adbi year in review 2012

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ASIAN DEVELOPMEN BANK INSIUE

Kasumigaseki Building 8F3-2-5 Kasumigaseki, Chiyoda-ku

okyo 100-6008

Japan

el: +81-3-3593-5500

Fax: +81-3-3593-5571

URL: www.adbi.org

Email: [email protected]

2013 Asian Development Bank Institute

Cover photo: Kasumigaseki Building, okyo, Japan


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Table of Contents

eans essage ................................................................................................................................... 2

Advisory Council ...................................................................................................................................

ision and verview ........................................................................................................................... 4

esults ramework ................................................................................................................................

Collaboration within AB and with AB eadquarters ................................................................. 6

orking with ther nowledge artners .......................................................................................... 8

esearch ............................................................................................................................................ 12

Capacity Building and Training ........................................................................................................ 24

utreach ............................................................................................................................................. 0

Appendix 1: rganization Chart ......................................................................................................

Appendix 2: eans and Advisory Council embers ..................................................................... 8

Appendix : esearch Events ........................................................................................................... 9

Appendix 4: Capacity Building and Training Events....................................................................... 42

Appendix : elected AB ublications ......................................................................................... 44

Appendix 6: Top 0 ownloads of 2012 ........................................................................................... 2


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ist of AbbreviationsADB Asian Development Bank

ADBI Asian Development BankInstitute

AEC ASEAN Economic Community

AFDC Asia Pacifc Finance and Development Centre

APEC Asia-Pacifc Economic Cooperation

ASEAN Association o Southeast Asian Nations

BRICs Brazil, Russia, India, Peoples Republic oChina

CAREC Central AsiaRegional Economic Cooperation

CASS Chinese Academy o Social Sciences

CBT capacity buildingand training

CEPII Centre dEtudes Prospectives et dInormations Internationales

CLMV Cambodia, Lao Peoples Democratic Republic, Myanmar, Viet Nam

DAJA DevelopingAsia Journalism Awards

DMC developing member country

DRM disaster risk management

ESCAP Economic and Social Commission or Asiaand the Pacifc

ERD Economics andResearch Department, ADB

EU European Union

FTA ree trade agreement

G20 Group o Twenty

IADB Inter-American Development Bank

IMF International Monetary Fund

IWRM Integrated Water andResources Management

NEAR North East AsiaResearch Foundation

OECD Organisation or Economic Co-operation and Development

PPP public-private patnership

PRC Peoples Republic oChina

RePEc Research Papers in Economics

SME small and medium-sized enterprise

SSRN Social Science Research Network

UNDP United Nations Development Programme

VIIES ViennaInstitute oInternational Economic Studies

WTO World Trade Organization

US United States

$ = US dollar


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2

he year under review was highlighted by ADBIsdevelopment and introduction o a results

ramework, increased collaboration internally

and with ADB Headquarters, a strong ocus on external

knowledge partnerships, and the advancement o research

as well as capacity building and training (CB) activities.

he ADBI results ramework contains a set o 15

measurable indicators that will enable perormance to

be tracked in a more systematic and structured way than

in the past. his is the irst knowledge management

results ramework in ADB and the frst among the majormultilateral development banks to combine research, CB,

and outreach.

hrough the year, the coordination o Research and

CB activities was strengthened with joint projects that

involved the active participation o ADBIs Research and

CB Departments through all phases o the project cycle.

Moreover, ADBIs Outreach Unit worked closely with

both departments to disseminate ADBI outputs along

multiple channels.

ADBI continued in 2012 to improve ties with its parent

institution, ADB, with collaboration at the level o strategic

planning, joint ownership o major studies, and individual

activities. Formal contact points were also appointed in

ADBI and departments at ADB Headquarters to establish

more structured communications. As well, ADBI sta

began to serve as peer reviewers or certain ADB projects.

Working with external knowledge partners is a priority

or ADBI. In 2012, ADBI collaborated with global and

regional organizations, government, public agencies,think tanks, universities, and other knowledge partners.

Such collaboration broadens ADBIs understanding

o development issues, raises the quality o its research

and CB activities, widens outreach, and enhances the

impact o activities. Such external partnerships in 2012

included the ADBI-OECD Conerence on Services in

Selected Sectors and the ADBI-World Bank Roundtable

on Regional Commodity Exchange Market Integration in

Asia.

Besides advancing the work o ongoing research projects,six new projects with cross-cutting themes were initiated in

2012. Tese included the new agship study Connecting

South Asia and Southeast Asia, which will analyze how

closer regional connectivity and economic integration

between South Asia and Southeast Asia can beneft both

subregions given the new role played by Myanmar in

acilitating this process. Moreover, the study Future o the

World rading System: Asian Perspectives was launched

in 2012 to undertake a broad and comprehensive

examination o key changes occurring in the world trading

system and their policy implications or Asia.

CB activities are spread across the themes o inclusive

and sustainable growth, regional cooperation and

integration, and governance or policies and institutions,

o which there were 23 policy dialogues, six course-based

training programs, and one e-learning course in 2012.

Microfnance raining o rainers was a distance learning

course that sought to strengthen the institutional capacity

o microinance in the region by increasing the number

and country coverage o accredited microfnance trainers.

Running or the eighth time, this course had over 300participants in 2012.

In the area o outreach, ADBI continued eorts to widely

disseminate ADBI outputs in the orm o publications and

through top-tier and local media, the ADBI website, and

social media channels. A new initiative or 2012 was the

introduction o the ADBI blog Asia Pathways, through

which short original contributions on economic and

development issues in Asia and the Pacifc are presented.

It is my sincere wish that this 2012 activity report oADBI provides a solid understanding o our work as

the think tank o ADB and how our strategic ocus and

activities contribute to ADBIs vision o being the leading

knowledge center or economic development in Asia and

the Pacifc.

Masahiro Kawai

Dean & CEO

Asian Development Bank Institute

eans essage


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he unctions o the Advisory Council are setout in Article IV o the Statute o the Asian

Development Bank Institute. Te Council has

seven members, one o whom is a senior ocial rom

ADB Headquarters (HQ). Te other members o theAdvisory Council are distinguished practitioners or

scholars in the ield o development or management

selected rom among ADBs members on a broad

geographical basis. Members o the Advisory Council

are appointed or two years by the ADB President

and may be reappointed. Tey meet twice a year. Te

Advisory Council selects its own chair.

In accordance with the Statute, the Advisory Councilprovides advice and recommendations on the strategic

directions o ADBI and reviews the ADBI work

program. In the governance structure o ADBI, the

Advi sory Counci l pl ay s a cruc ia l ro le in gu id ing

ADBIs activities and ensuring that its work products

and chosen projects are o the highest standards and

relevance.

Te Advisory Council met in okyo on 27 April 2012

and Manila on 2 October 2012, where it considered

ADBIs work program or 20132015.

Advisory Council

tanding from left): asahiro awai AB ean) asahisa ujita Changyong hee

eated from left): ebastian aust aruhiko uroda AB resident) and Cinnamon

ornsife. Not pictured: Ajit umar eth)

Name Country

Cinnamon Dornsie

ActingCo-Director o the International Development Program,

The Paul H. Nitze School oAdvancedInternational Studies, Johns Hopkins University

United States

Masahisa Fujita

President andChieResearch Ocer, Research Institute o Economy, Trade andIndustryJapan

James Richard Gilling

First Assistant Director General, AusAIDAustralia

Justin Yiu Lin

Honorary Dean, National School o Development, Peking University

Peoples Republic oChina

Sebastian Paust

Senior Adviser to the ManagingBoard, Deutsche Gesellschat r Internationale

Zusammenarbeit GmbH

Germany

Ajit Kumar Seth

Cabinet Secretary andCabinet Secretariat, Government oIndiaIndia

ChangyongRhee

Chie EconomistADB

ustin ifu in

ames illing


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4

ision and verview

he ADB Institute is recognized as the leaderin the creation and sharing o knowledge on

economic development in the Asia and Pacifc

region. ADBI conducts research and capacity building

and training activities that contribute to ADBs overall

objective o poverty reduction.

ADBI ocuses on medium- to long-term development

issues o strategic importance to senior policymakers.

he objectives o ADBI, as set orth in its Statute,

are to identiy eective development strategies and to

improve the capacity o agencies and organizations indeveloping member countries.

