Abstract
This chapter argues that Asian economies should move away from growth strategies driven by exports to developed economies. Rebalancing should take place on both the demand side and on the supply side. Well-targeted policies that increase the productivity on the supply side and by targeting regional consumers on the demand side are necessary. To increase productivity, developing Asian countries should leverage production networks to graduate to higher value-added and knowledge-intensive activities. This can be accomplished by investing in human capital to provide workers with marketable skills, implementing appropriate R&D policies to enhance the capacity of firms, and maintaining FDI friendly environments. A region-wide FTA should include full cumulation of rules of origin in order to overcome noodle bowl effects. Infrastructure investment can be facilitated if governments, multilateral development banks, and bilateral financial institutions work together. More open and competitive services sectors would be promoted if policymakers removed distortions that favor manufacturing over services. SMEs could be strengthened if Asian governments were to establish high-level coordinating agencies like SPRING Singapore and develop long-term holistic plans to nurture SMEs. To ensure that the resulting growth is sustainable, new growth patterns should be made more environmentally-friendly.
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Notes
- 1.
Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam.
- 2.
We are indebted to Professor Shujiro Urata for this suggestion.
- 3.
Hertel et al. (2008) simulated the across-the-board abolition of estimated 2005 protection tariffs in agriculture; business, finance, and construction services; extractive industries; and manufacturing. He also considered liberalization of all sectors simultaneously. His model contained 22 sectors in 19 regions around the world.
- 4.
An Asia-wide FTA could be formed initially by the ASEAN+3 or the ASEAN+6 countries. Discussion of an ASEAN+3 versus an ASEAN+6 FTA is contained in Chapter 7.
- 5.
This paragraph draws on Kotera (2006).
- 6.
For a full definition of regional infrastructure, see Bhattacharyay (2008).
- 7.
- 8.
Afghanistan, Armenia, Azerbaijan, Bhutan, Kazakhstan, Kyrgyz Republic, Lao People’s Democratic Republic, Mongolia, Nepal, Tajikistan, Turkmenistan, and Uzbekistan.
- 9.
See Bhattacharyay (2009) for further details.
- 10.
See World Bank (2009a) for an in-depth discussion of the services revolution.
- 11.
In general, barriers to services trade are classified in terms of whether they restrict market access (e.g., policy that limits the number of service providers) or whether they specifically discriminate against foreign service suppliers by not offering “national treatment” to all providers (e.g., policy that limits foreign equity ownership). Restrictions may also apply to establishment (i.e. the ability of service suppliers to establish a physical outlet in a country and supply services through those outlets). Or, they may apply to ongoing operations (i.e., the activities of the service suppliers who are already in the market). Many regulatory restrictions can reduce competition and efficiency in the services sector.
- 12.
Cabotage is the transport of goods or passengers between two points in the same country.
- 13.
There are several studies quantifying, estimating, and projecting potential employments around the world. Inevitably, there are substantial data gaps at the regional level. Governments should commission in-depth modeling and econometric efforts to analyze not only direct employment related to renewable energy generation but also the accompanying indirect employment in related services sectors. Attention also needs to be given to disaggregating data on the basis of the sub-regional level so as to reflect the varying potentials.
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Thorbecke, W., Bhattacharyay, B., Lim, H., Pasadilla, G., Anbumozhi, V. (2015). Rebalancing Production. In: Kawai, M., Lee, JW. (eds) Rebalancing for Sustainable Growth. Economics, Law, and Institutions in Asia Pacific. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55321-2_4
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