Improving Asia’s cross-border infrastructure: ‘new model asia’

Having faced two financial crises in little over a decade members of the Asian economic community urges policy makers to improve infrastructure across the whole of Asia to increase interdependence amongst its member states.

GDN’s Japan advisor Professor Kaoru Hayashi chaired Parallel 1.2: ‘Economic Integration in Asia, Trade, Infrastructure and Finance’. The discussion focused on the prospects of improving Asia’s infrastructure and the potential of a single Asian Monetary policy that, if managed correctly, would promote economic integration in the region.

Professor Hayashi said “If we can combine these regions we can exploit regional integration. If we can harness economic integration we can create sustainable economic growth. We need to create an institutional framework where strong leadership and decision making is required.” He added “Imagine if there is no conflict, imagine if we had a strong transport infrastructure which passes through Pakistan, Afghanistan and Uzbekistan.”

Asia is still heavily reliant on external demand for product and as a result is vulnerable to financial instability from external economies.  East Asia especially has been severely affected through the export channel. The main focus would be to shift growth from dependence on exports and provide impetus for countries in the region to pursue many important financial co-operative initiatives.

Asia processes high levels of natural resource and workforce which, if cultivated could create a more efficient cross-border infrastructure. There is huge potential for economic development and growth. The problem that exists is joining Asia’s regions efficiently (North East Asia, South East Asia, Central Asia and South Asia).

Professor Hayashi was joined by Dr Chalongphob Sussangkarn, distinguished fellow of the Thailand Development Research Institute (TDRI), Professor Sujiro Urata from the Graduate School of Asia-Pacific Studies at Waseda University and Mohamed Ariff from the Malaysian Institute of Economic Research.

A key message of the talk was that while improving infrastructure in Asia would be a huge investment the co-operation, implementation and management of cross border networks could promote regional stability and peace.

However, Dr Chalongphob warned that while improved infrastructure offers cross-border opportunities it is not enough. He said “Multi-national corporations take advantage of the East Asian diversity breaking up production and sub processing in another country.”

Dr Chalongphob said “Simply having the infrastructure is not sufficient, we need to improve the software side.” He added “The way forward is to work at a regional level, through a multi-national organisation that should be set up to regulate capital controls”

Surveillance has to go beyond intra-regional surveillance as the region still depends a lot on what happens outside. The financial implications of the West are hugely impactful on the export conditions of the Asian economy. Dr Chlongphob said “We need to survey outside because most of our product goes outside.” Why don’t you survey where you invest your money?”

Improved infrastructure and improved understanding of intra-regional relations would benefit Asia a single monetary union is an unlikely reality. The disparate diversity of the region and its size will be a huge stepping stone.

See more stories from the GDN 2010 Conference, watch participants’ videos interviews, download conference presentations and papers

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