‘Likonomics’ policies in China

July, 2013
Yiping Huang
Since taking office in mid-March, the Li Keqiang government has taken a different policy path from that of its predecessor. Its key economic policy framework, although yet to be fully detailed, can be summarised as ‘Likonomics’, and appears to consist of three key pillars — no stimulus, deleveraging and structural reform. If so, this implies further downside risks for the economy and markets in the near term. But such policy measures are necessary now for China in order to avoid much more disruptive outcomes in the future.

Convergent Currencies: Challenges of the Asian financial markets

June, 2013
Takatoshi Ito
It is almost certain that the 21st century is the Asian century in terms of real side of the economy—ouput, trade, consumption, and investment. What is not certain is how Asia will integrate financially and what will happen to Asian currencies, especially the Chinese renminbi (RMB) which could become the default international currency in Asia.

Price regimes and India’s current account gap

May, 2013
Ashima Goyal
India’s current account deficit (CAD) rose to a record 6.7 per cent of GDP in the last quarter of 2012. That clearly is unsustainable. But an effective cure must address the roots of the problem, for which a correct diagnosis is essential.

Vietnam’s structural reforms must go deeper

April, 2013
Jonathan Pincus
The tight monetary policy that Vietnam introduced in 2011 has revealed deep fissures in the country’s political economy. These fissures come about because the economy is comprised of two largely autonomous sectors. The first is a dynamic, competitive export sector, specialising in labour-intensive manufactures and agricultural commodities. The second is a protected sector, dominated by state-owned and state-related firms, which has survived largely on the basis of easy credit and favoured access to land.

Can Malaysia beat the middle-income trap?

March, 2013
Vikram Nehru
Electioneering in Malaysia has been at a fever pitch for many months now as Prime Minister Najib Razak prepares to call a general election. Yet away from the election’s sound and fury, the Malaysian government has been implementing some remarkable economic and institutional reforms that will stand the country in good stead in coming decades. But it has failed to address arguably the single most important obstacle to economic rejuvenation in Malaysia.

New value-added trade data adds value to our understanding of Asia

February, 2013
Christopher Findlay
The future of manufacturing in developed economies, and the scope for digital technology to provide new life for that sector, has received increasing attention as production moves to low-wage countries and as the manufacturing process becomes more fragmented. A new data set on the nature of world manufacturing trade in goods and services released by the OECD and the WTO this month suggests the real complexity of this story and the importance for policy makers of understanding global value chains. This new data set will have particular relevance across Asia, and especially East Asia, where manufacturing is already heavily organised around value chains.

Why the TPP is undermining the Doha Round

January, 2013
Jagdish Bhagwati
Under regional FTAs like the Trans Pacific Partnership (TPP), far fewer countries are involved compared to multilateral trade negotiations like the Doha Round. The potential trade-offs in negotiations are more manageable and participant states may be more likely to make offers and examine concessions. But apart from this possible advantage, the TPP process has many downsides, and is undermining successful multilateral free trade.

The way forward for RCEP negotiations

December, 2012
Hank Lim
Leaders from ASEAN countries and their six regional free trade partners agreed to start negotiations for the Regional Comprehensive Economic Partnership (RCEP) on 20 November 2012. The ‘Phnom Penh milestone’ signaled ASEAN’s determination to lead the way in assembling the emerging regional economic architecture. The existing FTAs between ASEAN and China, Japan, South Korea, India, Australia and New Zealand could eventually lead to the creation of an integrated market with a combined market population of more than three billion people, and a combined GDP of about US$19.78 trillion (based on 2011 figures). With the region accounting for more than half of the global market and about a third of global economic output, a successful RCEP would significantly boost global trade and investment.

Explaining India’s infrastructure slowdown

November, 2012
Ashima Goyal
There is currently much finger pointing taking place in India over the mess that is the state of the country’s infrastructure investment.Fresh investments are not forthcoming, and even existing projects face implementation issues. Is overall demand-growth slowdown responsible for the situation? Or does it have to do with financial constraints resulting from fragile global markets, risk-averse banks and high interest rates? Or are the government’s failures in policy-making, granting clearances and coordinating between its own departments also partly to blame?

Indonesia’s participation in global production networks

October, 2012
Moekti P. Soejachmoen
The pattern of global manufacturing trade has changed substantially over the last two decades, with a rapid increase in the parts and components trade compared to other manufactured goods. This phenomenon reflects an increased intensity in global production networks. With technological development and innovations in telecommunications and transportation, it is possible for firms to fragment their production process into smaller segments in which components of production or assemblies can be relocated to different places, creating global production networks. Trade and investment liberalisation in many developing countries has facilitated this process.