ADBI strives to be demand-driven and to respond

to important challenges aecting many stakeholders

in the region in a timely, operationally relevant, and

policy-oriented ashion.

ADBI increases the impact o its activities by working

closely with leading think tanks to shape the debate on

key emerging issues and to develop sound and practical

recommendations regarding policy reorms.

ADBI ensures the quality o its research and capacitybuilding and training programs by pursuing excellence

and originality in areas where it has an unmatched

strategic advantage, such as the analysis o emerging

policy issues rom a regional perspective. o urther

strengthen its reputation as a trusted knowledge

institution, ADBI has introduced a results ramework

or its programs and activities. It also seeks to enhance

its visibility, impact, and accessibility through the use

o new media and refned knowledge products.

ADBI has been pursuing a work program with threestrategic priority themes, which orm a coherent basis

or all its activities:

t Inclusive and sustainable growth

t Regional cooperation and integration

t Governance or policies and institutions

Private sector i s sues , as dr ivers o economic

development, cut across all the strategic themes.

ADBIs fnancial statements can be ound in the ADBAnnual Report 2012, Vol. 2.


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ADBI adopted a recommendation in the specialevaluation study o ADBI published in 20111

that it should develop a results ramework,

accomplishing it in close coordination with knowledge

departments at ADB HQ.

he ADBI ramework is the irst in ADB to ocus

on knowledge activities and it has drawn on state-o-

the-art thinking. he ramework contains a set o 15

measurable indicators that will enable perormance

to be tracked over time in a more systematic and

structured way than in the past. Monitoring againstthese indicators will begin in 2013.

his is the irst knowledge management results

ramework in ADB and the irst among the major

multilateral development banks to combine research,

capacity building and training, and outreach. ADB

HQ is in the process o establishing its own knowledgemanagement results ramework and ADBI will be

working closely with the knowledge departments to

ensure that the rameworks are compatible.

he results ramework will make ADBIs strategic

direction much clearer or stakeholders and or

sta, who will be able to see how their individual

achievements ft into ADBIs broader picture.

he ADBI results ramework is a clear indication

o how seriously ADBI takes the need to track andimprove its perormance. Establishing well-deined

measurable indicators and monitoring perormance

against them will give management a clearer idea o

where ADBIs strengths and weaknesses lie and will

enable them to improve perormance as a result.

esults ramework

1ADB. 2011. Special Evaluation Study: Performance of the Asian Development Bank Institute: Research, Capacity Building and

Training, and Outreach and Knowledge Management. Manila.


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ADBIs Research and Capacity Building

and raining (CB) departments

continued to act as a team and to share

resources in undertaking their activities.

Research ellows participated in selected

CB activities as resource speakers and as

discussants, allowing them to supplement

their theoretical work with insights

rom CB participants engaged on a

day-to-day basis with emerging issuesin developing countries. Joint activities

organized by the Research and CB

departments in 2012 included: OECD

ADBI Roundtable on Capital Market

Reorm in Asia, CLMV Project

raining on Agricultural Productivity

and Natural Resources Management,

and Policy Dialogue: ASEAN, the PRC,

and India: Te Great ransormation?

he Outreach Unit works with the

Research, CB, and Administration,

M an age m e n t , an d Co o rd in a t i o n

departments to ensure that all ADBI

events, publications, working papers,

special programs, and partnerships are

relected on the ADBI website in an

accurate and timely manner.

he coordination o Research andCB activities was strengthened in

2012 through more jo int pro jects

and by involving both departments

in all phases o these joint projects.

For example, the joint Research and

CB project, Strengthening ASEAN

ransitional Economies, will include

research and CB components in all

phases. For other research projects,

CB is involved in the early stages o

development o such projects to ensurethat their contents are also appropriate

Collaboration within AB and with ABeadquarters


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Collaboration within AB and with AB eadquarters

or CB purposes. Research is also involved indelivering CB activities.

orking with AB eadquarters

ADBI has greatly strengthened its bonds with its parent

institution, ADB, in recent years. Collaboration occurs

at the level o strategic planning, joint ownership

o major studies, and individual activities. Formal

contact points have been appointed in ADBI and

departments at ADB HQ to establish more structured

communications. ADBI sta have served as peerreviewers o ADB projects.

Strategic planning. All ADBI medium- and long-

term planning is carried out in close consultation

wi th the ADB Board and management and wi th

the knowledge departments and, where relevant,

operations departments at ADB HQ. Beore launching

a major initiative, ADBI consults extensively with

relevant departments at ADB HQ to ensure that

the strengths o the two institutions can be used to

maximum advantage. In addition, ADBI conductsan annual consultation exercise with ADB HQ to

ensure that any variations in the work program are

communicated. Also, ADBI provides input when ADB

departments launch work programs. All ADBI projects

in the three-year rolling work program are reviewed

and commented on by ADB departments beore the

work program is submitted to the Board. he ADB

chie economist is a member o the ADBI Advisory

Council and gives advice and recommendations on the

strategic directions and work programs o ADBI and

on potential synergy with ADB.

Major studies. he ADBI lagship project, ClimateChange and Green Asia, is a joint project with ADB

HQ, with the Regional and Sustainable Development

Department taking the lead in Manila. Other major

ADBI projects being carried out with ADB include:

AS EA N , the Peoples Republic o China, and

India: he Great ransormation? (with numerous

departments); ASEAN 2030: oward a Borderless

Economic Community, and Supporting Equitable

Economic Development in ASEAN: A Project Focused

on Cambodia, Lao PDR, Myanmar, and Viet Nam

(both primarily with the Southeast Asia Department);Pacifc 2030 (mainly with the Pacifc Department); and

Disaster Risk Management in Asia and the Pacifc (with

the Regional and Sustainable Development Department).

Individual activities. ADBI continued to work

closely on research and capacity building activities and

knowledge products with various departments at ADB

HQ during 2012. During the year, ADBI collaborated

with the Economics and Research Department, Oce

o Regional Economic Integration, Private Sector

Operations Department, Regional and SustainableDevelopment Department, Strategy and Policy

Department, and regional departments.

esults ramework

ADBI adopted the recommendation in the special

evaluation study o the institute that it should develop

a results ramework, which it has developed in close

coordination with knowledge departments at ADB

HQ. (see p. 5).


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In 2012, ADBI collaborated with global

and regional organizations, government,

public agencies, think tanks, universities,

and other knowledge partners. his

broadens ADBIs understanding o

development issues, raises the quality o

its research and CB activities, widens

its outreach, and enhances the impact o

its activities. Examples o activities ADBIconducted in 2012 with external partners

include the ollowing.

t ADBIOECD Conerence on Services

rade in Selected Sectors: Audiovisual

Services, Higher Education, and

Financial Services (January 2012)

with OECD; and Indian Council or

Research on International Economic

Relations, India

t he 2nd ADBI-OECD Roundtableo n L a b o r M i g r a t i o n i n A s i a :

Managing Migration to Support

Inclusive and Sustainable Growth

(January 2012) with OECD

t OECDADBI 12th Roundtable

on Capital Market Reorm in Asia

(February 2012) with OECD

t ADBINEAR Jo int Conerence:

Lessons rom JapanIs Japan Koreas

Future? (March 2012) with NorthEast Asia Research Foundation,

Republic o Korea

t ADBIPRI Conerence: Achieving

Financial StabilityLessons rom the

Eurozone Crisis or Macroeconomic

and Financial Stability (March 2012)

with Policy Research Institute o

Japans Ministry o Finance

t 8th Mic ro inance ra in ing o

ra ine r s : A B l ended Dis tance

Learning Course (April 2012) withWorld Bank, US

Working with Other Knowledge Partners


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orking with ther nowledge artners

9

ADBI Partners

International organizations: International Monetary Fund (IMF); Organisation or Economic Co-operation and Development (OECD),

includingits Task Team on South -South Cooperation; WorldBank, includingits Tokyo Development LearningCenter; World Trade

Organization (WTO); European Bank or Reconstruction and Development (EBRD); Inter-American Development Bank

Regional organizations: Asia-Pacifc Economic Cooperation (APEC), includingits Business Advisory Council andits Secretariat;

Association o Southeast Asian Nations (ASEAN), includingits Secretariat; Network oAsian River Basin Organizations (NARBO); Mekong

Institute.

