ADBI Annual Conference 2007

Ten years after the turbulent Asian financial crisis, the region has “regained economic buoyancy and vibrancy and achieved remarkable growth and development,” opened ADB President Haruhiko Kuroda at ADBI’s tenth anniversary conference held on 4 December 2007 at the ADBI Conference Hall in Tokyo. “I expect ADBI to play an even greater role within ADB as knowledge services is likely to become one of the priority areas of the new Long-Term Strategic Framework,” President Kuroda added.

“ADBI must remain ahead of the curve and provide leadership in identifying issues of medium- and long-term strategic importance,” said ADBI Dean Masahiro Kawai.

The conference, titled “A Decade of Developments,” revisited “…the Institute’s past research and capacity building activities while helping navigate the way to its future,” ADBI Dean Masahiro Kawai said in his introductory remarks. The Dean also added that ADBI will strive to be a “leading center for the creation and sharing of knowledge in Asia and the Pacific” by vigorously pursuing ADBI’s three main work areas of research, capacity building and training, and outreach. According to Dean Kawai, ADBI will continue to work with various development partners by strengthening linkages with both policymakers and think tanks in the region.

Highlighting ADBI’s role in the region during the past decade, the conference covered a lot of ground and invited distinguished scholars and policymakers as session chairs, presenters, and discussants.

Overall the conference was a success and was attended by more than 140 participants from the academia, think tanks, government, and private institutions. The conference was closed by Mr. Hiroshi Watanabe, Special Advisor to the President of the Japan Center for International Finance, where he aptly stated that the conference had “done an excellent job in providing a bridge from ADBI’s past to its future.” He further stated that ADBI is ready to take on fresh ideas and face new challenges in the coming decade.

In revisiting the issues and topics highlighted by ADBI over the last ten years, the conference covered a diverse set of topics from the legacy of the Asian financial crisis to poverty reduction and inclusive growth to regional cooperation and integration.

Back Row (L-R): Susan Stone, Justin Yifu Lin, Peter Petri, Shinji Takagi, Antoni Estevadeordal, Ifzal Ali, Yuen Pau Woo, Siow Yue Chia Front Row (L-R): Iwan Azis, Thanong Bidaya, Tadao Chino, Masahiro Kawai, Peter McCawley, Kimimasa Tarumizu, Mohamed Ariff

Session 1: Asian Crisis 10 Years On— Financing for the Future

The first session tackled the legacy of the Asian financial crisis and how it impacts future economic and financial incentives at the national and regional levels. The session opened with Prof. Peter Petri’s presentation on “Financing Asia’s Future,” asking, “How will Asian growth in 2020 be financed?” Professor Petri concluded that the problem of “financing Asia’s future” is not one of finding sufficient resources to support investments but rather ensuring that savings and investments are efficiently intermediated. In the end “there is a need to develop institutions and mechanisms to handle Asia’s finances” by deepening and opening capital markets to diversify risks and create financial centers.

The second presentation by Dr. Mohamed Ariff, titled “Asian Crisis Ten Years On: Policy Perspectives” outlined some lessons from the decade-old financial crisis, which acted as a catalyst to reforms in the banking and corporate sectors. Although countries severely hit by the crisis have not yet returned to their pre-crisis performance levels, they are now more resilient owing to “efforts and initiatives [that] have been taken” by government so that Asia will be able to “reduce the probability and intensity of another crisis.”

Session 2: Achieving Poverty Reduction for an Inclusive and Equitable Asia

The second session explored analytical and policy implications of poverty reduction for an inclusive and equitable Asia. Professor Justin Yifu Lin opened the session by espousing that “the way for a developing country to eliminate poverty and to achieve inclusive and equitable growth is to follow a comparative advantage-following (CAF) strategy.” He said that in the past, many developing countries introduced various distortions to protect and subsidize non-viable firms in certain priority sectors, which led to poor economic performance and inequitable income distributions. Using the CAF strategy, countries can achieve inclusive and equitable growth by “investing in education, agricultural technology, and rural infrastructure” coupled with reforms in various sectors of the society.

Dr. Ifzal Ali in his paper “Inequality and the Imperative for Inclusive Growth in Asia” pointed out the remarkable decline in poverty in Asia as a result of the region’s rapid economic growth. However, inequalities persist: “the rich are getting richer faster than the poor.” In order to address this inequality, he advocated three anchors of inclusive growth: “expanding opportunities, broadening access to opportunities, and adding social protection to act as a safety net.” These anchors are mutually reinforcing and allow all members of the society to participate and contribute to the growth process on an “equal footing regardless of their individual circumstances.”

Session 3: Regional Growth through Integration and Cooperation

The third session explored the role of institutions in regional cooperation and discussed the costs and benefits of regional integration. Dr. Antoni Estevadeordal opened the session with his paper titled “Regional Integration and Regional Cooperation in Asia-Pacific: State of Affairs and Future Scenario.” The paper documents how “regional trade agreements (RTAs) have proliferated around the world.” He showed how trade integration has been present throughout history and how “today modern free trade agreements (FTAs) are the main protagonists.” This has led to an “increasingly dense regional noodle bowl of agreements” in Asia. While the rise of RTAs can act as a catalyst for regional cooperation, there is a need to reduce the negative externalities that may be brought about by the production of regional public goods.

Dr. Yuen Pau Woo in his paper “Asia-Pacific and Integration: Perceptions and Measurement” measured the extent of Asia-Pacific economic integration using a composite index and found it to have “steadily strengthened.” He also discussed the results of the state of the region survey among opinion leaders in the region, presenting their views on the regional outlook, integration, and institutions. He argued that Asia-Pacific integration is “more important for the Western Pacific than it is for the Eastern Pacific” and that there is a need for trans-pacific institutions such as Asia-Pacific Economic Cooperation (APEC). The challenge for such institutions is not competition from East Asian regionalism but from “lack of institutional commitment.”

“Asia faces a very serious challenge” for environmental sustainability, stated Dr. Siow Yue Chia, Singapore Institute of International Affairs. She said that the region will need strengthened economic cooperation to meet the challenges of water shortages, environmental pollution, and loss of biodiversity.

Session 4: Emerging Issues for Asia in the Next 10-20 Years

The final session of the conference was a lively discussion on the future directions for Asia as well as the identification of the most pressing issues that will confront Asia and the Pacific in the next decade. Dean Kawai asked the seven panelists to identify “challenges and issues” that think tanks like ADBI should “focus on from the perspective of conducting research, in-depth study analysis, and capacity building for the public sector.” Outcomes of this session will help inform ADBI’s long-term focus and mission. The major areas identified were as follows:

• Exchange rate management as an urgent and serious challenge
• Liquidity and excess savings have large economic implications, so a study of the flow of funds is needed
• The need to manage domestic debt in a region whose experience is mostly with foreign debt
• The importance of understanding the link between macro policies and poverty
• The need for financial restructuring through the development of a bond market
• Identification of the best institutional framework to deal with the twin concerns of poverty reduction and economic competitiveness
• Environmental sustainability and demographic change and their profound impacts on economic productivity
• The impact of the rise of India and the People’s Republic of China on comparative advantage and labor markets
• The need to generate and then retain intellectual capacity in the region
• The impact of the rise of capital-intensive industries, especially in the People’s Republic of China and India and its impact socially and economically on the region