Opening Remarks by
President Tadao Chino
Asian Development Bank

at the Korea Day Seminar: "Dynamic & Sustainable Growth in Korea and Asia"

14 May 2004
ICC Jeju, Republic of Korea

Your Excellency Deputy Prime Minister, Distinguished Guests, Ladies and Gentlemen,

I am honored to be opening this important seminar today. I would like to thank our host-the Government of the Republic of Korea-for the excellent arrangements for this event as part of the Asian Development Bank's Thirty-Seventh Annual Meeting.

The Republic of Korea represents a remarkable success story in Asia's recent history. Korea has successfully transformed its economy from one that was agriculture-based, with per capita GDP below 100 dollars in the early 1960s, to among the most advanced economies in Asia. After the Asian Financial Crisis struck in 1997, Korea recovered quickly thanks to strong structural reforms, especially in the financial and corporate sectors. Now, building on its success to-date, it strides to develop its economy further.

In this context, I believe today's seminar to be very timely. It presents us with an excellent opportunity not only to assess the factors behind Korea's development success, but discuss the challenges facing the country and the rest of Asia in striving for "dynamic and sustainable growth." Before you hear many excellent presentations today by distinguished scholars and policymakers from across the world, I would like to take a couple of minutes to share a few thoughts on three areas in which ADB has been actively engaged.

First, as Asia has witnessed rapid and remarkable economic growth in the last two decades, regional cooperation and integration have helped create the security and economic environment for this outstanding performance. Building on this solid foundation, steps are now afoot to take economic cooperation and integration in Asia to new levels.

I should mention, in particular, the unprecedented moves toward regional cooperation in the monetary and financial areas. The Asian Financial Crisis highlighted the speed with which the contagion could spread among neighboring countries. It is encouraging to note that in a relatively short period of time, East Asia has launched several important initiatives to build greater resilience to external shocks. These initiatives could potentially become key instruments in ensuring sustained integration and growth in the future. They include:

• Peer review and policy dialogue
• Reserve pooling and sharing, and
• Regional bond market development.

In the area of peer review and policy dialogue, the ASEAN Surveillance Process and the ASEAN+3 Informal Policy Dialogue are well established. With regards to regional reserve sharing, we have the Chiang Mai Initiative. And, in the sphere of bond market development, for the first time, concrete steps are being taken at the regional level to complement individual country efforts, under ASEAN+3 and various other groups. Korea, being a partner of ASEAN+3 initiatives, has an important role to play in all these processes.

I am glad to say that ADB is actively supporting many of these historic initiatives. Under ADB's Long Term Strategic Framework, regional cooperation and integration is a key element supporting its three pillars of poverty reduction. Since 1997, ADB has supported various regional cooperation projects, investing in infrastructure, the exchange of information and experiences, promotion of policy dialogue, and strengthening of institutions and research capabilities.

Enhanced cooperation offers a degree of protection from the possibility of future economic crises. But the work is far from finished, and attention should be given to a number of areas to further improve resilience to external shocks and prevent financial contagion.

Now turning to the second area of ADB work, I would like to point out that the Asian Financial Crisis underscored the centrality of good corporate governance to private sector development and broad-based economic growth.

In promoting good governance, ADB's policy dialogue with its developing member countries emphasizes that a clear definition and protection of rights as well as an effective judicial and regulatory framework leads to a healthier environment for private sector development. Encouraging results have already been achieved in many countries in areas such as establishment of property rights, reforms for small and medium enterprises, privatization, and introduction of international accounting standards. But much remains to be done. I believe Korea's recent experiences provide useful insights on our continuing work in this regard.

Third, in this era of globalization, rapid technological development, and increasing competition, most Asian countries are implementing reforms to make their labor markets more flexible, dynamic, and efficient. Many countries in the region are achieving significant rates of growth of GDP, but much lower rates of growth of employment. They are seeing surplus labor in rural areas, and unemployment and underemployment in urban areas-all factors that contribute to poverty. In carrying out labor market reforms, it is important to pursue measures that balance "efficiency" and "job creation" with a view to achieving full employment.

Your Excellency, Ladies and Gentlemen,

Much has changed in Asia and the Pacific since I first started work on the establishment of ADB 40 years ago. One of the most impressive developments is that the Republic of Korea, one of our founding members and one of the first borrowing countries, has become a donor. One of Korea's first loans was the Seoul-Incheon Expressway Project. Since then, ADB assistance has helped Korea to achieve its industrial development through projects in infrastructure, small and medium enterprises, and the financial sector. While Korea ceased to be a regular borrower from ADB in 1988, the country has remained fully engaged with ADB and continues to actively support our activities in the region. I am sure that this solid partnership has been mutually beneficial, playing an important part, for instance, in Korea's rapid recovery from the Asian Financial Crisis.

I hope our partnership will now enter a new phase-as we work together to assist other countries in the Asia and Pacific region develop their economies and reduce poverty. Korea's development over the past three decades is exemplary for the rest of Asia, and offers many lessons. Today's seminar will provide valuable insights for us all.

Thank you.