Increasing integration among Asian economies offers a new platform to promote growth, strengthen trade links and reduce poverty. This is good not only for Asia, but also for the US and the rest of the world, according to a new Asian Development Bank study.
The new ADB study entitled "Emerging Asian Regionalism", partnership for shared prosperity suggests that while Asian economic integration is market-led, to tap the full potential of regional interdependence, Asian economies need to boost their ties through closer dialogue and policy co-ordination.
"This study is an excellent analysis of Asian regionalism and shows how economic integration and co-operation can help to reduce transaction costs and increase efficiency, providing an important platform for poverty reduction in the region," said the World Bank Chief Economist, Justin Lin, at a seminar where the ADB study was presented.
The book recommends that to foster financial stability and economic prosperity, Asian authorities also need to enhance regional macroeconomic surveillance and work towards the creation of new regional institutions such as an Asian Financial Stability Forum and an Asian Secretariat for Economic Cooperation.
"Economic integration in Asia is becoming increasingly important to global growth and managing shared risks in the region," said Jong-Wha Lee, Head of ADB Office of Regional Economic Integration.
The Asian financial crisis of 1997/98 exposed the region's vulnerabilities and gave impetus to a new wave of regional co-operation. The US can benefit from strengthening its ties with Asian countries. Rapidly rising Asian income can contribute to growing US export into Asian markets, speakers at the seminar added.
The study highlights that Asia is less integrated in finance than in trade but financial markets are now larger, deeper, and more sophisticated than they were a decade ago. With the growth of trade and financial ties, Asia's macroeconomic interdependence has also increased. The region faces a challenging period ahead as global payment imbalances appear increasingly unsustainable, the financial turmoil unfolds and the global economic slowdown deepens.
"The challenge for Asian policy makers is to closely monitor global and regional developments, and to be ready to act together whenever region-wide responses are appropriate," the study says. It also says the region needs to cooperate to make development sustainable by protecting regional health and environment.