Author: Aurelia George Mulgan, UNSW@ADFA

The Hatoyama administration has approved a fiscal 2010 budget containing ¥561.8 billion in expenditure on a new ‘individual household income compensation system’ (kobetsu shotoku hoshō seido) for farmers, to be launched in April. This income subsidy will compensate farming households for losses incurred as a result of higher production costs and lower market prices. The scheme will begin with a ‘model project’ targeting rice farms nationally.

The process undertaken in determining the budget for the policy illustrates how little has changed in agricultural policymaking under the Democratic Party of Japan (DPJ) compared to the Liberal Democratic Party (LDP). Read the rest of this entry »

Author: Greg Lopez, ANU

The persistent decline in Malaysia’s economic performance since the East Asian Financial Crisis (EAFC) of 1997/98 and the government’s mishandling of the global shocks that preceded the Global Financial Crisis (GFC) were a key reason for the ‘political tsunami’ that hit Barisan Nasional (BN) at the 12th General Election (12GE) on 8th March, 2008. Two years on the economy remains in the mud due to a sluggish global economy, ineffective stimulus plans to address the GFC and most importantly, a lack of political will to put through bold reforms to get the economy back on track.

Like many economies in East Asia, Malaysia evaded the direct impact of the sub-prime crisis but was caught in the after effects – its main export markets collapsed, suffering the worst decline since the EAFC. Read the rest of this entry »

Author: Suman Bery, NCAER

In his Budget speech on February 26, India’s finance minister articulated the three important challenges confronting him in preparing this year’s Budget.

These were to restore growth (to 9 per cent, ideally higher); to use this growth to make development more inclusive, particularly by strengthening rural infrastructure; and to address bottlenecks in public delivery mechanisms and institutions. Read the rest of this entry »

Author: Peter Drysdale

Could it be that domestic pressures in the DPRK — in consequence of a costly stumble backwards along the tortuous North Korea road to economic reform — and coordinated negotiating pressure from the other parties to the six-party talks are opening the opportunity for progress towards a settlement with North Korea? Some are now arguing that the time to move forward again may have come. And a number of analysts are now focused on the retreat on retrogressive economic policies and the prospect of a North Korean leadership visit to China as signs that a moment of decision may be bearing down on Pyongyang. It is difficult to know what all this means, as Scott Snyder suggests.

We have gathered the best of the latest analysis to try to get a handle on what’s been going on and what it might mean. Read the rest of this entry »

Author: Rudiger Frank, University of Vienna

On January 29, 2010, the Foreign Trade Bank of the DPRK issued document No. DC033 10-004 to diplomatic missions and international organisations in North Korea. The use of foreign currency was to be stopped, payments were to be made in the form of non-cash cheques, and the official exchange rate of the euro to the North Korean won was changed from 188.2 North Korean won to 140 North Korean won, effective January 2, 2010. Making a payment even for everyday purchases has become quite burdensome for foreigners. Obviously, locals are not supposed to deal in foreign currency, only the domestic currency.

In the preceding weeks, North Korea had made international headlines with what appeared to be a concerted economic policy initiative. Read the rest of this entry »

Guest Author: Renu Kohli

India’s Budget for 2010 is a demonstration of the discipline that global integration imposes upon countries. The modest contraction in the fiscal stance displays a responsible coordination of macroeconomic policies. Its overall message—serious effort at consolidating public finances—manages fiscal expectations positively. Both were necessary to contain rating hawks and reassure markets and investors—the new watchdogs of open India.

This remarkable development is significantly due to the pressures of growing economic openness. Read the rest of this entry »

Author: Andrei Lankov, Kookmin University and ANU

Over the past year or so, something strange has begun to happen in Pyongyang. The North Korean leadership has taken some actions that have clearly damaged the interests of the ruling clique.

The recent currency reform is the best example of self-defeating policy decisions. For years, the Pyongyang government has waged campaigns against the unofficial and semi-official markets that have played a decisive role in North Korea’s economic life since the collapse of the state-run economy in the 1990s. Read the rest of this entry »

Author: Aidan Foster-Carter, Leeds University

The past month saw both Chairman and Premier Kim doing something almost unheard of in Pyongyang. Apparently they both said sorry, although some reports got the two muddled up.

