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ADBI News
2011 Volume 5 Number 2

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Migrants Money

ROUNDTABLE

Opening session of round table with Jean-Pierre Garson, OECD, Masao Kobayashi, Parliamentary Secretary for Health, Labor and Welfare, Japan, and Worapot Manupipatpong, ADBI

International labor migration has been a hot topic

in policy discussions since the onset of the global financial crisis. Migrants have been among the first to lose their jobs. Some have had to return to their home countries. Remittances of migrants earnings and savings were also expected to be badly hit. In the event, migrants remittances only dipped down slightly in 2009, and bounced back again in 2010. But to what extent are these remittances contributing to economic development? How can remittances be better channeled into productive investment? These are some of the issues tackled by participants at the inaugural ADBI-OECD Roundtable on Labor Migration in Asia, held at ADBI in Tokyo on 1820 January. Globally, migrants remittances to developing countries amounted to some $325 billion in 2010, about three times the size of official development assistance. In recent years, they have grown exponentiallyfrom a mere $55 billion in 1995 and $81 billion in the year 2000. Asias developing countries receive well over half of migrants remittances globally, the leading recipients in 2010 being: India ($55.0 billion), China ($51.0 billion), Philippines ($21.3 billion), and Bangladesh ($11.1 billion). In terms of GDP, a number of smaller countries dominate the recipient list: Tajikistan (35.1%), Tonga (27.7%), Nepal (22.9%), Lebanon (22.4%), and Samoa (22.3%).

Migrants remittances have many complex effects. The evidence shows that they can reduce poverty for the individuals that receive them. It also shows that recipients often use remittances to finance the education of their children, a potential positive for development. At the same time, there is growing evidence that migrants remittances can promote a dependency culture. Many remittance receivers sit back and live off the life of the sender. Most regrettably, there is little strong evidence that remittances foster investment in receiving countries. A key reason is the unfavorable investment climate that exists in such countries which have much red tape, bureaucracy and corruption. Indeed, lack of economic opportunity

In this issue
ADBI-OECD Roundtable Climate Change and Green Asia Visiting Scholars at ADBI Recent Books Distinguished Speaker Upcoming Events Recent Working Papers Triangular Cooperation 12 2 3 45 6 7 7 8

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at home is one of the reasons why migrants often feel pushed to leave their own country in the first place. One perverse trend in the migrants remittances story is that, while remittances can be used to finance the education of young people, they are also then used to finance their departure from the country. And when large parts of the country are geared up to leaving the country, there is much

less pressure on government to implement pro-development reforms. In short, as with the case of official development assistance, reaping the full benefits of migrants remittances requires a sound policy environment at home. By themselves, migrants remittances are no silver bullet for economic development. I
For more details on this event see: www.adbi.org/event/4186.roundtable.labor.migration.asia/.

How to tackle Climate Change and Accelerate Green Growth?

NEW FLAGSHIP STUDY

As a consequence of rapid, carbon-intensive growth, Asia and the Pacific is fast becoming a major source of greenhouse gas emissions. Protecting the environment is an economic imperative for emerging Asias economies and global society is increasingly expecting the region to behave in an environmentally responsible way. Governments of the region have begun responding to these pressures by imposing voluntary targets and making policy commitments to improve carbon efficiency. However, technological barriers, shortage of finance, and a lack of international cooperation mean there have been few achievements to date. A flagship study on Climate Change and Green Asia initiated by ADBI in cooperation with ADB has been measuring the progress made in the region so far and has proposed a pro-active policy framework that the emerging economies of Asia can adopt to strengthen low-carbon development. The Inception Workshop for the study held in Tokyo on 28 February and 1 March discussed key

research issues focused on the goal of reducing the emissions without adversely affecting economic growth. Over 40 participants, representing various think tanks, also launched a research network to exchange information and draw upon each others expertise to solve the common challenge of promoting green economies. A policy dialogue held in Hong Kong on 21 April identified relevant country experiences and regional practices in tackling climate change. About 20 senior policymakers from the region interacted with the research community and with members of the ADBI Advisory Council to come up with a series of recommendations on how to maximize commitments and contributions towards low-carbon green growth, aimed at actionable policy-oriented research in the areas of low-carbon energy resources, eco-innovation, financial resources mobilization, and regional cooperation. The findings of the study, being implemented in close cooperation with regional thinks tanks, will be of direct relevance to policymaking and investment communities, and will constitute an important contribution to regional policy cooperation aimed at low-carbon, green growth. I
For more information on the study see: www.adbi.org/event/4507.working.together.green.asia/ ?sectionID=35.

