Building a Resilient Future for Asia after COVID-19: How can ADB help?

By Yasuyuki Sawada, Chief Economist and Director General, Economic Research and Regional Cooperation Department, Asian Development Bank, Cyn-Young Park, Director for Regional Cooperation and Integration, Economic Research and Regional Cooperation Department, Asian Development Bank, Rolando Avendano, Economist, Economic Research and Regional Cooperation Department, Asian Development Bank


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


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The latest estimates of the COVID-19 impact paint a grim picture of severe economic and job losses for developing Asia. ADB’s latest study estimates that the pandemic could cost the region from 6.2% to 9.3% in lost regional GDP, depending on whether it entails a 3-month or a 6-month containment scenario. This effect accounts for 30% of the expected overall decline in global output. The region is also expected to take the brunt of employment losses: the study projects losses from 6.0% (109 million) to 9.2% (167 million) of total employment, representing 70% of global employment losses. The shock is estimated to be seven times higher than during the global financial crisis.

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Unbundling Corruption: Why it matters and how to do it

By Yuen Yuen Ang, Political Scientist at the University of Michigan, and the author of How China Escaped the Poverty Trap and China’s Gilded Age: The Paradox of Economic Growth and Vast Corruption

Corruption-whistleblower-shutterstock_1581042757Even amid a global pandemic, corruption persists and manifests itself in multiple forms, ranging from corrupt police extorting truck drivers delivering essential goods, rigged procurement contracts, to politically connected corporations receiving huge bailouts from the government while small businesses are starved of loans they desperately need to stay afloat. Although all of these actions are corrupt, they involve very different actors and stakes; some are transactional while others are extractive; and each brings about vastly different consequences.

Yet the conventional way of measuring corruption across countries does not capture qualitative distinctions across types of corruption. Instead, standard indices—most notably, the Corruption Perception Index (CPI)—measure corruption as a one-dimensional problem, ranging from 0 to 100. Consistently, rich countries rank at the top while poor countries are stuck at the bottom. Continue reading

From crisis to opportunity in China: stepping up digitalisation amid COVID-19

By Margit Molnar, Head of China Desk, OECD Economics Department and Kensuke Tanaka, Head of Asia Desk, OECD Development Centre


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


digitalisationDigitalisation as a way to lift growth potential

COVID-19, or the new Great Depression, is likely to have a lasting impact on economies and societies worldwide. Pandemics are shown to be followed by sustained periods with depressed investment opportunities, and/or heightened desires to save (Jorda et al., 2020), thereby reducing potential growth. To mitigate the impact of COVID-19, many governments, in addition to emergency measures to save lives and keep firms afloat, have also adopted investment stimuli. China is among those countries where the composition of stimulus is tilted towards public investment. While continuing to strike a delicate balance between keeping the pandemic under control and resuming activities, it is crucial to accelerate processes that will counter the fall in growth potential. China’s growth potential is set to decrease as the country catches up with more advanced economies and its rapid ageing also weighs on it. However, China can still reap the “reform dividend” with measures that also boost growth in the long term.

Digitalisation is a promising candidate to lift China’s long-term growth potential. Digital technologies are shown to boost productivity (Gal et al., 2019), which is the key to sustainable growth. At the current juncture, introducing digital technologies can also help jumpstart the economy as it creates new jobs and meets new demand (OECD, 2018). Indeed, in the first quarter of the year, it was the IT and software sector growing at over 13% and the financial sector at over 6% (partly thanks to surging online payments), that held up services growth. Continue reading

The economic implications of lockdown in Emerging Asia

By Kensuke Tanaka, Head of Asia Desk, OECD Development Centre and Mario Pezzini, Director, OECD Development Centre and Special Advisor to the OECD Secretary General on Development  


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


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Kuala Lumpur, Malaysia. Health workers prepare to conduct a COVID-19 test for people at Flat Selangor Mansion, Masjid India. Photo: Shutterstock

First detected in China, COVID-19 has spread rapidly to other countries, infecting more than 2 million people worldwide and killing more than 127,000 to date (14 April).  From mid-March, Southeast Asian countries started to see their number of cases climb (Figures 1 and 2). As of 14 April, India confirmed over 11,000 cases, though the sharp increase can partly be attributed to more testing. Malaysia and Indonesia each surpassed the bar of 4,800 confirmed cases, while the Philippines has counted over 5,200 as of the same date. The rapid evolution of the disease has prompted authorities to announce various measures including putting entire cities and countries into lockdown to stop the virus. As early as January in China and March elsewhere, many Emerging Asian countries have imposed local or even nationwide lockdown and curfew measures (Table 1), with varying durations, geographical coverage, and scope. Lockdown measures contribute to containing the spread of the virus, but they also prevent economic activities that would otherwise take place. As the debate in countries turns to when and how to end a lockdown and restart the economy, the health and economic implications of lockdown measures need to be considered carefully.

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Covid-19: time to unleash the power of international co-operation

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By Mario Pezzini, Director, OECD Development Centre and Special Advisor to the OECD Secretary General on Development


This blog* is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


Development co-operationThe rapid spread of the dire human, social and economic impacts of the coronavirus crisis shows just how interconnected we are. International co-operation has become –literally– vital.

A health crisis has set off a global economic crisis, where shocks on the demand and supply sides are combining in an unprecedented scenario. Many developing countries are bracing themselves. While Europe is struggling to contain and cope with a spiralling number of cases and fatalities, the effects in countries where health systems are already weak, economies are highly dependent on global demand, and strict containment policies are more difficult to implement, could be even more disastrous.

