Economics, Politics and Public Policy in East Asia and the Pacific
Author: Wendy Dobson, University of Toronto
The euro crisis hijacked the G20 Summit in Cannes — even by late December Europe’s leaders still had not fully diagnosed the problem, but without an accurate diagnosis how can there be an effective prescription?
This missing link accentuates two challenges that Asian integration will face in 2012: the consolidation of regional architecture and the need for deeper structural adjustments. Read more…
Author: Wendy Dobson, University of Toronto
With no clear leader and few strong incentives for deep integration, Asian cooperation for the foreseeable future is likely to be intergovernmental, with little pooling of sovereignty to create supranational institutions or agree common rules and disciplines.
As Asia’s weight in the world economy grows, however, its interests will also be served by a strong commitment to global institutions. Read more…
Author: Wendy Dobson, University of Toronto
China’s embrace of global institutions and their rules and norms has helped guide its spectacular economic growth and integration into the world economy.
But China’s impact on the global economic order is still an open question. Its sheer size and dynamism make it a force to be reckoned with. Read more…
Author: Wendy Dobson, University of Toronto
G20 leaders remained focused on their global recovery agenda, at their Summit in Seoul, but as the sense of urgency in the crisis fades so too does the laser-like focus. The group’s diversity is showing and domestic issues are beginning to crowd leaders’ priorities. As well, it seems each new host feels compelled to lengthen the agenda, with the Koreans adding development and the French host in 2011 mooting its perennial summit favorite, reforming the international monetary system.
So was Seoul more than a talk shop? Read more…
Author: Wendy Dobson, University of Toronto
The G20 Seoul Summit will be the first such global economic meeting to be hosted by a non-G7 country. In their continued focus on the significant agenda for collective action set at Pittsburgh in September 2009, leaders face a ‘Catch-22’. The tension and political uncertainties generated by subdued growth are weakening the collective will to cooperate on the policy changes needed to restore confidence and future growth.
To the continuing agenda—global recovery, rebalancing growth, financial regulatory reform and governance reform at the International Monetary Fund—the Korean hosts have added two new issues: financial safety nets and closing the development gap.
Author: Wendy Dobson, University of Toronto
The Toronto meeting of G20 leaders on June 26-27 was a stop on the road to Seoul. Leaders took a few significant steps forward but not enough has yet been accomplished to avoid another crisis and there is danger of renewed complacency. Much, therefore, is riding on the work that leads to decisions in Seoul.
Among its accomplishments, the Toronto meeting was a deadline that elicited progress on the key objective of restoring strong, sustainable, and balanced world growth. Read more…
Author: Wendy Dobson, University of Toronto
The G20 meeting this weekend in Canada has a heavy agenda and high expectations. Leaders face a serious challenge to demonstrate determination to follow through on the September 2009 Pittsburgh summit’s framework for strong, sustainable and balanced growth.
Prior to that June 26-27 meeting Canada also chose to host a G8 side show. Its challenge is to avoid any appearance of being an executive committee meeting before the G20. Read more…
Author: Wendy Dobson, University of Toronto
The central domestic challenge for America in 2010 is economic. Unemployment is above 10 per cent and probably has not yet peaked, the recovery in economic activity is anemic and the massive fiscal and monetary policy responses have yet to show that they can successfully bridge to the resumption of organic activity. The recession was unprecedented in that its causes lie in the financial sector in which there is now deep risk aversion by traditional lenders and the weak recovery risks exacerbating protectionist sentiment.
In the coming year policy makers face difficult decisions about exit: timing the withdrawal of fiscal and monetary stimulus soon enough to avoid igniting inflation but not so soon that recovery is nipped in the bud. They also face potential political firestorms over the design of a long-term strategy for fiscal consolidation (after a deficit estimated to exceed 13 per cent of GDP in 2009) and a desire by some elected representatives to hold the Federal Reserve Board accountable for the perceived laxity in monetary policy which, along with weaknesses in financial regulation, is seen to have seeded the crisis. Read more…
Author: Wendy Dobson, University of Toronto
China and India are the world’s only large economies with positive growth in 2009. Future projections show China catching up with the U.S. economy by 2020 and India doing so by 2035 or 2040.
In contrast, the United States, digging out from the financial crisis, faces slower growth, a less leveraged financial sector and rising taxes and savings rates. The Asians’ size and ability to maintain economic momentum seem to only strengthen predictions of the United States’ decline. Read more…
Author: Wendy Dobson, University of Toronto
Prime Minister Stephen Harper’s attendance at the APEC leaders’ meeting in Singapore this weekend shouldn’t be treated with a yawn – the meetings are part of a complex game in which our ideas, as co-chair with South Korea of the G7/G20 process in 2010, will count.
Asia Pacific Economic Co-operation could evolve significantly in the next few years. The unique region has the world’s four largest economies: China, India, Japan and the United States. China and India, the world’s most populous countries, are currently its most dynamic economies. Japan, with Australia’s help, has pushed for regional trade and financial institutions to attract the two increasingly important emerging giants into co-operating on regional projects, rather than pursuing rivalries. Read more…
Author: Wendy Dobson, University of Toronto
APEC leaders’ agenda at their Singapore meeting on November 14-15 should include expanding membership to India when the ten-year moratorium expires in 2010.
A positive decision would have at least two significant implications. The APEC region is home to the world’s four largest economies (China, India, Japan and the United States) and it makes no strategic sense to exclude one of the four – especially when India is already a member of the East Asia Summit and the G20. Read more…
Author: Wendy Dobson, University of Toronto, Canada
East Asian economies were relatively well insulated against the financial impacts of the global financial crisis but their dependence on trade through regional production networks and export-led growth strategies made them vulnerable to the sharp contraction of demand from the North American and European economies. The International Monetary Fund projects sharp real GDP declines in 2009, with Japan’s economy shrinking by -6.2 per cent, Taiwan’s by -7.5 per cent, South Korea’s by -4 per cent and Singapore’s by -10 per cent; China is the outlier, with positive growth expected to be 6.5 per cent. Even so, China has experienced a huge growth contraction from 13 per cent in 2007. Japan was hardest hit by the contraction of export markets: its current account surplus is expected to shrink from 4.8 per cent of GDP in 2007 to 1.5 per cent in 2009. China’s will shrink slightly but Korea’s and Taiwan’s will expand.
There is a strong reaction in the region to this revealed vulnerability. Governments are asking how they can reduce their dependence on exports to the advanced industrial economies and rely more on regional and domestic demand. This reasoning leads to an emphasis on alternative growth engines in the region (such as potentially large demand in China and India) and on ways to deepen the linkages among the region’s economies. Unexpectedly, the G20 leaders’ summits organized on an ad hoc basis to manage the financial crisis may turn out to be the catalyst for a sharper focus on deeper regional integration. Six Asian economies are members, the three Northeast Asians plus Australia, India and Indonesia, and each is an equal at the global table. This new ‘definition’ of the six as equals in global strategy could be the basis for a more strategic approach to trade and finance in the region that replaces current ad hoc arrangements.