Author: Scott A. Snyder, CFR

I’ve been watching North Korea ramp up efforts to attract foreign investment since Jack Pritchard and I heard last November in Pyongyang from the chairman of Pyongyang’s Foreign Investment Advisory Board a presentation of new laws that provide for repatriation of investments, tax benefits, and wages of 30 Euros/month that undercut the $57/month wage rate at the Kaesong Industrial Zone.

Although catastrophic failure of currency revaluation implemented from late November of last year has severely eroded the credibility of the government’s economic policies, there are serious efforts underway to realise new foreign investment at Rajin-Sonbong port at the northeastern tip of North Korea. Read the rest of this entry »

Guest Author: Nabeel Mancheri, Jawaharlal Nehru University

The Annual Bilateral Summit in New Delhi on 29 December 2009 marked a stepping stone in the relationship between India and Japan. During the summit, Dr. Yukio Hatoyama and Dr. Manmohan Singh, Prime Ministers of Japan and India respectively, held discussions on bilateral, regional and global issues and reaffirmed that Japan and India share common values and strategic interests. They pledged to further develop their Strategic and Global Partnership in an effort to strengthen their bilateral relations and ensure peace and prosperity throughout the region and the world.

Until the 1990s, the relationship between India and Japan had been highly asymmetrical. Read the rest of this entry »

Guest Author: Frank Tudor, Australia-China Business Council

Australia’s relationship with China, both commercially and politically, is entering 2010 on positive terms. With Wang Wang and Funi recently working miracles for the South Australian tourism market, coupled with a sense of real political will in Canberra and Beijing to resume FTA negotiations and high level visits, many issues, such as the defence policy white paper, feel like distant memories. Now that it has come to trial there is also expectation of fair resolution of the Stern Hu affair.

Many factors help define the contemporary bilateral Australia-China relationship. As neighbours, Australia and China have a vested interest in maintaining peace and delivering prosperity across the region through mutually beneficial trade and investment. The key differences relate to China’s increasing scale of urbanisation and the prominent and unrivalled role of the State in maintaining the unity of Chinese civilisation. Read the rest of this entry »

Author: Pravakar Sahoo, IEG and Nisha Taneja, ICRIER

China has been taking an increasingly active interest in South Asian countries over the past few years, seeking to rally friendship and support in order to surpass India’s dominance in the region. When the South Asia Association for Regional Cooperation (SAARC) was formed in 1985, they expected leadership from India, but India has yet to assume this role. Now China, India’s main political rival, is entering its neighbouring markets more aggressively through both trade and investment.

China has been the fastest growing economy in the region for the last decade and has surpassed India in terms of growth, world trade share, price competitiveness in product manufacturing and winning oil deals. Read the rest of this entry »

Author: Ben Hillman

After the deadly riots that engulfed Tibetan areas in 2008, one might have expected that the Chinese government’s first high-level conference on Tibet policy since 2001 would generate some new ideas. Instead, China’s leadership offered more of the same. Blaming outside forces for ethnic unrest, the leadership promised to ‘fast track Tibet’s development’ to achieve ‘lasting stability’—Communist Party speak for ‘throw more money at the problem’ and ‘come down hard on unrest.’

Over the last decade the Chinese government has invested massive sums in Tibetan areas—US$46 billion in the Tibet Autonomous Region (TAR) alone, where just under half of China’s ethnic Tibetans live. Read the rest of this entry »

Author: Christopher Findlay, Adelaide University

Readers who are members of the JAL Mileage Bank (JMB) are probably wondering now what will happen with their bank of points. The reconstruction of JAL certainly raises this question but also highlights some even bigger challenges in air transport today.

The international system of the regulation of air transport has tried to suppress a set of highly competitive processes. Market access rights are negotiated bilaterally, and routes limited mostly to carriers identified with the countries involved. Read the rest of this entry »

Author: Rajiv Kumar, ICRIER

Last week Ratan Tata was reported to have said that the Investment Commission (IC), which he headed, should be wound up principally because of lack of follow-up on its recommendations. The commerce and industry minister was reported as saying that the government is likely to announce a new manufacturing policy by the end of March, and that in his view the share of the manufacturing sector in India’s gross domestic product should increase from the present 16 per cent to 25 per cent. Bravo!

But does India really need another brand new policy for the manufacturing sector to push up its growth rate? Read the rest of this entry »

Author: Aaron Batten, Ministry of Finance, Malawi

The PNG economy continued to perform well in 2009. Despite declines in the oil and gas sector, lower commodity prices, and reduced international demand because of the global financial crisis, real GDP grew by a solid 4.5 per cent. This growth was also relatively diversified with a 4 per cent increase in formal non-mining sector jobs adding further to the large employment gains made since 2005.

