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Seminar on Inter-regional Cooperation ESCAP Presentation

Seminar on Inter-regional Cooperation ESCAP Presentation. 8 June 2007 Santiago. Trade & Financial Integration in Asia: Role of Public-Private Alliances. Kim Hak-Su UN Under-Secretary-General & Executive Secretary, UNESCAP. Overview. Background. Trade integration: achievements &

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Seminar on Inter-regional Cooperation ESCAP Presentation

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  1. Seminar on Inter-regional Cooperation ESCAP Presentation 8 June 2007 Santiago

  2. Trade & Financial Integration in Asia: Role of Public-Private Alliances Kim Hak-Su UN Under-Secretary-General & Executive Secretary, UNESCAP

  3. Overview • Background • Trade integration: achievements & future challenges • Financial integration & PPA linkages • Way forward

  4. Background: Asymmetric integration • Success in economic integration: asymmetric in Asia • Intraregional trade: grown substantially • Financial integration: lagging behind

  5. Trade Increases • ESCAP members account for about 30% of world trade • Half of their exports: intra-regional • Imports: more from the region than rest of the world (RoW); however RoW imports continue to grow • Large trade surplus

  6. ESCAP exports to & imports from the region & ROW

  7. PTA Proliferation • 89 PTAs: Currently implemented • More: under negotiation & consideration • Most agreements are bilateral, only 11 functioning RTAs • Business sector’s rising participation: critical for consolidating & rationalizing Asian regionalism

  8. Noodle Bowl

  9. Strong Regional Growth & FDI • Around 17% outflows from the region • Around 20% of world total FDI inflows to the region • Top destinations: China, Viet Nam & India

  10. FDI Inflows (billions US$)

  11. Rising Regional TNC Investments • TNCs lead FDI: • TNCs employed some • 6 million workers, with sales of $2 trillion (2005) • Asia: HQs of 77 of world’s top 100 TNCs • Need continuous sound public sector policies to facilitate FDI

  12. PPAs in Trade Facilitation • National Trade/Transport Facilitation Committees • Single-window facilities • Trade financing mechanisms

  13. Trade Integration: Challenges & PPA Role Lingering Doha round A solution: Stronger government-business partnership

  14. Trade Integration: Challenges & PPA Role Loss of PTA effectiveness (noodle bowl effect) A solution: Inclusive trade policy making on PTAs

  15. Trade Integration: Challenges & PPA Role Lesser share of trade-related assistance to the region A solution: More private sector participation in trade capacity building & advocacy

  16. Financial Integration • Large trade surplus, high forex build-up (over $ 3 trillion) • Resources not utilized for development • Financial integration weakest in Asia • May adversely affect region’s growth momentum • PPAs could help reverse the trend

  17. Forex Reserves, 2006

  18. Financial Integration: Little Progress ESCAP region initiatives: - Chiang Mai Initiative - Asian Bond Fund initiatives - Financial market surveillance - Financial liberalization efforts

  19. Financial Integration: Little Progress Constraints: Tight - Capital controls: - Foreign bank entry: Restricted Limited flexibility - Exchange rate regimes: - Trade in financial services: Limited

  20. PPAs to Strengthen Financial Integration • Enough financial resources, but need facilitation mechanism (resource mobilization): - Set up Asian investment bank - Set up regional special purpose vehicle - Expand Asian Development Bank - Expand Asian Bond Fund - Reinvigorate sub-regional banks & funds

  21. Public sector: • Provide regulatory, institutional & regional cooperation mechanisms • Help private sector grow Way forward: Build on Strengths • Private sector: Efficiency & innovation • PPAs: Combine strengths for trade integration & financial integration

  22. Thank you www.unescap.org

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