Principal Economist, Lei Lei Song discusses the result of the 2013 Asian Economic Integration Monitor.
Title: Release of ADB's Bi-annual Asian Economic Integration Monitor
Description: Principal Economist, Lei Lei Song discusses the result of the 2013 Asian Economic Integration Monitor.
Lei Lei Song
Office of Regional Economic Integration
Asian Development Bank
Q: What are the hallmarks of recent integration in Asia?
A: Integration in Asia is a bit different from other regions, in particular in Europe, because integration in Asia is mostly led by the market themselves, cause it is market driven and without much intervention by the governments, so we call it institutionalized. So, market driven, institutionalized integration in the region.
Q: Forecast for regional trade integration?
A: Intraregional trade that’s the trade between neighbors, has already gone into more than half of the total trade in the region. And in Europe, survey shows about 65% and in Asia, it’s already about 55%. So we do have some room to move in terms of trade connections but the room is already very limited.
Q: Forecast for regional financial integration?
A: Financial integration has a huge room to move. Currently, across our regional asset holdings which means Asian investors holding Asian assets, the ratio is still pretty low. It’s roughly below 20%, it’s very low but in Europe, that ratio is very high. So in terms of financial integration and with trade and production network connecting all countries together then financial integration with all barriers taken down then the finance will be more connected and will be more integrated that will link the countries more closely in the region.
Q: How can governments affect the rate of integration?
A: They not only facilitate the trade and investment financial flows between countries in the region. But also they have to manage the process of integration to minimize risks such financial contagion or to reinforce financial sector in the region or build up some financial safety nets in case there’s trouble somewhere in the region, then they can contain that trouble and build up safety nets for those countries possibly in trouble.