Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Regional Integration In Asia: An Overview Session on Planning & Policy Rita Nangia Asian Development Bank The views expressed here are those of the presenter and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent.

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Session Description In the last two decades, regional integration has been taking root in the Asian region. This session presents:  An overview of the trends in regional integration in Asia, and  A comparison with other regional blocks.

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Overview Asia’s economic growth Trade in Asia  Major trends  Role and dominance of People’s Republic of China Regional integration  Post crisis trends  Historical trends Investments  Emergence of production networks What does it mean for cross-border infrastructure?  Need for greater cross-border connectivity  Multimodal infrastructure development  Policy and institutional development

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Economic Performance Rapid and sustained growth Asia is growing rapidly *GDP growth rate, 2003 % per annum Source: World Development Indicators, 2005

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Economic Performance Rapid and sustained growth Impressive performance in poverty reduction Poverty is declining % Source: ADB Key Indicators 2005

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Economic Performance Rapid and sustained growth Impressive performance in poverty reduction Trade and investments important drivers of such phenomenal Asian success  Growth is reinforced by trade, and in turn  Trade is creating new economic opportunities

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Poverty Outlook Nearly 300 million were able to rise above $1 day poverty line during Trends expected to continue -  Asia’s level of poverty in %  Its level of poverty in %  By 2015 significant decline is expected  Projected poverty in Asia - 2.9% to 9.3% depending on the pace and quality of economic growth Source: ADB Key Indicators 2005

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Gains From Trade Major gains in global trade  Exports from Developing Asian countries grew from $162 billion in 1980 to $1.9 trillion in 2004* Trade openness a major criteria  Reduction in tariff and non tariff barriers Phenomenal growth in intra-region trade  Region is more integrated than most trade blocks  Production networks around region  PRC both a destination of exports and also a market for exports from East Asia Attracting foreign direct investments Source: H. Kuroda, M. Kawai and R. Nangia. Infrastructure and Regional Cooperation. Paper prepared for the Annual Bank Conference on Development Economics, Tokyo, 2006

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Traditional Trading Pattern* Importing developed country Exporting developing country South-South trade: 0 South-North trade:100 Developing-country exports:100 Source: UNCTAD Trade and Development Report, 2005

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Triangular Trade Under Production-Sharing* Importing developed country Developing-country assembler of parts & components, producing final product South-South trade: 90 South-North trade:100 Developing-country exports:190 Source: UNCTAD Trade and Development Report, 2005 Developing-country producer of parts & components Trade value $ 90 Trade value: $ 100

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Triangular Trade Under Production-Sharing With Transhipment* Importing developed country South-South trade:276 South-North trade:100 Developing-country exports:376 Source: UNCTAD Trade and Development Report, 2005 Developing-country assembler of parts & components, producing final product Developing-country producer of parts & components Trade value $ 88 Trade value: $ 100 Transhipment port Trade value $ 90 $ 98

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Regional Integration In Asia A shift from trade liberalization to economic integration after crisis  ASEAN formed in 1960s Market vs. policy driven regional integration Focus on trade and non trade barriers  Policy harmonization  Asia’s regional integration based on competitiveness  Intra-industry trade growing  Added advantage to foster global integration Increased FDI driving integration

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Foreign Direct Investments Large volume of FDI  Economic reforms of 1980s and early 1990s  Japan and newly industrializing economies building forward and backward linkages  PRC a major destination of FDI High savings and investment rates

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Average Savings and Investment (% of GDP ) Source: World Development Indicators, 2005

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview What Is Needed Demand for both intra regional and non-regional infrastructure increasing rapidly Need for better connectivity for exports and imports within region especially connecting PRC Feeder ports and regional hubs Cross-border corridors Efficiency improvements - in time delivery Soft aspects - efficient customs clearance, electronic documentation and integrated logistic provisions Human capital development and ICT

Cross-Border Infrastructure: A Toolkit Session 0: Program Overview Key Messages Early Asian integration was largely market-driven. These trends underwent a transformation in the 1990s, particularly during the Asian crisis of Conscious economic and monetary cooperation with institutional support has increased considerably. Asia-Pacific economies are more committed to regionalism - both economically and institutionally - now than ever before. There are significant efficiency gains possible by planning and promoting infrastructure development to play a major role in further integrating Asia.