Major outbreaks in developing countries could cause the collapse of weak health systems and expose gaps in social protection programmes, especially in Africa, where so many schemes rely on official development assistance. A humanitarian crisis may be in the making: travel restrictions affect the delivery of humanitarian assistance, and infections in refugee camps – largely hosted in developing countries – will be difficult to fight. The ILO estimates that 25 million jobs could be lost worldwide, possibly more, as the majority of workers in developing countries are in the informal economy. Continue reading

How China is implementing the 2030 Agenda for Sustainable Development

 By Xiheng Jiang, Vice-President of China Center for International Knowledge on Development (CIKD)

 

Photo by Robert Bye on UnsplashThe United Nations Sustainable Development Goals Report 2019 shows that, while advances have been made in some areas, monumental challenges remain. The world is not on track to end poverty and millions still live in hunger. People in absolute poverty will remain at 6% by 2030, falling short of the 3% goal. It is also alarming that undernourished people went up from 784 million in 2015 to 821 million in 2017 and 55% of the population have no access to social protection. The report stresses that climate change and inequality are two major challenges, which demand enhanced national and collective action across countries, facilitated by international organizations.

China’s Progress Report on Implementation of the 2030 Agenda for Sustainable Development (2019) was also unveiled at UN Headquarters in September 2019. This second progress report since the adoption of the 2030 Agenda in September 2015, takes stock of China’s progress in pursuing the SDGs, identifies the gaps and formulates plans for next steps. The report features cases depicting efforts by Chinese governments at all levels, also showing how the private sector and general public are contributing. So, how is China implementing the SDGs through its development policies? China is pushing its sustainable development forward in three key areas; eradicating extreme poverty, building an “ecological civilization” and contributing to global climate and sustainability governance.
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Look East instead of West for the future global middle class

By Kristofer Hamel, Chief Operating Officer, and Baldwin Tong, Research Analyst, World Data Lab

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South City Mall in Kolkata, India

Poverty is declining worldwide. Yet, reducing poverty is not equivalent to a rising middle class. A large share of the world’s population earns between USD 2 and USD 11 a day (in 2011 purchasing power parity). Only once people start earning more than USD 11 do they tend to have enough extra spending power to make purchases that go beyond basic needs and therefore enter the global middle class. First-time middle-class purchases include personal transportation (motorcycles), housing (first-time renting or low-end purchases), finance (first savings account or loan) and education (tertiary).

Over the next decade, middle-class spending power will shift from west to east due to the huge growth in the middle-class segments (USD 11-USD 110 per day) of India and China. The middle classes of these two countries will represent over 83% of their respective country’s spending power, meaning that businesses should consider their tastes and preferences. Combined, the world’s two most populous countries are expected to represent over 43.3% of the global middle class by 2030.
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Innovation Driving the City

By Ms. Theresa Mathawaphan and Ms. Yaowarat Kekina, National Innovation Agency (Public Organisation), Thailand


Check out the 28 March 2019 EMnet meeting on
“Global Challenges for Business in Emerging Markets”
with a special focus on Smart Cities in Asia


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Bangkok CyberTech District Development

Innovation and technology currently play an increasing role in developing the urban city by tackling multiple challenges. Many cities in the ASEAN region have set-up urban development strategies by creating an innovation ecosystem to elevate the area’s economy and investment, reaching a global level. This makes the “innovation city” concept more recognised and used as a new way of driving the development of cities.

Proof of this is the Innovation Cities Index 2018. This report evaluates the city innovation ecosystem capability of 500 cities worldwide, reflecting the vision that a city can grow and be sustainably driven when citizens and corporations are capable of generating innovation. This index measures three main aspects, namely cultural assets, human infrastructure and networked markets, and has a total of 162 indexes. Continue reading

Raising capital for intermediary cities

By Jeremy Gorelick, Senior Infrastructure Finance Advisor, USAID’s* WASH-FIN (Water, Sanitation and Hygiene – Finance) Programme, and Joel Moktar, Project Leader, Open Capital Advisors


This blog is part of an ongoing series exploring the intersection between intermediary cities in developing countries and sustainable development


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Intermediary cities are the fastest growing cities in the developing world. Often referred to as secondary or second-tier cities, intermediary cities typically have a population of between 50,000 and one million people. They play a fundamental role in connecting both rural and urban areas to basic facilities and services.[1] Driven by population growth and rural-urban migration, intermediary cities worldwide are projected to grow at almost twice the rate of megacities (those with more than 10 million inhabitants) between now and 2030.[2] Of these, the fastest growing cities are in Africa and Asia.[3]

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Normatively weak institutions can be functionally strong: A surprising lesson from China

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By Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan and the author of “How China Escaped the Poverty Trap


This blog is part of an ongoing series evaluating various facets
of
Development in Transition. The 2019 “Perspectives on Global Development” on “Rethinking Development Strategies” will add to this discussion


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Guangzhou, China. Photo : shutterstock.com

For the past decades, policymakers and development practitioners have clung to the idea that “good governance” is the solution to poverty. If only poor countries could eradicate corruption, enforce laws, hold leaders accountable and achieve a checklist of best practices, their economic and social problems would be resolved.

This thinking, however, runs into a chicken-and-egg problem: in the first place, it’s hard for poor countries to quickly and meaningfully establish good governance. Indeed, if it were easy to achieve good governance, poor countries would have done it long ago.

But if insisting on one-size-fits all good governance is not the solution, then what is the alternative? My research on China’s development reveals a surprising lesson: normatively weak institutions can be functionally strong. Seen through first-world lenses, the norms and structures found in low-income, pre-industrialised countries are often regarded as “weak” or “backward,” that is, as impediments to development. In fact, these institutions can be creatively adapted or repurposed to kick-start development.
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