The government’s management of the economic expansion has been mixed, however. The fiscal surpluses of previous years have eroded, with this year’s budget recording a 0.4 per cent of GDP deficit after a 2.2 per cent of GDP deficit in 2008. Read the rest of this entry »

Author: Rajiv Kumar, ICRIER, India

The rapid and sustained growth of manufacturing is a necessary condition for not only generating the required employment for our young workforce, but also for modernizing our society and eliminating the dualism—stark differences between the organized and unorganized sector—that currently characterizes our economy. Too much reliance on financial and information technology-enabled services could actually produce the opposite results by creating enclaves and exacerbating the dualism.

So this objective of accelerating the growth of manufacturing, increasing its share in India’s gross domestic product (GDP) and eliminating the dualism must form one of the cornerstones of our economic policy. Let me note right away that it is very difficult to achieve a consensus on any policy objective in our country Read the rest of this entry »

Author: Rajiv Kumar, ICRIER

China’s manufacturing boom and export surge is in large part a result of the subsidization of producers through cheap capital, low wages and disciplined labour, combined with the latest technology brought in by foreign direct investment. Additionally, the role of the Chinese armed forces and local governments must be mentioned. The People’s Liberation Army (PLA) regularly places orders on emerging domestic enterprises to generate economies of scale and be globally competitive. They also transfer technology to these firms. Local governments acquire land for both domestic and foreign enterprises and often contribute the proceeds as equity capital, thereby becoming partners and assuring the investors against any future political risk.

Can India follow the same model? Clearly not in its entirety. However, the land acquisition law, inherited from colonial days, can be immediately junked and replaced with one that enables our farmers to have a direct stake in the venture for which the land was purchased directly by the entrepreneur. Read the rest of this entry »

Guest Author: Daniel Kliman

Traveling at up to 300 kph and boasting an impeccable safety record, the Shinkansen exemplifies Japan’s technological prowess. It could also become a new frontier in the U.S. Japan partnership.

With the Obama administration committed to developing high speed rail, and the Democratic Party of Japan (DPJ) looking to achieve a more equal relationship with the United States, the time is ripe for bilateral cooperation on an American shinkansen. Read the rest of this entry »

Guest Author: Long S. Le, University of Houston

Vietnam’s economy is showing resiliency. The country’s GDP has rebounded to 5.76 per cent in the third quarter, whereas the economy grew 3.9 per cent in the first half of this year. Opportunely, the Vietnamese government forecasts that the economic growth in the fourth quarter will be more than 6.5 per cent, meaning that an annualized GDP growth of 5.2 per cent is attainable for 2009.

Although the Asian Development Bank (ADB) has recently adjusted its annual growth forecast for Vietnam from 4.7 to 4.5 per cent, the ABD forewarns that the Vietnamese government needs ‘to strike a balance between stimulating growth through demand-side measures and safeguarding macroeconomic stability.’ Read the rest of this entry »

Author: Andrew Elek

Last month, Arvind Subramanian published a valuable piece in the Business Standard, New Delhi in which he recommends that the G20 should promote increased international financing of international public goods, such as technology to help cope with climate change or raise agricultural productivity. He also recommends that the World Bank should devote a considerably larger share of its financing to this purpose.

The first of these deserves strong support, but it is not certain that reforming the World Bank is the most appropriate means of enhancing the funding of international public goods.

Read the rest of this entry »

Guest Author: Pravakar Sahoo

Given the backdrop of a prolonged Doha round with no consensus being reached on several issues in the WTO, both developed and developing countries are left with no option but to pursue regionalism in a rigorous way to cater to their developmental needs. India is no exception to the idea and has signed several agreements in the last five years, the Comprehensive Economic Partnership Agreement (CEPA) with Korea being the most recent. The signing of India-Korea CEPA on 7th August 2009 though delayed, has been welcomed and rightly so, by both the business community and policy makers from both the countries. This agreement which has provisions for substantial reduction of both tariffs and non-tariff barriers in a phased manner is expected to take India-Korea relations to a higher level and enhance India’s presence in East Asia.

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Author: Geethanjali Nataraj

Japan and India are two of the largest democracies in Asia, sharing a commitment to the rule of law and respect for human rights. They are also leading economies in Asia.

In recent years, the two countries have strengthened bilateral ties through new initiatives and programmes ranging from economic and cultural linkages to defence and security. Japan gives 30 per cent of its overseas development assistance to India and is, even in this period of global economic downturn, committing more than $4 billion to the Delhi-Mumbai Industrial Corridor. But our economic relationship is still far below its potential. Two-way trade ($10.18 billion for 2007-08) has risen in the last five years, but still remains considerably low when compared with the China-Japan trade or even the India-China trade (respectively, $237.193 and $37.931 billion in 2007-08). Similarly, Japan’s foreign direct investment in India for March-April 2008 ($0.82 billion) ill compares to its investment in smaller Asian countries such as Vietnam ($0.41 billion), not to mention China ($1.9 billion).

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