Analytics


New Paper of the East Asia Foundation Explores South Korea’s Growth

According to the author, as a result of South Korea’s period of compressed, high economic growth, the fervor that South Koreans have for growth has become a sort of cultural gene. A strong faith in meritocracy has developed. Yet recently, the trickle-down effect of South Korea’s economy has reached its limit, and the possibility of a collapse of the patrimonial middle class, as discussed by Thomas Piketty, is becoming a reality for South Koreans. The metaphor of growth disguised under the name of reform will again push away the challenges of economic democratization, and the deterioration of economic democracy combined with stagnant growth will eventually lead to a retreat in political democracy. Now is the time to seek a great escape from the nostalgia for growth.
Press-release at the East Asia Foundation official web-site

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OECD released a multi-dimensional review of Kazakhstan

The review covers a broad range of issues, e.g. quality of life in Kazakhstan, economic growth, sectoral competitiveness, public governance etc.
According to the review, Kazakhstan’s economy and society have undergone deep transformations since the country declared independence in 1991. Kazakhstan’s growth performance since 2000 has been impressive, averaging almost 8% per annum in real terms and leading to job creation and progress in the well-being of its citizens. Extractive industries play an important role in the dynamism of the economy, but sources of growth beyond natural resource sectors remain underexploited.

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New Lowy Institute paper explores four key narratives that help explain the way that China acts in and interprets the world

According to the author, four narratives are key to understanding China’s worldview as it relates to foreign policy: the century of humiliation; cultural characteristics as being inherent and unchanging; history as destiny; and filial piety and familial obligation as they apply both inside China and to China’s neighbours.
The author emphasizes that the narratives also help to explain recent Chinese geo-economic initiatives such as the One Belt, One Road initiative and the AIIB. One Belt, One Road focuses on connectivity and cooperation among countries, principally in Eurasia. The primary purpose of the AIIB is to address the infrastructure needs of the Asia-Pacific. It will do this primarily by funding projects in emerging markets that other international banks are unwilling to fund. Both initiatives reflect the century of humiliation narrative and the idea of history as destiny. The AIIB and One Belt, One Road are portrayed within China as evidence that China is finally overcoming its period of weakness and vulnerability. As one Chinese academic noted to the author, these initiatives represent “a great shift from the idea of just taking care of ourselves.” These initiatives are seen as a way for China to resume its rightful position as a wealthy, strong, and responsible power, at the centre of a web of regional economic interdependence.
Full text at the Lowy Institute official web-site

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New East Asia Foundation study analyses the Trans-Pacific Partnership (TPP) and the Republic of Korea, Japan and the US priorities

The author of the paper emphasizes that the Trans-Pacific Partnership (TPP) agreement is a game changer in the sense that it goes a step beyond free trade and establishes new norms in trade and the world economic order. It also restructures the Asian regional architecture, closely linking its economy and security. Moreover, foreign and domestic policies are intimately joined in the TPP. The TPP includes most issues that any FTA would: goods, rules of origins, pharmaceutical patents, trade remedies, sanitary and phytosanitary issues (SPS), technical barriers to trade (TBT), services, intellectual property rights, and government procurement. It covers a large portion of these issues which are not regulated under WTO rules and norms. It is expected to provide the basis for new trade regulations and stimulate economic integration among the members.

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The report “APEC in Charts 2015” depicting the region’s economic, trade, investment and policy-related performance through the use of charts was released

According to the report, in 2014 nominal GDP of the APEC region accounted for 57% of global GDP, share in total world trade - 49%, share in the world’s population - 39%.
The APEC region posted a real GDP growth of 3.2% in 2014, higher than the world GDP growth of 2.5% during the year. Uncertainties surrounding the path of oil prices, moderation of growth in China, and the timing of monetary normalization in the United States combined with domestic factors such as lower household spending resulted in diverging growth paths among members. In 2014, the real GDP (in 2005 USD) per person in the APEC region grew by 4.3%, compared with 3.4% growth in the rest of the world. The APEC region has consistently outpaced the rest of the world in terms of real GDP per capita growth in 2000-2014.
Inflation rates across the APEC region increased from an average of 2.8% in 2013 to 3.1% in 2014. Accommodative financial conditions from relatively low policy interest rates and quantitative easing combined with strong credit growth contributed to higher inflation levels in 2014.

