Asia's Contribution to Global Rebalancing

14 Pages Posted: 4 Nov 2011

See all articles by Cyn-Young Park

Cyn-Young Park

Asian Development Bank

Charles Adams

National University of Singapore (NUS)

Hoe Yun Jeong

Asian Development Bank

Date Written: November 2011

Abstract

Developing Asia remains at the core of global payment imbalances. While the geographical concentration of current account imbalances is significant - with the People's Republic of China accounting for the lion's share of the region's current account surplus - how Asia contributes to global rebalancing also depends critically on the newly industrialising economies and larger Association of Southeast Asian Nations economies. Given the region's huge diversity, the necessary national macroeconomic and structural policies will vary significantly across Asia's emerging economies. Whereas near‐term rebalancing efforts will be driven primarily by macroeconomic and exchange rate policies, structural reforms are essential for boosting domestic and regional demand as sources of economic growth over medium to long‐term. We argue that regional rebalancing will depend critically on the adoption of deeper and more comprehensive structural reforms and further trade liberalisation to unlock the potential of strong domestic and regional spending - thus reducing Asia's high dependence on extra‐regional demand. Priority policies should include infrastructure spending, competition, trade, financial development, investment, immigration, and other social policies to reduce national savings.

Suggested Citation

Park, Cyn-Young and Adams, Charles and Jeong, Hoe Yun, Asia's Contribution to Global Rebalancing (November 2011). Asian‐Pacific Economic Literature, Vol. 25, Issue 2, pp. 38-51, 2011. Available at SSRN: https://ssrn.com/abstract=1954434 or http://dx.doi.org/10.1111/j.1467-8411.2011.01310.x

Cyn-Young Park (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines
(632) 632-5473 (Phone)

HOME PAGE: http://www.adb.org

Charles Adams

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Hoe Yun Jeong

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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