National government agencies: Australian Agency or International Development (AusAID); Bank oItaly (Representative Oce

in Tokyo); Japan Bank or International Cooperation; Japan Fair Trade Commission (JFTC); Financial Services Agency, Japan; Japan

International Cooperation Agency; Japan Water Agency; Ministry o Finance, Japan

Think tanks, universities, and other knowledge institutions: Australian APEC Study Centre, RMIT University, Australia; Australian

National University; Brookings Institution; Bruegel, Brussels; Cambodia Development Resource Institute; Centre dEtudes Prospectives

et dInormations Internationales (CEPII); Chatham House, UK; Chinese Academy o Social Sciences (CASS); Economic Research Institute

or ASEAN and East Asia, Indonesia; Indian Council or Research on International Economic Relations (ICRIER); Istituto Superiore Mario

Boella (ISMB), Italy; Korea University; ; Myanmar Development Research Institute; National Bureau o Economic Research, US; Peterson

Institute or International Economics; Policy Research Institute, Ministry o Finance, Japan; Politecnico di Torino, Italy.

MOU partners:Australian APEC Study Center at RMIT University; Bruegel, Belgium; Bertelsmann Stitung, Germany; Centre dEtudes

Prospectives et dInormations Internationales (CEPII), France; Chines Academy o Social Sciences -Institute o World Economics and

Politics (CASS-IWEP); Centre or East Asian Studies at Korea University.

t he 8th East Asia op Level Oicials Meetingon Competition Policy and the 7th East Asia

Conerence on Competition Law and Policy (May

2012) withJapan Fair rade Commission (JFC);

and Malaysia Competition Commission

t he 3rd High-Level Pol icy Roundtable on

Internat ional Inves tment Pol ic ie s in As ia :

Responsibility and Sustainability (May 2012) with

OECD; and Asia-Pacifc Financial Development

Center, PRC

t AsiaLatin America : Fo rging a Long-er mPartnership (May 2012) with ADB HQ; and the

IADB

t NBER Japan Project Meeting (June 2012) with

National Bureau o Economic Research, US;

AustraliaJapan Research Centre, Australia; Columbia

University, US; and University o Chicago, US

t Asia-Paci ic Fo rum on Fi nancial Inclusion:

Ap proaches, Regulations, and Cross-Border

I s sue s ( June 2012) w i th APEC Bus ines s

Advisory Council; and Asia-Paciic Finance and

Development Center, PRC


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ear in eview 2012

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t Managing the WO Accession Process: Strategies,

Challenges, and Practices (July 2012) with ADBHQ; AsiaPaciic Finance and Development

Center (AFDC); World Bank, US

t ADBIIADB Seminar: Shap ing th e Future o

the Asia and the PaciicLatin America and the

Caribbean Relationship (July 2012) with Inter-

American Development Bank, US

t Future o the World rading System: Asian

Perspectives (August 2012) with World rade

Organization

t ADB IWor ld Ba nk Ro un dt abl e on Reg iona l

Commodity Exchange Market Integration in Asia(September 2012) withWorld Bank, US

t S u b - r e g i o n a l W o r k s h o p o n M i l l e n n i u m

Development Goals or Central and East Asia

(September 2012) withADB HQ; United Nations

Development Programme (UNDP); and United

Nations, Economic and Social Commission or

Asia and the Pacifc (UNESCAP)

t Adjusting the World to the New Realities o the

International Financial System (October 2012)

with Reinventing Bretton Woods Committee, US

t AsiaLatin American and the Caribbean High Level

Economic Policy Forum - AsiaLatin America:New Engines o Growth o the Global Economy?

(October 2012) withADB HQ; and IADB

t PPP inrastructure DevelopmentBasics or

Negotiation (November 2012) with the Center

o r F i n an c i a l , E c o n o m i c , an d B an k i n g

Studies, France; and AsiaPaciic Finance and

Development Center, PRC

t 7th NARBO IWRM rainingSolutions to Water

Sector Issues through IWRM: Te Mahaweli River

Basin Experience (November 2012) with ADB

HQ; Japan Water Agency; and Network o AsianRiver Basin Organizations

The seminar Adjusting the orld to the New ealities of the nternational inancial ystem provided insight on the eurozone

crisis the regional cooperation responses and the implications of the crisis for regional cooperation in Asia.


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orking with ther nowledge artners

11

Networking

In 2012, ADBI continued to strengthen external

knowledge partnerships and disseminate knowledge

on development issues. Under the ADBI Visiting

Researcher Program, three visiting researchers

and ellows rom the Asia and Paciic region each

spent up to 6 months at ADBI. ADBI continued

to communicate with ormer visiting ellows and

researchers to inorm them o ongoing ADBI activities

and to inquire about the status o their ADBI working

papers and the outreach activities that they conductedor their research papers. ADBIs database o visiting

ellows, researchers, and scholars is being used to

strengthen its network o alumni and riends o ADBI.

ADBIs e-newsline and e-notiication services as well

as its Facebook and witter accounts are also used to

strengthen contacts with alumni o Research and CB

events.


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he Research Department addresses

sal ient economic and social issues

pertaining to ADB developing member

countries. For 2012, these included the

ongoing European sovereign debt and

banking crisis and its implications or

Asian countries and international trade

and investments. Other key issues and

research areas were examined in line

with the three ADBI priority themes:inc lus ive and sus ta inable growth;

regional cooperation and integration; and

governance or policy and institutions.

Te ollowing section highlights the fve

crosscutting themes projects and six new

projects that were launched in 2012, as

well as various events and publications.

ngoing rojects withCrosscutting Themes

Climate Change and reen Asia

his lagship project examines how

Asias emerging economies can respond

to increasing demand or low-carbon

development and introduce proactive

policies to strengthen green growth

practices in developing Asia. he studyhas also helped create a network o

institutions that can draw on each others

expertise in promoting green economic

development. he studys indings will

be directly relevant to the policymaking

and investment communities, and it will

make important contributions to regional

policy cooperation or low-carbon green

growth. he study is being implemented

jointly with ADBIs Capacity Building

and raining Department (CB), ADBdepartments, particularly the Regional and

esearch


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esearch

1

Sustainable Development Department, and severalAsian think tanks. Te project organized our events in

2012.

One such event, Beyond Nimbyism: Towards Integrated

Reforms for Financing Green Growth , ocused on

reorm measures to accelerate green growth and the

development o policy tools that catalyze investment

in climate change mitigation, adaptation, and green

technology.

AEAN the eoples epublic of China andndia: The reat Transformation?

his study examines in detail key development issues

aecting member countries o the Association o

Southeast Asian Nations (ASEAN), the Peoples

Republic o China (PRC), and India; and their role

in, and impact on, the regional and global economies.

he indings will provide policymakers with national

and regional medium- to long-term policy and strategy

rameworks or achieving a balanced, sustainable,

and resilient development process. he studys ocus

is on maximizing the potential o Asias key emergingeconomies while minimizing negative externalities by

ostering integration and cooperation. his study is

being implemented jointly with ADB departments.

Te project organized three events in 2012.

nternational onetary and inancial

ystemAsian erspectives

his project ocuses on issues related to reorms o

the international monetary and inancial system that

can support the development o Asian economies,

including institutional eorts to promote greaterregional monetary cooperation and exchange rate

coordination; new international reserve instruments;

and increasing the voice o Asian economies in global

inancial institutions. Several components o this

project are being implemented jointly with other think

tanks.

AEAN 200: Toward a Borderless Economic

Community

he aim o the study is to analyze aspirations and

challenges or ASEAN as the region moves alongthe next two decades o development. It deines the

vision o a RICH ASEANa Resilient, Inclusive,Competitive, and Harmonious regionby 2030.

In line with this vision, the study will oer an

inormative, technical, and detailed view o the main

challenges and the policy reorms and institutional

developments required, at both national and regional

levels, to bring them to higher income levels and to

improve the quality o lie o their citizens. Tis project

is being implemented jointly with the ADB Southeast

Asia Department and the ASEAN Secretariat. he

project organized two events in 2012.

3DFLF,VODQG(FRQRPLHV

Te aim o this study is to provide strategic directions

to Paciic island economies, their governments, civil

society, and business communities on approaches

to development. he study will deine the increased

economic interdependence o the Pacifc with East and

Southeast Asian countries and include a component

ocused on the long-term implications or Paciic

island economies o the development o inormation

and communication technologies. Tis project is being

implemented jointly with the ADB Pacifc Departmentand in collaboration with several development partners,

including the Australian Agency or International

Development and the World Bank. his project will

be continued in the 20132015 work program. he

project organized one event in 2012.

