in countries big and small, regardless of their natural resources. Will the world’s two most populous countries—China and India—be able to feed their people when food consumption is expected to go up by 50% in the next decade? Read the part 1 transcript: http://bit.ly/2mlGPBN Read the part 2 transcript: http://bit.ly/2mkgrbJ How the numbers on global trade imbalance don’t really give us the full picture. Read the transcript: http://bit.ly/2z9Kn1E And how longer life expectancy in China is widening the growing gap between rich and poor. Read the transcript: http://bit.ly/2G2TeUs Know more about ADBI’s work from ADBI.org. https://www.adbi.org

Better sanitation systems lead to economic growth Feb 15, 2018

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Providing total and improved sanitation services is a challenge across Asia, as population growth—up 5.7% on average in the past two decades—overwhelms existing infrastructure and outpaces planning. In Central Asia, South Asia, East Asia, and Southeast Asia, 1.7 billion people do not have access to safe sanitation, 780 million still practice open defecation, and 80% of waste water is dumped without proper treatment. The region needs to invest more than $71 billion to provide sanitation services to all. Countries in Asia and the Pacific can learn from the Republic of Korea and Malaysia about how to improve sanitation services, improve water quality and availability, broaden sanitation and strengthen governance, establish institutional mechanisms, and implement city-wide planning—all of which spur economic growth. Korea and Malaysia have harnessed innovative sanitation systems and involved the private sector in identifying projects that provide maximum coverage for communities. They have also put together sanitation projects funded by both the public and private sectors. Vedanti Kelkar, a capacity building and training associate at the Asian Development Bank Institute, explains the economic benefits of such a strategy. Read the transcript http://bit.ly/2F3wsLV Read the blog post http://bit.ly/2HgHdv5 About the author Vedanti Kelkar is a research associate at the Asian Development Bank Institute https://www.adb.org/adbi/about/staff-profiles/vedanti-kelkar Listen to another episode on sanitation http://bit.ly/2GeHeP7 Know more about ADBI's work on urbanization and sanitation http://bit.ly/2ClVQcX

SMEs in Asia need easier access to credit Feb 12, 2018

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Small and medium-sized enterprises are the backbone of Asia’s economies. The Asian Development Bank’s most recent SME survey covered 20 countries in Central, East, South, Southeast Asia, and the Paciﬁc and showed that SMEs accounted for an average of 96% of all enterprises and 62% of the national labor force. SMEs contributed an average of 42% of the gross domestic product or manufacturing value added in these countries, and continued to inﬂuence trade. The latest data show that SMEs in the People’s Republic of China and India accounted for more than 40% of total export value, followed by 26% in Thailand, 19% in the Republic of Korea, and 16% in Indonesia. Yet their development is hindered because of the difficulty accessing affordable credit. Read the transcript http://bit.ly/2CbsUEl Read the working paper https://www.adb.org/publications/solutions-smes-difficulties-accessing-finance-asian-experiences About the authors Naoyuki Yoshino is dean of ADBI Farhad Taghizadeh-Hesary is an assistant professor of economics at Keio University, Tokyo Know more about ADBI’s work on SMEs http://bit.ly/2ElPHnb http://bit.ly/2CdtNwf Related Podcast http://bit.ly/2H6cRLR http://bit.ly/2tZS4mU

Community sanitation can be cheaply improved with money-making technology Feb 02, 2018

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Basic household sanitation has long been outside the reach of cost-effective comprehensive solutions, especially in communities dependent on septic rather than sewage systems. But this is changing. Groups as varied as the Bill & Melinda Gates Foundation and a coalition of private-sector water technology interests are attacking the problems of fecal sludge management, or FSM, particularly in underserved communities. Thanks to innovative products and platforms and the collaboration of the Asian Development Bank Institute, the technology that moves water to bathrooms, taps, and kitchens worldwide is within reach of communities that don’t have complex and costly sewage systems. David Robbins, a specialist in on-site and decentralized wastewater management, found that FSM’s efficiency and effectiveness—the hallmarks of modern sewerage systems—can now be used to attract the private sector into a fledgling sanitation economy that can overcome the many political roadblocks faced by communities without sewers. Read the transcript http://bit.ly/2Bbv7mC Watch the full presentation https://www.youtube.com/watch?v=87p35v-I2pA About the speaker David Robbins is a specialist in on-site and decentralized wastewater management, with an emphasis on fecal sludge management.

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