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Former Indian Foreign Secretary Shyam Saran in the lecture presented his country`s priorities in the new geopolitical context

According to the author, India has welcomed the US rebalancing to Asia but is unable to understand its posture leading to the crisis in Ukraine. Russia has been pushed closer to China, which is now the pivot in the triangular relationship among China, Russia and the US. For India, the closer relationship Russia has with China reduces the value of our long-standing and cooperative engagement with Russia. In dealing with India–China issues and even India–Pakistan issues in the future, Russia may not be as supportive as in the past.
Full text of the lecture

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New article by Lowy Institute for International Policy assesses the Trans-Pacific Partnership (TPP) influence on the global GDP growth and China`s vision of this initiative

The authors take into consideration an econometric assessment of the TPP’s impact by the Peterson Institute in Washington. According to the research, the TPP by itself has modest benefits, but if all the Asian countries worked towards TPP-style rules and eventually joined up in an over-arching, all-inclusive Asia/Pacific framework, the benefit would be very much greater.
The Peterson Institute authors estimate that world income would rise by USD295 billion per year on the TPP track, and by USD1.9 trillion if the Asian/Pacific countries ultimately combine to achieve region-wide free trade. To put this in more perspective, the world gains about 0.3 % of GDP through implementing the TPP, but an inclusive pan-Asia/Pacific agreement would raise incomes by nearly 2%.

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India’s Economic Growth Picks Up, but Uncertainty over its Momentum Remains

The Indian economy will continue to grow but acceleration year-on-year will be gradual, says the latest India Development Update of the World Bank.
According to the Update, India was able to take advantage of the sharp decline in global oil and commodity prices to eliminate petrol and diesel subsidies and increase excise taxes. Resources from lower subsidies and higher taxes have been well utilized in lowering deficits and increasing capital expenditure. Current account deficit narrowed 3.4 percentage point between financial year (FY) 12-13 and FY 14-15. In the first six months of calendar 2015 the construction sector expanded by 4 percent.
The Update expects India’s economic growth to be at 7.5 percent in 2015-2016, followed by further acceleration to 7.8 percent in 2016-2017 and 7.9 percent in 2017-2018. However, acceleration in growth is conditional on the growth rate of investment picking up to 8.8 percent during FY2016-FY2018, it adds.

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ISPI study explores China’s economic growth and heading to “New Normal”

As downward pressures on the Chinese economy are intensifying, President Xi Jinping said the nation needs to adapt to a “New Normal” in the pace of economic growth, with the aim of shifting focus from the speed to the quality of growth. The Chinese economy can no longer postpone facing and solving a series of structural imbalances. Rebalancing the drivers of growth to change the structure of the economy will require deep economic and institutional reforms.
The author points out that Chinese expansion over the last three decades in fact relied on a set of imbalances – macroeconomic (the excess of investment and credit made the economy vulnerable), demographic (a workforce that is going to shrink) and the regional divide.
The main ingredients of structural change in China are increasing agricultural productivity through the mechanization of sowing and harvesting, progressive urbanization that allows millions of rural workers to move from agriculture to manufacturing and services and find better-paid jobs in urban areas, investment in infrastructure and the introduction of advanced production technology in manufacturing.

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New East Asia Foundation material looks at the Republic of Korea – Japan relationship

According to the author, the absence of productive relations between Japan and the Republic of Korea (ROK) is, by no means, a new trend. That said, the rift between the two sides over history has significantly eroded meaningful trilateral cooperation between Seoul, Tokyo and their mutual ally – Washington. Recently, there have been some positive signals that Japan and the ROK may return to a relationship based on pragmatism and one that focuses on shared interests, many of these in partnership with the United States. This does not mean that the historical grievances between the two will – or should – disappear. Rather, there appears to be recognition in both Tokyo and Seoul that a “two-track approach” is the best option. This portends well for the trajectory of trilateral relations in the coming months.
Full text of the East Asia Foundation web-site

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