Regional Cooperation towards Green Asia: Trade and Investment

Kaliappa Kalirajan,
JEL codes: 
ADBI Working Paper Series

It is logical to argue that growth led by low-carbon goods and services (LCGS) is an imperative for the countries of Asia and the Pacific, and particularly for emerging Asian economies, which are heavily dependent on imported energy and resources. Acknowledging this fact, individual governments in Asia have recently been taking effective actions in the form of voluntary targets and policy commitments to improve the production and use of LCGS. However, the observed effects of these commitments are often challenged by many constraints, such as technological barriers, financial deficiencies, and lack of human capital, some of which are very specific to developing Asia. Different sector policies—such as in trade and environment—and investment policies that aim to facilitate private enterprises, households, and government agencies to contribute to green growth through the use of LCGS are being implemented at the national level. However, fears of competitive disadvantage mean that these policies need to be driven by global and regional frameworks that encompass all countries and sectors. In this context, the objectives of this study are to (i) measure the potential of major emerging Asian economies for exports in LCGS under the “grand coalition,” partial coalition, and stand-alone scenarios; (ii) measure the impact of existing “behind the border” constraints on potential exports in emerging Asian economies; (iii) identify the potential, options, and challenges with respect to a grand coalition scenario; and (iv) find ways to improve the contribution of public–private partnerships to LCGS.