New rojects with CrosscuttingThemes

Connecting outh Asia and outheast AsiaTis new agship project, in collaboration with ADBs

South Asia and Southeast Asia Departments, will

analyze how closer regional connectivity and economic

integration between South Asia and Southeast Asia

can beneit both subregions, with a ocus on the

role played by physical inrastructure and public

policies in acilitating this process. It will examine

major developments in South AsiaSoutheast Asia

economic cooperation, the role o economic corridors,

and regional cooperation initiatives. By virtue o its

strategic location straddling South Asia and SoutheastAsia, the recent opening up o Myanmar in political,


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ear in eview 2012

14

economic, and inancial terms presents a signiicant

new opportunity or enhancing these integration

eorts, with the promise o substantial gains or both

regions. his is particularly the case or land-based

transportation, such as highways and railroads, as

well as energy and inormation and communications

technology inrastructure. Te ocus is on connectivity

in a broad sense, covering both hardware and sotware,

including investment in inrastructure, investment

inancing and inancial development, energy trading,

trade acilitation, and support o national and regionalpolicies. his study will provide: (i) an assessment o

sectors with the potential or signifcant benefts rom

cooperation; (ii) specifc policy options at the regional,

subregional, and country levels to realize those benefts;

and (iii) the dissemination o the fndings to public and

private stakeholders through a senior policy seminar,

publication o the interim, fnal project reports and an

edited book, and media outreach. Te project held an

inception meeting in 2012.

isaster isk anagement in Asia and the3DFLF

Countries in the Asia and Pacifc region are particularly

exposed to natural disasters. O the ten major natural

disasters with the highest death tolls since 1980, seven

have occurred in the developing countries o Asia. In

addition to the human lives lost, the average annual

direct economic cost related to property destroyed

in natural disasters in the region rom 2002 to 2011

is conservatively estimated at $65 billion. Including

indirect economic losses associated with disruptions

to the wider national and regional economies throughinterruptions o production networks and supply

chains, loss estimates would increase by a signiicant

margin.

Tis study, in collaboration with ADBs Regional and

Sustainable Development Department, aims to reect

the changing and rising trends o natural hazards and

disasters in the region, as well as to better assess human

and economic losses due to disasters, evaluate national

DRM strategies and policies and regional rameworks,

and make appropriate local, national, and regional level

recommendations. Te project organized three events,including an inception meeting, in 2012.

The uture of the orld Trading ystem:

Asian erspectives

he world trading system is undergoing undamental

changes because o the rise o emerging economies

such as the BRICs (Brazil, Russia, India, PRC), which

are expanding trade and investment globally. New

perspectives rom Asia, whose economic importance is

growing rapidly, can help acilitate an orderly transition

and sustain trade-led growth or all economies involved.For instance, an increasing share o Asias trade consists

o intermediate goods and services that pass through

dierent economies and industries beore being

assembled into fnal products. Such global production

value chains substantially alter how economies interact

through trade. International rules and institutions or

trade can also have proound and lasting eects on

this shit and redefnition o trade relationships. In the

absence o a WO Doha deal, the spread o ree trade

agreements (FAs) in Asia has implications or the pace

o trade liberalization, the consolidation o regionaltrade rules, and the compatibility between global and

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Conference 2012 took stock of recent developments in regional integration and assessed policy choices for sustainable

growth.


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regional trade rules. Finally, ollowing the 2008 global

inancial crisis and amid the ongoing eurozone crisis,

protectionist tendencies are also on the rise in some

economies. Tis new project aims to undertake a broad

and comprehensive examination o these key changes

occurring in the world trading system and their policy

implications or Asia. he project held an inception

meeting in 2012.

Cambodia ao yanmar and

iet Nam roject: trengthening AEANTransitional Economies

his project, in collaboration with ADBs Southeast

As ia De partme nt , wi ll con du ct policy- or ien ted

economic research and CB programs to support the

economic growth and social development o Cambodia,

Lao PDR, Myanmar, and Viet Nam, which have been

identifed in ADBIs ASEAN 2030 study as ASEANs

most dynamic economies or the next two decades, but

also those requiring more assistance rom international

partner agencies in terms o policy-oriented research

and capacity building activities. Te project carried outa training course in Bangkok in 2012.

egional Cooperation andntegration

Asiaatin America Economic Ties

his study o economic ties between the Asia and

Paciic region and Latin America and the Caribbean

aims to bolster the economic relationship between

the two regions and to analyze the catalytic role o the

two regional development banks, ADB and the Inter-

American Development Bank (IADB). It analyzes

patterns o trade and investment lows, the spreadand depth o interregional ree trade agreements, and

orms o bilateral and multilateral cooperation. he

projectjointly implemented by ADBI, ADBs Oce

o Regional Economic Integration, and IADB

ormed the basis o a high-level dialogue between the

Presidents o ADB and IADB at the annual meetings

o both banks in 2012. Te project held six events in

2012. Tis project will be continued in the 20132015

work program.

ey changes taking place in global trade were discussed by participants at the workshop uture of the orld Trading ystem:

Asian erspectives.


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16

One such event, Asia-Latin America: New Engineso Growth o the Global Economy?, examined how

Asia and Latin America economic ties have deepened

in the last ten years, contributing to growth and

poverty reduction in both regions. hese economies

demonstrated great resilience and rapid recovery ater

the 2008 global inancial crisis, and can become the

new drivers o the world recovery.

utputs

Four books and 26 working papers were publishedunder this theme in 2012, including the ollowing.

Inrastructure or Asian Connectivity is a ollow-up

volume to Inrastructure or a Seamless Asia. his

book addresses the prospects and challenges concerning

both sot and hard inrastructure development

in Asia and provides a ramework or achieving

Asian connectivity through regional inrastructure

cooperation.

Shaping the Future o the Asia and the Pacifc-LatinAmerica and the Caribbean Relationship.Economic

ties between Asia and Paciic and Latin America and

the Caribbean (LAC) have reached a turning point.

In a mere decade, Asia has become the LACs second-

largest trading partner. Tis dynamic trade relationship

has boosted the LACs strategic and economic

importance to Asia. In its our chapters, the book

identiies the challenges and opportunities in each o

these pillars while drawing attention to the beneits

o balancing their development. his report is one o

the most downloaded books on the ADBI website andrepresents a collaborative eort by ADBs Oice o

Regional Economic Integration, ADBI, and IADB.

Regional and Global Monetary Cooperation

evaluates regional and global monetary cooperation,

ocusing on inancial saety nets, with a view toward

developing recommendations or more eective

cooperation, especially between the International

Monetary Fund (IMF) and regional inancial

arrangements. his paper, by Mario Lamberte and

Peter Morgan, argues that a global inancial saetynet (GFSN) should have adequate resources to deal

with multiple crises, be capable o a rapid and exibleresponse, and not be encumbered by historical

impediments such as the IMF stigma that would limit

its acceptance by recipient countries. Oversight o

a GFSN needs to be based on cooperation between

global and regional orums, or example, the G20 and

ASEAN+3, or the East Asia Summit.

As ia-Lat in America Free rade Agreements : An

Instrument or Inter-Regional Liberalization and

Integration? his paper, by Ganeshan Wignaraja,

Dorothea Ramizo, and Luca Burmeister, uses newcriteria to examine whether Asian-Latin American

FAs have acilitated market-led integration by

liberalizing trade and behind the border regulatory

barriers in 20 AsianLatin American FAs in eect

in 2012. he evaluation o agreements suggests

that progress has been made in reducing trade and

regulatory barriers using FAs, but more needs to

be done in uture FAs to solidiy and expand the

process o deep integration between the two regions.

raditional areas like goods and services are typically

well covered in inter-regional FAs. he paper alsonoted several challenges with existing AsianLatin

American FAs including insuicient depth in some

agreements, variable rates o FA used by business, and

the risk o a noodle bowl eect.

Te Peoples Republic o Chinas High-ech Exports:

Myth and Reality, by Yuqing Xing, argues that the

PRCs leading position in high-tech exports is a myth

created by outdated trade statistics that are inconsistent

with trade based on global supply chains. Current trade

statistics mistakenly credit entire values o assembledhigh-tech products to the PRC, thus greatly inlating

its exports. In 2009, the PRCs value-added accounted

or only about 3% o the total value attributed to its

exports o iPhones and laptop personal computers.

