Regional Cooperation

Updated 27 June 2008

Regional cooperation is a longstanding subject of interest for the ADB. ADBI is not the only part of the ADB group looking at these issues but the Institute has sought ways to complement and support other initiatives. We receives frequent requests from various parts of the ADB to sponsor or support regional activities. Our recently completed and ongoing regional cooperation research projects are listed below. See the online catalog for our regional cooperation materials.

1. Industrial and Competition Policy
Developing countries in Asia debate the following policy question: Should we allocate scarce resources to promote competition and thereby procure resulting efficiency gains, or would we do better to favor selected sectors viewed as contributing most to a particular set of desired, long term, developmental goals? Making the distinction between these two choices obscures the fact that the two can be complementary.

The results of an ADBI study on this topic are "Industrial and Competition Policy: Conflict or Complementarity?"

Researcher/Project Coordinator: Douglas Brooks

2. FDI in the Transitional Economies of Southeast Asia
This joint report with ADB examines the trends, patterns, and economic impacts of foreign direct investment (FDI) in the Mekong region, focusing on Cambodia, Lao PDR and Viet Nam (CLV). How has FDI affected economic growth, exports, employment and productivity? What are the policy challenges associated with becoming more attractive to FDI? This report attempts to answer these questions. Although FDI has played an important role in the growth and transformation of all three countries, its role and contribution could be significantly enhanced. To a large extent, the role that FDI can is limited by inherent deficiencies in the investment environment-poor physical infrastructure, limited domestic capacity in the form of human capital and entrepreneurial skills, and weaknesses in legal, judicial, and administrative structures.

Strengthening of the financial and banking sectors and addressing vulnerabilities in the corporate sector are also important in improving the investment climate in the CLV countries. To varying degrees, policy uncertainty and perceived political interference or instability has affected perceptions of risk and hindered investment inflows as well. These are long-term developmental challenges that the CLV countries need to address, and significant progress has been made since the reform process began around the mid-1980s. Much more remains to be done in the future, however, if these countries are to attract the amounts of FDI that their more advanced ASEAN neighbors had done in transforming and modernizing their economies.

Researchers: Jayant Menon and Prema-chandra Athukorala
Project Coordinator: Jayant Menon

3. PRC's Growth and Impact on Terms of Trade of Neighboring Countries
The purpose of this study is to analyse the terms of trade effects of the PRC's rapid growth on its neighbouring countries. The analysis is conducted using a dynamic Computable General Equilibrium (CGE) framework, the Monash Multi Country or MMC model. The advantage of using the MMC model is that it provides a detailed representation of the structures of the economies of concern.

The simulation results show that, indeed, PRC's technological convergence leads to increased world prices for mining products and to lower world prices for manufactures, especially those it exports extensively. However, the overall impact on each of its neighbouring countries' terms of trade is relatively small. Due to various reasons depending on the economic structure of the specific neighbouring country, PRC's technological convergence brings about factors that generate off-setting effects on the neighbouring countries' terms of trade

Researcher: Mai Yin-hua
Project Coordinator: Jayant Menon

4. Monetary and Exchange Rate Policies in Selected ASEAN Countries
The Scope for Monetary Cooperation among Cambodia, Lao PDR and Viet Nam in Light of New Regional Developments This project is coordinated by the Office for Regional Economic Integration of ADB, with inputs from ADBI as a collaborating institution. ADBI will prepare a chapter on ‘Monetary and Exchange Rate Policies in Multiple-Currency Economies', as well as contributing to the concluding chapter entitled "Policy Options for Enhancing Monetary Stability in Cambodia, Lao PDR, and Viet Nam".

Researcher/Project coordinator: Jayant Menon

5. Ageing Asia
Many countries in Asia, particular in East Asia, are now on the edge of drastic demographic changes. Some countries will face demographic challenges related to a declining share of their working populations and an increase in the share of aged dependents as early as 2015-2020. This is expected to have adverse effects on their economic performance and prospects through a decrease in the labor force, and lower saving and investment rates. However, there are a number of Southeast Asian countries that will face a diametrically opposite problem.

Although populations are still very young in these countries, over the next two decades a bulge in the size of the working age population will occur. This raises the potential for significant levels of unemployment and related social problems.

ADBI held a seminar on Ageing Asia at ADB's annual meeting in Kyoto on 7 May 2007. The seminar proceedings are available online

ADBI's Ageing Asia workshop proceedings held in Tokyo on 8 May are available online.

The proceedings will be published as a monograph in 2007.

Project Coordinator: Jayant Menon

6. Trade Policy Development Program (joint with ADB-Phnom Penh Plan)
This training program, designed for middle to senior ranking officials from the GMS region, is part of the Phnom Penh Plan that is coordinated by the Southeast Asia Regional Department of ADB. ADBI is providing inputs to this Program as a collaborating institution. ADBI's contribution to this 10 day program is to provide lectures on issues relating to regional cooperation and integration.

Topics to be covered by ADBI include: Unilateralism and Multilateralism; Principles, Agreements, and Structures of the WTO; The Doha Round; Market and institutional arrangements: AFTA, GMS and APEC; Bilateral Trade Agreements (BTAs ;) and Implications on the Multilateral Trading Framework. This will cover 2 days, as will be conducted at the National University of Singapore in October, 2007. ADBI also contributed to the same program in 2006.

Project Coordinator: Jayant Menon

7. After the Tsunami: Rebuilding on Indonesia, Sri Lanka and Thailand
This project aims to undertake a comparative study of the post-tsunami experience of Indonesia, Thailand and Sri Lanka – the three most severely affected countries. Drawing on the analytical framework developed in the Sri Lanka study, the project has commissioned studies of Indonesia and Thailand, and an update of the Sri Lanka study so as to review country experiences in three countries a year plus after the tsunami. These will provide independent yet country-based perspectives. In addition, it is proposed to examine the experience of the international donor assistance effort so as to draw lessons from a donor perspective.

A book will be published that comprises chapters on the country studies, an assessment of the aid effort, and lessons and policy implications drawn from a comparative analysis of the country experiences.

Researchers: Budy P. Resosudarmo (Indonesia)
Bhanapong Nidhiprabha (Thailand)
Institute of Policy Studies (Sri Lanka)

Project Coordinators: Peter McCawley and Sisira Jayasuriya