ADBI Dean Kawai with scholars and senior policy makers involved in ADBIs flagship study on Climate Change and Green Asia at a policy dialogue session held in Hong Kong, China on 21 April

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Visiting Scholars at ADBI

ADBI engages a small number of outstanding scholars from all ADB member countries as Visiting Fellows to participate in ADBIs research Masahiko Aoki, a leading scholar in the fields of multi-disciplinary institutional studies and corporate governance, is the Henri and Tomoye Takahashi Professor of Japanese Studies and professor of economics emeritus and senior fellow at the Stanford Institute of Economic Policy Research and the Freeman Spogli activities. ADBI is proud to present the following scholars who joined during the period covered by this newsletter: Institute for International Studies of Stanford University. Following studies at the University of Tokyo and the University of Minnesota, he taught at Harvard University, Kyoto University, and Stanford University and was president and chief research officer of the Research Institute of Economy, Trade and Industry of Japan from 20022005. He is also president of the International Economic Association, a foreign member of the Royal Swedish Academy of Engineering Sciences, and guest professor at Tsinghua University. Professor Aoki has written and edited various books in the field of corporate governance.

Yoon Je Cho is professor of economics at the Graduate School of International Studies (GSIS) of Sogang University in Seoul. His previous positions include chief economic advisor to the President of the Republic of Korea, the Republic of Koreas ambassador to the United Kingdom, dean of GSIS, vice president of the Korea Institute of Public Finance, and senior counselor to the deputy prime minister and minister of finance and economy of the Republic of Korea. He worked as an economist at the World Bank and the International Monetary Fund and taught at Georgetown University. He currently serves as a member of the High Level Panel for Infrastructure Investment for the G20

Summits Meeting. Professor Cho received his B.A. in economics from Seoul National University and his Ph.D. in economics from Stanford University. Professor Cho has published widely on the liberalization of the financial system, the global financial crisis, financial sector reforms, and the Republic of Koreas economic development.

Yu Yongding is an academician of the Chinese Academy of Social Sciences (CASS); he has been president of the China Society of World Economy since 2003, and editor-in-chief of China and World Economy since 1998. He was directorgeneral of the Institute of World Economics and Politics (IWEP) with CASS (19982009) and a member of the Monetary Policy Committee of the

Peoples Bank of China (20042006). Originally from Jiangsu province, he graduated from the Beijing School of Science and Technology of the Chinese Academy of Sciences in 1969, and worked as electrician at Beijing Heavy Machinery Factory from 19691979. He completed an M.A. in economics at the Graduate School of Chinese Academy of Social Sciences in 1983, and obtained his D.Phil. in economics from the University of Oxford in 1994. He has authored, co-authored and edited numerous books and articles, in the fields of macroeconomics and international economics in particular. Professor Yu was awarded the Sun Yefang Prize in Economics in 2004.

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Recent Books
Managing Capital Flows Study Launched in Hong Kong
Given the uneven recovery from the global financial crisis of 20072009, the rapid capital flight during the Asian financial crisis of 19971998 is very much on Asian policymakers minds as they work to ensure this pattern is not repeated. Managing Capital Flows is designed to help them develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. The book presents practical options for workable national policies and regional policy cooperation, particularly in exchange rate management. I ADBIs title Managing Capital Flows was launched in Hong Kong, China, on 21 April with a well-attended panel discussion. The event was opened by Peter Pang, deputy chief executive of the Hong Kong Monetary Authority who delivered a keynote speech. The panel discussion was moderated by Henny Sender of the Financial Times, with concluding remarks delivered by Andy Filardo of the Bank for International Settlements (BIS). One of the discussants was Eric Girardin, a member of the ADBI Advisory Council. The BIS co-hosted the event, which was extensively covered in the Hong Kong and regional media.