Tis paper suggests that a value-added-based approach

should be adopted to accurately measure high-tech

exports. Furthermore, i assembly is the only source o

the value-added generated by PRC workers, then in

terms o technological contribution, these assembled

high-tech exports are no dierent rom labor-intensive

products, and so they should be excluded rom thehigh-tech classifcation.


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Institutions or Asian Integration: Innovation andReorm, by Giovanni Capannelli and See Seng an,

is based on an ADB study completed in 2010. his

paper reviews literature on the design and development

o institutions or Asian regionalism and discusses the

uture needs or innovation and reorms o the regional

institutional architecture having in mind the creation

o a regional economic community. Te paper ollows

the taxonomy o institutions or regionalism adopted

by the ADB study and ocuses on key governance

principles or such institutions by presenting case

studies o principles and institutions that worked anddid not work well in the past. Asias institutions or

regionalism need strengthening through reorm and

innovation such as better governance and resourcing,

greater and more eective participation and delegation

o powers, streamlining o regional architecture,

including the phasing out o outdated or irrelevant

institutions and, where needed, the creation o new

ones.

Lessons o the European Crisis or Regional

Monetary and Financial Integration in EastAs ia, by Ulrich Volz, discusses the causes o the

eurozone crisis and the challenges that Economic and

Monetary Union countries ace in solving it. his

paper highlights fve lessons or regional fnancial and

monetary cooperation and integration in East Asia: (i)

do not rush monetary integration; (ii) rethink costs

and benefts o international fnancial integration; (iii)

develop and strengthen a regional crisis prevention

and resolution mechanism beore the next crisis hits

the region; (iv) reinorce surveillance and monitoring

o East Asian inancial markets; and (v) put in placeadequate resolution procedures and recapitalize banks

switly once the banking system is in trouble.

Revisiting the Internationalization o the Yuan ,

by Yongding Yu,dicusses how, as the worlds second

largest economy, largest trading nation, and the largest

oreign holder o United States government bonds, the

PRC needs a currency with international status that

can match its economic status in the global economy.

Tis paper suggests that beore the internationalization

o the yuan can make meaningul progress, necessaryconditions, such as the existence o deep and liquid

fnancial markets, a exible exchange rate and interestrates responsive to market conditions must be created.

Yuan internationalization should be a natural course

o economic development and capital account

liberalization. o push yuan internationalization in an

artifcial way is counter-productive.

nclusive and ustainable rowth

Five books and 19 working papers were published

under this theme in 2012, several o which are

highlighted below.

Do Exporting Firms in the Peoples Republic o

China Innovate? Tis paper, by Ganeshan Wignaraja,

assesses actors driving irm-level export perormance

in Asias super exporterthe PRC. While early studies

suggest that innovation is important, there has been

little research on opening the black box o technology

at the irm-level in the PRC. he paper undertakes

econometric analysis o innovation, learning, and

exporting in automobiles and electronics frms in the

PRC using a large-scale dataset to identiy the mostappropriate innovation proxy. Drawing on recent

literature on innovation and learning in developing

countries, it tests two alternative proxies: (i) a

technology index to capture a variety o minor activities

involved in using imported technologies eiciently;

and (ii) the research and development to sales ratio,

which represents ormal technological eorts to create

new products and processes, oten at world rontiers.

Climate Change in Asia and the Paciic: How

Can Countries Adapt? Edited by VenkatachalamAn bu mo z hi , Me in h a rd Br e i l i ng , Se l v a r a j ah

Pathmararajah, and Vangimalla R. Reddy, this book

compiles policies and best practices on climate

change adaptation, ocusing on the structural and

nonstructural measures applied in the Asia and

Paciic region to adapt to climate change. From

environmental, social, and economic perspectives, the

most vital sectors or the region are agriculture, and

water and natural resource management. Although the

book targets the Asia and Pacifc region, key fndings

are relevant to other regions, such as Arica and LatinAmerica.


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Asias Wicked Environmental Problems, by StephenHowes and Paul Wyrwoll, considers our major

environmental challenges that policymakers across

developing Asia will need to address toward 2030:

water management, air pol lution, deorestation and

land degradation, and climate change. his paper

contends that these challenges, each unique in their

own way, exhibit the characteristics o so-called

wicked problems. Detailed case studies illustrate the

complexity and signiicance o Asias environmental

challenges, and also their nature as wicked problems.

here will be no easy or universal solution toenvironmental problems across Asia.

Europes Debt Crisis, Coordination Failure, and

International Eects, by Stean Collignon, gives an

overview o the causes o the European debt crisis

and the consequences or external relations. his

paper inds that political mishandling has increased

uncertainty, which has contributed to a tendency or

the euro to become weaker. Europes debt crisis is in

reality a political crisis. Te eurozone economy is ully

integrated by the act that the European Central Bankalone sets monetary budget constraints on domestic

economies, but the political heterogeneities and

dierent member state jurisdictions prevent economic

policies that are consistent with the requirements o a

single currency.

How Should We Bank with Foreigners?An

Empirical Assessment o Lending Behavior o

International Banks to Six East Asian Economies,

by Victor Pontines and Reza Y. Siregar, examines the

inluence o critical determinants not only to overallinternational bank lending to six selected Asian

countries, but also to cross-border bank lending.

One inding showed that cross-border lending by

international banks tends to pull out rom host

economies during dicult times in source economies,

whereas such ret renchments are not evident on an

aggregated basis. Tis suggests that encouraging brick-

and-mortar aliates o international banks to set up

shop in recipient economies may be the judicious

choice or these economies. his paper also examines

the dierences between subsidiaries and branches ointernational banks in terms o their ability to shield

themselves rom the inancial diiculties o theirglobal parent banks. he results show that oreign

bank subsidiaries are more capable in this regard. Tis

inding carries with it the attraction o avoring an

organizational banking structure that is biased toward

subsidiaries.

overnance for olicies andnstitutionsCurrency nternationalization: essons and

rospects for the BTe PRCs high economic growth over the past several

decades and its increasing economic integration with

other countries have led to a signiicant increase in

its importance in the global economy. Tis raises the

question on the kind o role the renminbi (RMB) will

play in international trade and inance. Indeed, over

the last decade, the PRC has embarked on a number

o initiatives to raise the status o the RMB in the

international monetary system. For instance, the PRC

began issuing RMB-denominated notes, bonds, and

unds in Hong Kong, China. Tese and other measureswill greatly accelerate the internationalization o the

RMB. his new project, in collaboration with ADBs

Economics and Research Department and Oice o

Regional Economic Integration, aims to examine the

extent and pace o RMB internationalization and

how the experiences o other important international

currencies can provide guidance and lessons on the

likely path and prospects o RMB internationalization.

It studies the implications o a greater role o the

RMB or international trade, investment and fnancial

transactions or the PRC economy, its neighboringand distant economies, and the global coniguration

o major reserve currencies, most especially the RMBs

potential challenge to the supremacy o the US dollar

in the international monetary system.

utputs

Five working papers were published under this theme

in 2012, including the ollowing.


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Developing Asias Pension Systems and Old-AgeIncome Support, by Donghyun Park and Gemma

Estrada, provides a broad overview o the state o

pension systems in eight selected Asian countries;

analyzes the pension systems; and identiies their

major structural weaknesses. his paper suggests

pension reorm can reinorce and speed up reorm in

other areas. Pension reorm can also serve as a catalyst

or healthcare reorm because old-age income and

healthcare are vital components o the well-being

o retirees. he paper concludes with speciic policy

directions or pension reorm to strengthen the capacityo Asian pension systems in delivering economic

security or Asias large and growing population o

elderly.

he Peoples Republic o China and Global

Imbalances rom a View o Sectorial Reorms, by

Hiro Ito and Ulrich Volz, examines the impact o

sectorial reorms on current account imbalances, with

a special ocus on the PRC. his paper argues that

domestic fnancial liberalization has a negative impact

on the current account balance among developingor emerging market economies. Moreover, domestic

fnancial reorm aects national saving and investment,

which in turn aects the current account balance. Te

paper also provides evidence that reorms relating to

the inancial sector and social saety and healthcare

aect both saving and investment as well as the current

account o the PRC, the worlds largest current account

surplus country.