On February 1, Rodong Sinmun, daily paper of the ruling Workers’ Party of Korea (WPK), reported Kim Jong-il as lamenting his failure to fulfil his late father Kim Il-sung’s pledge, to which he had also alluded shortly before on January 9, that all North Koreans would eat rice and meat soup (everyday fare for even the poorest South Korean, be it noted). Read the rest of this entry »

Author: Suman Bery, NCAER

Investors reacted with a yawn to Friday’s budget presentation by Indian Finance Minister Pranab Mukherjee—the Mumbai market closed almost flat on the day. That was less an endorsement of the government’s reform agenda and more a sigh of relief that the Minister was prepared to reduce the fiscal deficit after two years of a major expansion.

Mr. Mukherjee mostly accepted the recent recommendations of the 13th Finance Commission, a government committee that by law recommends reforms to the president. Read the rest of this entry »

Author: Ross McLeod, ANU

The visit of Indonesian President, Susilo Bambang Yudhoyono (SBY) to Australia, five months into his second five-year term, provides an opportune moment to take stock of Indonesia’s progress over the last few years. Like Australia, Indonesia has performed remarkably well in the face of the global financial crisis. Its annual economic growth rate fell from about 6 to 4 per cent, but has already accelerated again to well above 5 per cent. Inflation is only about 3 per cent, and the currency is strong. The budget deficit is small and well under control, as is public debt.

A number of factors have contributed to this good performance. Read the rest of this entry »

Author: Bradley O. Babson, NCNK

Politics and economics are deeply entwined in North Korea. Thus, interpretation of the intentions and implications of North Korean actions must be assessed through both lenses. As it tries to address economic development and security challenges, North Korea has to find a way to make internal changes that will yield results while maintaining political control and regime legitimacy.

At the same time, Pyongyang has to improve its external relations in ways that enhance its economy and security, but this will require more openness and commitment to compliance with international norms. Read the rest of this entry »

Author: Xiao Geng, Brookings Institution

Recent debate has focused on how to increase US exports and savings and increase Chinese imports and consumption in order to correct the trade imbalance between the US and China. In America in particular, focus has been placed on Chinese exchange rate policy. American leaders would like the RMB to appreciate significantly and quickly. They hope that this would lead to an increase in US exports and employment.

Yet Chinese leaders regard pressures to appreciate and protectionist measures from the US as unfair, and as detrimental to China’s development. They place emphasis upon structural and institutional reform in order to increase Chinese consumption and to bring about more efficient domestic investment. Read the rest of this entry »

Author: Ligang Song, ANU

China has succeeded in moving up the ladder of development through rapid growth in just three decades. The pace of China’s growth is not what is unique — Korea, Singapore and other economies in East Asia grew as fast in the 1970s and 1980s. What is unprecedented historically is its scale. The size of China’s population, market and geography, and the dynamism that flowed from economic reform and transformation are what define its impact on the rest of the world. Despite a still relatively low per capita income, the sheer size of the Chinese economy has made China a significant player in world production, consumption, trade and increasingly international finance and the environment.

The dynamics unleashed by Deng’s reform, the opening up policies and institutional changes have propelled continuous capital accumulation, productivity gains, trade and income growth on a scale the world has never seen before. Read the rest of this entry »

Author: Rajiv Kumar, ICRIER

Last week I went back to Seoul after 26 years. The city is transformed and so is the economy. In 1984, when I visited the export processing zones, Masan and Iri contributed at least 60 per cent of total exports from South Korea. Posco had been established as a public sector company to take on established global giants and out-competed all of them despite having to import 100 per cent of its raw materials by relying on latest technology, economies of scale and above all, sheer hard work and dedication. And, at the same time, Korea was reaching full employment levels by furiously expanding labour intensive exports.

The question arose in my mind that if Korea could successfully combine the latest technology with large-scale employment generation, could India do it as well? Read the rest of this entry »

Author: Sadiq Ahmed, PRI

Despite solid development performance since independence, Bangladesh’s per capita income remains low by global standards. Nevertheless, there have been encouraging signs; poverty has come down from over 70 per cent in the early 1970s to around 40 per cent in 2005.

However, a look at the spatial distribution of development progress shows significant disparity between leading and lagging regions of Bangladesh. Read the rest of this entry »