The panel discussion to launch ADBIs new book, Managing Capital Flows: The Search for a Framework, attracted strong media interest

Asias Free Trade Agreements: How is Business Responding?

How is Business Responding?, using new evidence from surveys of East Asian exporters including Japan, the Peoples Republic of China, the Republic of Korea and three ASEAN economies of the Philippines, Singapore, and Thailandto shed light on the FTA debate. In a novel approach, the study used firm surveys to explore the implications of the many free trade agreements in Asia. In the absence of data from official sources, the survey results represent the largest dataset of its kind for empirical analysis. The dataset captures the behavior of major industries, including electronics, automotives, textile and clothing, and food, that have driven Asias export success. ADBIs Masahiro Kawai and ADBs Ganeshan Wignaraja discussed the book at a meeting at the Peterson Institute for International Economics on 8 February 2011. I

The spread of Asias free trade agreements (FTAs) has sparked an important debate on the impact of such agreements on business activity. In January 2011, ADBI and ADB published a pioneering study, Asias Free Trade Agreements:
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Asian Tsunami
the developing world. In Asian Tsunami the lessons of the aid effort for disaster protection policy in developing countries are discussed. Its objective is to make a contribution to the task of improving disaster risk reduction policy in Asia by examining several aspects of the delivery of tsunami aid in three countriesIndonesia, Sri Lanka, and Thailand. The key conclusion reached is that much higher priority needs to be given to pre-disaster programs in developing countries in Asia: regional governments as well as the international community need to give much higher priority to strengthening local preparedness across the region so that when disasters strike, local communities are themselves able to respond quickly to minimize damage. It suggests there is a need for better cooperation between the international community and local and national organizations in providing support for disaster protection and post-disaster recovery programs. It was also found that rapid delivery of emergency assistancein the form of food, water, medicine, sanitation, and shelterin the immediate aftermath of a disaster is the single most critical issue in minimizing the human costs of a disaster. I

Natural disasters are an ever-present risk in most Asian countries. They normally affect the poorparticularly in developing countrieswho are at the highest risk because the places where they live and work tend to be especially vulnerable when disasters strike. The 2004 Asian tsunami caused the death of almost 230,000 people. The resulting assistance effort undertaken by governments in Asia and the broader international community was one of the largest ever humanitarian programs organized in

Asia and Policymaking for the Global Economy

global economic affairs, from the changing role of the G20 to the reform of relevant multilateral organizations such as the International Monetary Fund. The Asian financial crisis of 199798 not only exposed key vulnerabilities in the global financial architecture, but also brought to light the importance of emerging economies in the stability and sustainability of economic growth in an increasingly globalized financial system. After analyzing the dynamics of growth in Asia, Asia and Policymaking for the Global Economy evaluates the scope for policy coordination among key economies, focusing on Asia. The contributors analyze financial stability in emerging Asia and then assess the implications of Asias increasing role within the newly emerging global economic governance, paying particular attention to reform of the international monetary system. I

In this first collaborative research project between ADBI and the Brookings Institution, eminent international economists examine the increased influence of Asian nations in the governance of

To order these books, please go to the following web links:

Managing Capital FlowsEdward Elgar: www.e-elgar.com Asias Free Trade Agreements: How is Business Responding?Edward Elgar: www.e-elgar.com Asian TsunamiEdward Elgar: www.e-elgar.com Asia and Policymaking for the Global EconomyBrookings: www.brookings.edu/press.aspx

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Price Stability and Financial Stability in the UK and Europe

Sir John Gieve, former deputy governor of the Bank of England and a member of the Financial Services Authority Board and Monetary Policy Committee, delivered a lecture on Price Stability and Financial Stability in the UK and Europe as part of ADBIs Distinguished Speaker Seminar series in Tokyo on 11 April. At the outset of his talk, Sir John identified three major roots of the global financial crisis: lax monetary policy and financial sector regulation, especially in the United States; the structure of the financial system (i.e., globalization, product innovation and complexity, opacity in valuation and exposures); and the leverage cycle in the financial industry. In his view, the authorities need to institute appropriate macroeconomic policies and carefully control the credit cycle, while thoroughly studying the evolving structure of the financial system to set up proper regulations. Financial product innovations have led to the creation of complex credit Sir John Gieve gives his products that are assessment of the global difficult to assess in financial crisis