Implications o the Global Financial Crisis or

Financial Reorm and Regulation in Asia examineshow the 19971998 Asian fnancial crisis highlighted

shortcomings in Asian inancial markets, notably the

underdevelopment o domestic bond markets and

deiciencies in corporate governance, transparency,

and inancial regulation. Since then, Asian inancial

markets have made considerable progress. Edited by

Masahiro Kawai, David Mayes, and Peter Morgan,

this book highlights the challenges imposed by the

2008 global inancial crisis(i) preventing inancial

crises; (ii) responding to inancial crises when they

occur; (iii) managing international capital lows; and(iv) deepening and integrating inancial markets to

provide an alternative source o unding to oreigncapital owsand suggests policy recommendations to

address them.

Central Banking or Financial Stability in Asia, by

Masahiro Kawai and Peter Morgan, reviews the recent

literature on this topic and identiies relevant lessons

or central banks, especially those in Asias emerging

economies. Tis paper examines the debate about the

deinition o inancial stability; the consistency o a

inancial stability objective with the more traditional

and well-established central bank objective o pricestability; the appropriate governance structure or

coordination o macroprudential policy with other

fnancial supervisors and entities; and the appropriate

policy instruments to achieve macroprudential policy

objectives, including conventional, unconventional,

and macroprudential tools. he lean versus clean

debate has been resolved, largely in avor o the ormer,

and central banks should have a inancial stability

mandate and the policy tools to successully pursue

that mandate.

eminars

wenty-three seminars were held in 2012, attended

by leading scholars and policymakers to discuss a

wide range o issues. In addition, two brown bag

lunch seminars were held at ADBI, which provided a

platorm or presenting preliminary research ideas and

indings to solicit comments rom ADBI sta. wo

seminars are highlighted below.

Changing Myanmar: Challenges and Opportunitiesdiscussed the recent changes, as well as the economic

development and opportunities or business in

Myanmar as the country transitions to a more open

and dynamic economy.

What Next or Doha and WO? Guest speaker WO

Deputy Director General Alejandro Jara acknowledged

that the WO cannot address news rules that beit

a signiicantly changed trading system without irst

concluding the Doha Development Agenda. Te WO

must address a new agenda on investment rules, exportduties, and other regulatory issues.


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20

ADBIs Distinguished Speaker Seminar Series brings

eminent persons to ADBI to encourage debate

among policymakers, researchers, academics, think

tanks and other audiences interested in economic

development challenges in Asia and the Paciic. In

2012, 13 prominent scholars delivered seminars on

various subjects, including the ollowing.

The even lobal istortions: mpact on AsiaAndrew Sheng, President

o t h e F u n g G l o b a l

Institute, talked about the

emerging issues and policy

challenges o interest to

policymakers in the Asia

and Paciic economies. In

particular, he described

how the new normal is

not perect markets, but

massive global distortions. he global distortionsaggravate social inequality and instability. Sheng

highlighted the need to move out o short-termism,

toward long-term sustainability and public good.

Eurozone overeign ebt Crisis: Current

and istorical erspectives

Gianni oniolo, research proessor o economics

and history, Duke University, North Carolina; and

Daniele Franco, managing director o Economics,

Research and International Relations o Banca

dItalia, spoke on the causes o the eurozone crisisand possible solutions and policy responses. oniolo

said that although historyin particular Germanys

recession in the 1930sis a guide in understanding

the sovereign debt crisis in Europe and US, there are

notable dierences. Franco said defcits are expected

to decline in the eurozone in 2013, and the fnancial

conditions in the eurozone will become more stable

than in Japan and the US. But problems remain,

such as a lack o enorcement authority o EU rules.

Greater economic coordination, correcting macroimbalances, and enorcement o rules will help ensure

survival o the eurozone.

emystifying the Chinese Economy

Ju stin Yiu Lin , chie

economist and senior vice

president o the World

Bank, challenged many

tenets o conventional

n e o c l a s s i c a l t h e o r y

and showed how naveapplications o many o its

principles had catastrophic

consequences or many

transition economies. He provided a ramework to

analyze the causes behind those dramatic changes

and drew lessons or other developing countries rom

the Chinese experience o rapid economic rise in the

last three decades.

ill the Euro Celebrate ts 14th Birthday?

The resent E Economic ituation with apecial eference to taly

Carlo Filippini, proessor

o economics, Bocconi

University, Milano, spoke

about the economic and

iscal crisis in Europe,

with part icular reerence

to Italy. He said that the

disappearance o the euro

is unlikely because the

economic cost would be

istinguished peaker eminars


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too high. Deeper integration and a ull fscal union

will be the inal outcome or the EU. Although

the prevailing solution is a combination o iscal

restraint and a more rigid stability and growth pact,

Filippini stressed that structural reorms are required

in many countries including Italy. Ater many years

o low productivity and a high debt to GDP ratio,

Italy is pursuing a dicult path o austerity, growth,

and equity.

lexible Exchange ates for a table orldEconomy

Joseph Gagnon, a senior

e l low at the Peterson

Institute or International

Economic s , spoke on

lexible exchange rates or

a stable global economy.

Gagnon argued that using

monetary policy to ight

exchange rate volatility,

including through theadoption o a ixed exchange rate regime, leads

to greater volatility o employment, output, and

ination. In other words, the cure or exchange rate

volatility can be worse than the disease.

Carry Trades nterest ifferentials and

nternational onetary eform

R o n a l d M c K i n n o n ,

the Wil l iam D. Eberle

Proessor o International

Economics at StanordUniversity, said that the

US F e d e r a l Re s e r v e s

reduction o the interest

ra te on ede ra l unds

t o v i r t u a l l y z e r o i n

December 2008 (ollowed

by major European central banks) exacerbated

the wide interest rate dierentials with emerging

markets and provoked global monetary instability

by inducing massive hot money outlows into Asia

and Latin America. Speculative money ooding into

emerging markets by carry traders caused local

currencies to be overvalued. o prevent currencies

rom appreciating, emerging market central banks

intervened to buy dollars. With persistent carry

trades, however, emerging market central banks were

orced to keep intervening to prevent unlimited

appreciation. Te sharp buildup o emerging market

oreign exchange reserves, too big to be ully oset

by domestic monetary sterilization, resulted in

the loss o monetary control in emerging markets

and led to inlation that was generally higher thanthat in developed market economies. Reorm must

ocus on international monetary harmonization

that limits interest rate dierentials, while accepting

the need or exchange rate buers, such as capital

controls. However, i interest rate dierentials are

too wide, capital controls will ail. Mature industrial

economies, led by the US, would have to abandon

the current monetary policies which set interest rates

near zero.

essons for the Eurozone from AsiaO l a r n C h a i p r a v a t ,

ad v i s o r t o th e P r im e

Minis te r o hai land,

Pres ident o hai land

rade Representative, and

a ormer deputy prime

min i s te r o ha i l and ,

said that in analyzing the

European inancial crisis,

Asias experience with the

1997 Asian inancial crisis serves as a useul point oreerence. hailand, along with Indonesia and the

Republic o Korea, accepted an IMF-imposed austerity

program and did badly as compared to Malaysia, which

rejected the IMFs prescription. he experience o

crisis-hit Asian economies led to a change in thinking

about the productiveness o straight austerity

programs. he relaxation o austerity stances and

implementation o pro-growth policies in combination

helped Asia recover rom its inancial crisis. Drawing

rom the Asian experience, the same IMF pain

or gain austerity solution or Greece cannot work


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22

because Greece does not have a currency to devalue. o

resolve the eurozone crisis, not only must all eurozone

countries pursue pro-growth policies, Asia and the

rest o the world, including the PRC and Japan, must

switch rom austerity, or anti-inlationary stances, to

pro-growth policies.

The New Continentalism: Energy and

Twenty-irst Century Eurasian eopolitics

Kent Calder, director o

the Edwin O. ReischauerCenter or East Asia Studies

at SAIS and director o the

Japan Studies Program at

SAIS, argued that a new

transnational confguration

is emerging in continental

Asia, driven by economic

growth , r i s ing ene rgy

demand, and the erosion o longstanding geopolitical

divisions over the past generation. What Calder

calls the New Silk Roadwith a strengtheningmultiaceted relationship between Northeast

Asia, on the one hand, and the Middle Eas t and

South and Central Asia on the other at its core

could emerge as one o the worlds most signifcant

multilateral conigurations, although likely in

a much less ormalized ashion than traditional

regional arrangements. Te New Silk Road could be

important in cushioning the impact o geopolitical

change in Central Asia, with the role o multilateral

development institutions highly re levant in

determining the ultimate developmental path o theNew Silk Road nations.

