Asia Needs Multi-Speed, Multi-Track Approach to Integration, Experts Agree
ASIA COULD consider taking a multi-speed, multi-track approach to regional cooperation and integration that allows different countries to proceed according to their needs and stage of development, ADB President Haruhiko Kuroda told a seminar yesterday.
While the European model of integration offers lessons for Asia, the region must seek out a path suited to its unique initial conditions, Mr. Kuroda told the seminar on “Thinking Globally, Acting Regionally” at the Hyderabad International Convention Center.
The session was part of the Seminar Series at ADB's 39th Annual Meeting of its Board of Governors in Hyderabad.
“The region is culturally and politically diverse, with varying levels of economic and social development,” Mr. Kuroda told the audience.
“At a practical level, Asia's future strategic direction towards integration should respond to these differences while narrowing these development gaps.”
East Asia, where trade and investment is already well integrated, might focus on bringing greater coherence to trade agreements and deepening monetary and financial integration, Mr. Kuroda said.
“As countries and subregions become more economically integrated, the resulting network of production and trading relations will underpin future economic prosperity,” he said.
Speaking at the seminar were distinguished professors from Asia, Europe, and US.
“The driving force behind the Asian integration process is the market rather than policy or institutions,” said Eisuke Sakakibara, professor at Waseda University and formerly Japan's Vice Minister of Finance for International Affairs. “Corporations and the production networks they have established are driving integration in East Asia.” He, however, noted that the public sector has started to follow and accommodate market driven integration in Asia.
“I sincerely hope institution building and policy coordination proceed at an accelerating pace to complement the private sector-led, market-driven regional integration process,” Mr. Sakakibara added.
“Asia, especially East Asia, should aim at strengthening the regional financing facility”, he said in concluding.
Contrary to the general perception around the world, “political ambitions are not necessary for regional integration,” said Randall Henning, professor at the School of International Service (SIS) of American University, and visiting fellow at the Institute of International Economics. Mr. Henning also emphasized the need for Asia to build stronger institutions to further its regional integration.
Mr. Henning added that any major regional financing arrangement should be implemented when the financial markets are relatively calm, as they are now, rather than when they are turbulent.
Speaking at the seminar, André Sapir, professor at the Université Libre de Bruxelles and senior fellow at the Brussels European and Global Economic Laboratory, said that the current process of sustained trade integration in Asia, especially East Asia, probably requires greater intra-regional exchange rate stability.
“How such intra-regional exchange rate stability should be brought about is an issue that the Asian countries should think through carefully in the years to come,” he added.
“For this to happen in Asia, Japan and the People’s Republic of China will have to play the roles played by Germany and France in the process of European integration,” he concluded.
Michael Vatikiotis, regional representative for the Geneva-based Henry Dunant Centre for Humanitarian Dialogue in Singapore, who moderated the seminar, summarized the discussions. In his concluding remarks, Mr. Vatikiotis said that the current debate over regional integration is central to Asia’s future prosperity.
“The global system as we know it is creaky, leaky and inefficient,” Mr. Vatikiotis said in concluding the seminar. “Increasingly, different regions of the world are helping themselves. Asia faces the challenge of mounting protectionism from Europe and the United States. Globalization is paradoxically leading to regionalism.”
Srinivasa Madhur is Director of ADB's Office of Regional Economic Integration
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