DISTINGUISHED SPEAKER

terms of their value and the extent to which they expose banks. With all major banks holding huge amounts of such complex financial instruments, regulators find it difficult to estimate their impact on the banking system as a whole and are unable to distinguish problematic banks from sound banks. Sir John made a comparison between pre-crisis and post-crisis policy frameworks. In his view, the pre-crisis policy framework was characterized by policy segmentation with loose coordination among the authorities: the central bank was solely responsible for monetary policy aimed at maintaining macroeconomic stabilization; the treasury department focused on traditional fiscal policy to promote equity and raise productivity through fiscal measures; and the financial services authority regulated the financial services sector to ensure the fairness and resiliency of the financial system. The post-crisis policy framework, on the other hand, recognizes the interdependence and overlapping objectives of the authorities and therefore puts greater emphasis on stronger formal cooperation among them. He pointed out that a significant issue in the euro area is the high level of debt. In his view Greece and Ireland will remain locked in the debt trap, and as a consequence their economic growth will be a big question mark in the future. I

Business as Usual at ADBI After the Great East Japan Earthquake

At 2:46 pm on Friday 11 March, a magnitude 9 earthquake occurred off the coast of the Tohoku region of Japan. It was the strongest earthquake in Japans recorded history and one of the most powerful ever recorded. The earthquake generated a tsunami that caused extensive loss of life and damage in northern Japan, including at the Fukushima-Daichi nuclear power plant. The ADBI office remained open despite the disaster. Robert N. McCauley of the Bank for International Settlements gave a seminar at ADBI only four days after the earthquake, although several other events planned for Tokyo were postponed. ADBIs overseas events were unaffected. By early April, ADBI was operating as normal.
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An investigation of the Kasumigaseki building that houses ADBI found no damage to the structural safety of the building. ADBI has redoubled its efforts so it can hold postponed events before the end of the year and implement its work program in full. The Great East Japan Earthquake will have significant impacts, not just on Japan but on the regional economy. Nor will its effects be only economic; the disaster and its aftermath is already radically affecting energy policies across the globe and disaster preparedness theory and practice. As a research institute located in Tokyo, ADBI is in a unique position to analyze these trends. It will conduct studies of the economic and other impacts of the disaster and is posting the most incisive analysis by other parties on its website. I

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Selected Upcoming Events

International Monetary and Financial System: An Asian Perspective (Beijing, PRC) This symposium, which will be held during the 16th World Congress of the International Economic Association at Tsinghua University, Beijing, on 48 July, will bring together economists and scholars from all over the world for discussions on the ongoing and proposed reforms of the international monetary and financial architecture, with an emphasis on the Asian view. Growth and Integration in Asia: Monetary, Financial, and Trade Issues and Challenges (Adelaide, Australia) This conference aims to provide a better and more systematic understanding of various dimensions of de facto and de jure regional cooperation and integration in Asiaespecially after the global financial and economic crisisand to propose concrete policy recommendations for moving forward the regional cooperation agenda. Global Cooperation for Sustainable Growth and Development (New Delhi, India) This conference will focus on the continuing dialogues on stabilization after the global financial and economic crisis and key reform proposals debated by academics and policymakers from different G-20 countries. It is hoped that the result of the discussions will serve as useful policy input for leaders participating in the 2011 G20 Cannes Summit.

48 July

89 July

1314 September

Recent Working Papers

Trade in Services and Human Development: A First Look at the Links
Authors: Ben Shepherd and Gloria Pasadilla
The authors examine the association between human development and services trade by bringing some of the first empirical evidence to bear on the direct links between services sector regulation and human development, going beyond the income channel.
Read Working Paper 268 at www.adbi.org/working-paper/ 2011/03/10/4485.trade.services.human.dev/.

The Role of Macroeconomic Policy in Rebalancing Growth

Author: Peter J. Morgan
The author assesses the contribution that macroeconomic policy can make to promote a rebalancing of growth away from dependence on exports to developed economies to a more sustainable pattern of growth centered on domestic and regional demand.
Read Working Paper 266 at www.adbi.org/working-paper/ 2011/02/17/4381.macroeconomic.policy.rebalancing.growth/.