Toward a New

Capitalism

M u h a m m a d Y u n u s ,

chairman o the Yunus

C e n t r e , o u n d e r o

G r a m e e n B a n k , a n d

Nobel Peace Prize winner,

argued that poverty is not

created by the poor, but

rather it is imposed on the poor by a aulty system.

hereore, to eradicate poverty, the aulty system

and the institutions that make up the system have

to be ixed. Some o the most important o these

institutions are those oering fnance. Tis is because

ensuring that the poor have access to inance is at

the heart o eradicating poverty. However, banks

operate in a paradoxical way, lending money to

people who already have a lot o money, but not to

people who do not have money, believing that poor

people have limited means to repay loans. It is thedeep conviction that this conceptual ramework or

inance is wrong which led to the ounding o the

Grameen Bank in Bangladesh. he establishment

o the microinance institution demonstrated that

the scope o business could be widened to combine

two kinds o businessesone or making money

and another or solving problems. Tese businesses,

called social businesses, are sel-ueling engines

whereby activities become sel-sustaining. Although

charities can be eective on occasions, they ace

limits as charitable unds need not readily replenishthemselves. It is within the peoples power to make

unemployment and poverty obsolete eatures rom

the past. However, to succeed, it is necessary to

redesign the economic system in a way that has yet

been thought o beore and social businesses may be

one step in that direction.

ld ssues and New rontiers: Non-

tariff easures in

nternational Trade

P a t r i c k L o w , c h i e economist at the World

rade Organization, said

taris have become less

important in international

t rade whi l e a t t en t ion

is shiting to non-tari

measures (NMs). hese

measures raise complex challenges or international

trade and trade policy cooperation. Tese challenges

arise rom identifcation and measurement problems,

the scope or using public policy interventions


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as a means o unduly restricting trade, and the

administration o NMs. In addition, emerging

public policy concerns in new areas are likely to lead

to new amilies o NMs.

The ise of Asia and

the New orld rder

D a l e W . J o r g e n s e n ,

the Samual W. Morris

University Proessor at

Harvard University, saidthat the global economy is

undergoing a undamental

change. Despite concerns

o v e r s l o w i n g g r o w t h

in the PRC, India, and Japan, and the possible

dissolution o the eurozone, global economic growth

is accelerating. How can this paradox be explained?

I the global economy is shiting toward the more

rapidly growing economies, then the worlds growth

rate would shit toward the growth rates o the more

rapidly growing economies. Tus, even i the growthrates o the PRC and India were to slow, global

growth, which is considerably lower than that o

both countries, would accelerate. he growth rate

would lead to a new world order associated with

more rapidly growing countries such as the PRC

and India, which are going to have a larger share o

the global economy. Te PRC overtook Japan as the

worlds second-largest economy in 2010. However,

the World Bank noted that this milestone had been

reached in 2005 in current purchasing price parity

(PPP). In terms o PPP, India will overtake Japan in2012 and the PRC will overtake the US in 2017. Te

US has been the worlds leading economy or more

than a century. Te new world order will look very

dierent in 2020. Asia will boast three o the worlds

our biggest economies. he largest economies in

descending order will be the PRC, US, India, Japan,

Russia, Germany, Brazil and the United Kingdom.

The oad to iscal nion in the Eurozone:

antasy or eality

Paola Subacchi, research

director o international

economics at Chatham

House, argued that iscal

union, and eventual ly

pol itical union, is the

on ly way o rward o r

Europes Economic and

Monetary Union (EMU).D i v e r g e n c e s i n s i z e ,

development, and institutions present the EMU

with the dilemma o policy coordination in which

countries need to bind themselves by a political

ramework in order to respect their commitments

and do not have a clear incentive to deect. As it

is impossible to simultaneously achieve economic

integration, the nation-state, and political democracy,

the citizens o the eurozone will need to choose

which two o these three goals they want to achieve

and maintain.


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he Capac i ty Bu i ld ing and

raining (CB) Department

s t r i v e s t o p ro m o te s o u n d

development management through

enhancing developing member countries

(DMC) senior and mid-level oicials

understanding o important development

issues, identiying policies and measures

to address these issues, assisting them to

implement these policies and measureseectively, and providing venues or

both ormal and inormal dialogues

and communicat ion among DMC

government ocials.

All CB programs ollow one o three

ormats: policy dialogue, course-based

training, and e-learning. Policy dialogues

examine the implications and potential

impacts o contemporary policy issues

on Asian developing economies and seekto expand understanding o possible

responses among policymakers and

other important stakeholders. Course-

based training provides systematic

practical knowledge and skills aimed to

improve the capacity o policymakers in

policy selection, design, execution, and

assessment. E-learning courses use the

internet as a learning tool to maximize

the participation o government ocials

and practitioners in capacity developmentinitiatives.

o ensure quality, relevance, and impact

o CB activities, every CB program

ocuses on one o ADBIs three priority

themes: inclusive and sustainable growth,

regional cooperation and integration, and

governance or policies and institutions.

For each activity, participants are

careul ly se lected to maximize theeectiveness o the program. Special

Capacity Building and Training


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2

attention is paid to the need or geographic, gender,and background balance and diversity as well as each

participants relevant government work experience

and the participants ability to use the content o the

training program to train othersthereby transerring

the knowledge to a wider audience. All programs are

delivered in English, ADBs ocial language.

In 2012, 23 policy dialogues, six course-based training

programs, and one e-learning course were conducted:

18 on inclusive and sustainable growth, eight on

regional cooperation and integration, and our ongovernance or policies and institutions. From DMCs,

more than 7,500 participants attended the e-learning

course Microinance: raining the rainers, while

1,471 participants attended CB courses/workshops

and policy dialogues in person. Selected programs are

briey described below.

nclusive and ustainable rowth

Eighteen activities were conducted under the theme

o inclusive and sustainable growth. hey addressedcapacity building needs related to labor migration

in Asia and the Paciic region, managing climate

change issues and promoting sustainable economicdevelopment, fnancial inclusion, intelligent transport

systems, river basin management, trade policy,

microinance, skills development, sanitation, and

oreign investment ows.

he Cambodia, Lao PDR, Myanmar, and Viet Nam

(CLMV) program is a direct result o collaboration

between ADBIs two departments: CB and Research.

ADBI is working with CLMV governments on a series

o policy-oriented research activities and capacity

building programs aimed at assisting these countriesto narrow the development gap with other ASEAN

countries. In partnership with the Mekong Institute

o Khon Kaen, Tailand, ADBI conducted the frst o

our training programs in December 2012. he irst

CLMV training program examined opportunities and

approaches to strengthening seed policy and improving

seed industry eciency through lectures, case studies,

feld visits, and group discussions. Over 40 government

oicials rom CLMV countries attended the training

program, including 11 rom Myanmar.

ABs Economics and esearch epartment and AB conducted a workshop in unming C to explore effective

government poverty-reduction policies.


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ear in eview 2012

26

ackling climate change and accelerating green growthis important to achieving sustainable development. At

a stakeholder orum on Climate Change and Green

Asia, senior oicials rom the emerging economies

o Asia examined key issues and challenges in

reducing greenhouse gas emissions without adversely

aecting economic growth. hrough country reports,

presentations, and discussions, this orum assessed

the scope and merit o current pledges and their

progress, and analyzed the interplay o technological,

institutional, market, and management actors in the

dynamics o low-carbon green growth. he indingswill be included in the ADB and ADBI agship study

Climate Change and Green Asia.

A pol icy dialogue on the key indings o the ADB

and ADBI book, Public Policies and Practices or

Low-Carbon Green Growth, brought together senior

oicials rom large carbon-emitting economies o

Asia to discuss key recommendations on renewable

energy and energy eciency policy options as a way to

accelerate low-carbon green growth strategies, including

technology transer issues and inancing options.Strengthening national innovation systems, including

enabling market conditions and intellectual property

regimes, is key to promoting indigenous technologies.

