Asia-Pacific Finance and Development Centre 2006 Biennial Forum Shanghai, September 2006

1. Asia-Pacific Finance and Development Centre2006 Biennial ForumShanghai, September 2006 Session V: Regional Cooperation and Innovation Development Presented by Ken Waller Senior Advisor Australia ABAC Secretariat

2. Agenda • Cooperation in APEC – Innovation and Development • Financial Markets – Supporting Innovation • Technology in Finance and Innovation • The Challenge of IPR • APEC and ABAC – Roles and Objectives • Capacity Building – Critical Pillar • Summary 1

3. 1. Cooperation in APEC Innovation and Development • 21 economies – diverse; high to low income economies • Voluntary and non-binding • Capital rich and highly innovative societies and poor communities • Differences promote opportunities for cooperation • Development and growth – the cooperative challenge 2

4. 1.1 Cooperation in APEC Innovation and development • Key objectives of cooperation • Economic growth and higher living standards • Strengthening economic frameworks and financial systems • Promoting standards, IPR, innovative and emerging technologies • Developing regional responsiveness to natural disasters; pandemics; terrorism 3

5. 1.2 Cooperation in APEC Innovation and development • APEC Leaders commit to • Strengthening IPR protection and enforcement • Adopting anti-counterfeiting and anti-piracy initiative • Sharing of technologies • ABAC (Business) promotes information and communication technology • ICT – growth on a regional collaborative basis 4

6. 2. Financial markets Supporting innovation • History of money – as a means of intermediation • John Law – early part of 18th Century – “demand for money” • Value not dependent on gold or silver • Value - facilitates transactions • Continuous innovation – capital markets • Forwards/derivatives/ “atomising risk” 5

7. 3. Technology in Finance and Innovation • Finance system deeply influenced by technology • Technology a “financial enabler” • Enriching physical and human assets • Key driver of productivity growth • Revolutionised finance – real time transfer of wealth on massive scale – within economies and across borders 6

8. 3.1 Technology in Finance and Innovation • Application of technology to finance best secured by • Open, innovative and competitive financial markets • Supporting legal framework/ enforcement of contracts • Best practices regulatory environment • Risk management and good governance • Skilled people, rewarded for good judgement 7

9. 4. The challenge of IPR • World Bank – IPR protection highly important • to capital poor, but labour and knowledge rich developing • economies • for SMEs reliant on strong legal system and enforcement • Challenge is finding effective balance on IPR enforcement and sharing of knowledge 8

10. 4.1 The challenge of IPR • Knowledge and ideas - transformed to services and products - basic ingredients to commerce and trade • Innovation essential ingredient to growth – particularly important to services • Protection of IPR – promotes knowledge transfer • Analysis points to direct benefit – good patent regime can raise growth by 0.6% on average • A vital aspect of removing “behind the border” impediments 9

11. 5. APEC and ABACRole and Objectives • Cooperation between member economies to achieve APEC objectives • Business (ABAC) strongly endorses and supports cooperation between economies • Central mechanism to improve human capital – capacity building 10

12. 6. Capacity Building Critical Pillar • Many participants – IMF, World Bank, OECD, ADB and APEC - knowledge and experience sharing • Business/academia at the “sharp end” of innovation and knowledge transfer • Both want fair reward for risk and innovation • Both are critical participants in capacity building 11

13. 6.1 Capacity Building Critical pillar • Facilitating capacity building • For companies; open and welcoming foreign direct investment policies • Competitive markets in which innovation and reward for risk fully compensated • Protected by legal system 12

14. 6.2 Capacity Building Critical pillar • APEC/ABAC encourage investment liberalisation – collective and unilateral policies of APEC • APEC works with international organisations to enhance human resources skills • in building economic/social government institutions • in strengthening financial systems including anti-money laundering • promoting skills and governance in legal systems 13

15. 6.3 Capacity Building Critical pillar • APEC • Recognises public and private partnerships • IPR protection • Requires community-wide involvement • APEC Comprehensive Strategy on Intellectual Property Rights • Model guidelines for members’ authorities to inspect, suspend, seize and destroy goods 14

16. 6.4 Capacity Building Critical pillar • APEC measures cont. • ensure internet and e-commerce are not used to facilitate trade in counterfeit goods • develop model guidelines in line with internationally agreed conventions and treaties • strengthening operational contacts between national agencies • establish websites in each member economy • organise enforcement training – involving business • promote public awareness / media campaigns 15

17. 7. Summary • APEC – impressive growth and development; strong and robust outlook • Based on open, liberal and competitive markets and enabling investment policies • Innovation/technology/ finance – deeply interrelated • IPR protection – contributes to growth and prosperity • priority for APEC – IPR to grow in relevance as region integrates • Capacity building - public/private partnerships 16