The Effect of Exchange Rate Changes on Trade in East Asia

Author: Willem Thorbecke
The author considers how exchange rates affect East Asian trade, finding that exports produced within regional production networks depend on exchange rates throughout the region while labor-intensive exports depend on exchange rates in the exporting country.
Read Working Paper 263 at www.adbi.org/working-paper/ 2011/01/21/4339.effect.exchange.rate.changes.trade.east.asia/.

Exchange Rates and Global Rebalancing

Authors: Barry Eichengreen and Gisela Rua

The authors assess the general equilibrium relationship between exchange rates and global imbalances and the circumstances under which economies with large and persistent current account surpluses have been able to eliminate these successfully.
Read Working Paper 278 at www.adbi.org/working-paper/ 2011/04/13/4509.exchange.rates.global.rebalancing/.

Trans-Pacific Rebalancing: Thailand Case Study

Authors: Chalongphob Sussangkarn and Deunden Nikomborirak

Financial Regulatory Harmonization in East Asia: Balancing Domestic and International Pressures for Corporate Governance Reforms
Author: Richard W. Carney
The author sets out to demonstrateby focusing on corporate governancethat the harmonization of financial regulatory regimes is possible in East Asia.
Read Working Paper 269 at www.adbi.org/working-paper/ 2011/03/18/4490.financial.regulatory.harmonization.east.asia/.

The authors examine the options for external and internal economic rebalancing strategies for Thailand and the possibility of promoting greater regional trade by means of trade agreements and exchange rate coordination.
Read Working Paper 273 at www.adbi.org/working-paper/ 2011/03/31/4498.transpacific.rebalancing.thailand/.

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Sharing Knowledge through Triangular Cooperation

The global aid architecture is changing rapidly. In the past decade, a broad range of development partners have entered or expanded their cooperation activities, from middle-income countries eager to share their experience to international nongovernment organizations and private funds. This is positivemore resources and more minds are now focused on tackling persistent development challenges. But the new environment also brings new challenges. A key question is how to effectively coordinate the efforts of a growing and diverse field of actors to achieve the greatest impact for citizens in developing countries. Triangular cooperation, which often involves a traditional donor working with an emerging donor to share experience and ideas with a developing country, is seen as one promising approach. On 27 February2 March, 65 policymakers, practitioners and experts gathered at a workshop entitled Triangular Cooperation: Towards Horizontal Partnerships, But How? in Bali, Indonesia, to discuss the potential and challenges of triangular cooperation as a form of horizontal partnership. Working with the global Task Team on South-South Cooperation, participants discussed four key questions surrounding efforts to improve and expand triangular cooperation: How to ensure partnership? How to identify and promote the use of comparative advantages? How to manage transaction costs? And, how to use innovative E-newsline Brings Asia to Your Inbox
For a daily wrap up of development news and events in Asia, subscribe free to ADBIs e-newsline. Concise summaries of news, opinions, and editorials

CONFERENCE

approaches and models to promote South-South and triangular cooperation? Participants agreed on four main tasks. Raise political awareness of the value of triangular cooperation to expand use. Embed triangular cooperation approaches in the international cooperation strategies of developing countries. Deepen analytical efforts to explore the opportunities and challenges of shared ownership in development initiatives. Develop tools to help partners plan, implement, and monitor triangular projects more effectively. I

Participants examine how to build partnerships and manage costs in triangular initiatives For more information on triangular and South-South cooperation and this workshop visit www.adbi.org or www.southsouth.info.

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ADBI News reports quarterly on the activities of the Asian Development Bank Institute. The views expressed in this newsletter do not necessarily reflect the views or policies of the Asian Development Bank Institute or the Asian Development Bank. Materials may be reprinted with credit given to ADBI News. To send comments or to request a free subscription, e-mail adbinews@adbi.org; fax a message to +81-3-3593-5571; or write to ADBI News, Kasumigaseki Building 8F, 3-2-5, Kasumigaseki, Chiyoda-ku, Tokyo 100-6008, Japan. For the web version, go to www.adbi.org/newsletter/.