More than 300 participants joined the eighth program

o the Microfnance raining o rainers, a distance

learning course that ran rom December 2011 to

May 2012. he course aimed to (i) strengthen the

institutional capacity o microinance in the Asia

and Paciic region by making high-quality training

access ible to a large number o pol icymakers ,proessionals, and practitioners; and (ii) increase

the number and country coverage o accredited

microinance trainers in the Asia and Paciic region

and around the world. In the 20112012 course, 199

participantsa record numberreceived accreditation

as certiied microinance trainers. Since 2005, a total

o 892 participants rom 55 countries have been

accredited as certiied trainers through the course

implemented in collaboration with the World Banks

okyo Development Learning Center.

egional Cooperation andntegration

he high-level policy dialogue, 12th OECDADBI

Roundtable on Capital Market Reorm in Asia,

attracted more than 75 participants who discussed

the global inancial situation and regulatory reorms,

the integration o Asian inancial markets, the

yuans internationalization, the supervision and risk

management o Asian banks, and other related issues.

At the roundtable Dr. Kiyohiko Nishimura, a deputy

governor o the Bank o Japan, called or cooperationbetween Japan and the PRC on introducing direct

trading between the yen and the yuan to reduce

transaction costs and exchange rate risk, and to

enhance the utilization o the yen and yuan in bilateral

trade and investment. ADBI and OECD plan to

publish the proceedings jointly.

he policy dialogue, Ways Forward or Corridor-

Based ransport Facilitation Agreements in the

CAREC Region, promoted knowledge sharing on

approaches to improving transport acilitation amongthe countries participating in the Central Asia Regional

Economic Cooperation (CAREC) program. CAREC

is developing six international transport and trade

corridors linking the programs ten participating

countries with each other and linking the region

to other markets o Eurasia. he program plans to

complete construction or improvement o about 8,380

km o roads and 5,300 km o railway lines by 2017.

Improvements in sot inrastructure such as transport

acilitation agreements are required to ensure this large

body o investment delivers the highest returns to theregion. Te dialogue, organized in collaboration with

ADBs Central and West Asia Department, acilitated

SouthSouth knowledge exchange among 25 transport

and customs o icials rom CAREC countries ,

exposed oicials to transport acilitation agreement

development and implementation in other regions,

and considered easible approaches to improving cross-

border transport o goods and people in Central and

West Asia.


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2

overnance for olicies andnstitutions

About 20 gove rnment o i c i a l s i n charge o

microinance and banking regulations rom countries

in the Asia and Paciic region attended the course-

based training program, Best Practice Regulatory

Principles and Proportionate Regulation Supporting

Micro and Small and Medium-Sized Enterprises

Access to Finance . Experts rom ADB HQ, ADBI,

banks, and the Australian reasury discussed regulatory

initiatives and a proportionate regulation rameworkneeded to support micro, small and medium-sized

enterprise inance. Participants also shared their

country experiences and conducted case analysis and

presentations at the end o the training workshop. Te

summary report o the workshop was presented at the

Asia-Pacifc Economic Cooperation (APEC) Financial

Inclusion Forum in June in Shanghai.

ADBI, the Japan Fair rade Commission, and the

Malaysia Competition Commission organized two

meetings on competition law and policy. he 7thEast Asia Conerence on Competition Law and

Policy ocused on cartel practices, such as price-fxing,

bid-rigging, market sharing, and output controls.

Government oicials shared their experiences inidentiying, regulating, and punishing these anti-

competition behaviors and mechanisms. At the

8th East Asia op Level Oicials Meeting on

Competition Policy, recent progress in regulations

and institution building in East Asian countries were

discussed. All participants agreed to conduct an annual

survey on the institutional development o competition

and enorcement policies and to share the survey results

at the ollowing annual meeting.

Since 2009, ADBI, the APEC Business AdvisoryCouncil, and the Asia-Pacifc Finance and Development

Center have organized policy dialogues on inancial

inclusion. More than 80 participants including relevant

government oicials, microinance practitioners,

researchers, and representatives o business and civil

society organizations joined theAsia-Pacifc Forum on

Financial Inclusion: Approaches, Regulations and

Cross-Border Issues. Te policy dialogue ocused on

fve areas: (i) approaches to promote fnancial literacy,

(ii) fnancial identity, (iii) micro-fnance regulation, (iv)

consumer protection, and (v) acilitating cross-bordermicrofnance.

CBT irector r. uqing ing left) instructs participants atan AB workshop on micro small and medium enterprise

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ear in eview 2012

28

The 2012 eveloping Asia ournalism Awards

ADBI established the Developing Asia Journalism Awards (DAJA) in 2004 to recognize and promote excellencein reporting by journalists covering development trends and issues in the Asia and Paciic region. Each

year, hundreds o journalists submit their written work on a speciic topic chosen by ADBI. he theme or

DAJA 2012 was Green Growth or Growth Versus Green. Over 150 articles highlighting the opportunities,

challenges, and solutions being uncovered across the Asia and the Pacifcas the region seeks a path to green

and sustainable growthwere accepted.

wenty-fve articles were selected by a panel o judges and their authors were invited to attend a workshop in

okyo and a feldtrip to Ishinomaki, which was heavily damaged by the Great East Japan Earthquake on 11

March 2011. O the 25 journalists, fve were rom the PRC, two rom Bangladesh, three rom Cambodia, two

rom India, two rom Indonesia, one rom Lao PDR, one rom Myanmar, two rom Nepal, two rom Pakistan,

three rom the Philippines, one rom the Solomon Islands, and one rom ajikistan.

Te workshop highlighted key environmental challenges and opportunities acing the Asia and Pacifc region.

Selected journalists introduced their articles and approaches to environmental issues in their respective home

countries. opics discussed included the science o climate change, the impact o climate change on Asia,

responses to climate change by governments, communities, and businesses, and inormation resources on

climate change. Te feld trip to Ishinomaki ocused on the citys recovery eorts and the environmental impact

o the disaster. An awards ceremony at ADBI concluded the event.

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35/60


29

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Climate change is widely regarded

as one o most serious challenges

the developing countries o Asia

ace, and adapting to it is an urgent

requirement or the most vulnerable

sectors. TeWorkshop on Agriculture

Adaptations to Climate Change ,

organized in collaboration with the

Asian Productivity Organization andthe hailand Productivity Centre,

examined the key risks posed by

climate change on agriculture and

the actions that policymakers and

planners need to take to address

these risks.

Over 30 senior oicials attached to agriculture, environment, and inance ministries rom 20 economies

participated in the workshop in Bangkok, Tailand. Participants shared practical experiences and explored ways

to more eectively mainstream adaptation concerns into agricultural development planning. Te program had

six thematic sessions covering the ollowing topics and included group discussions and a feld visit.t $MJNBUFDIBOHFDIBMMFOHFTSJTLTBOEQMBOOJOHUPPMT

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he workshop provided a venue or robust

discussions among delegates and highlighted

practical experiences as well as creative thinking,

emphasizing the act that the Asia and Paciic

region needs immediate measuresstructuraland non-structuralto adapt to climate change

risks. Te participants, through acilitated group

discussions, devised adaptation roadmaps that

need to be integrated in their sectoral planning

in a phased manner. hey also acknowledged

the immediate need to link existing policies on

climate risk with others such as drought and

disaster management, structural adjustments,

insurance schemes, and subsidies or better

targeted and regionally coordinated actions.

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Adaptations to Climate Change held in Bangkok Thailand.


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utreach

ADBI continued eorts to raise

the proile o the institute and

to ensure that its outputs are

disseminated as widely as possible.

A DBI w a s r a nk e d t h e 1 0 t h b e s t

government-ailiated think tank in the

world in the 2011 Global Go o Tink

anks Report. Te report is based on an

international survey o more than 1,500scholars, public and private donors,

policymakers, and journalists rom 120

countries.

ADBI continued to augment its outreach

eorts to reach its target audiences o

academics, policymakers, think tanks, the

media, and the private sector.

he institute made use o the media in

Japan and globally to highlight ADBIsrole and activities, particularly through

the Dean as ADBIs chie spokesperson

(see ADBI in the News).

Participating in external events is another

eective way to promote ADBIs work

in the region and internationally. By the

end o the year, the Dean had spoken

by invitation at 51 external events, and

adbi year in review 2012

Documents