A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

www.adbi.org
ADBI News 2008 Volume 2 Number 3

Asian Noodle Bowl CONFERENCE

Asian noodle bowls are trading arrangements characterized by complex and overlapping tariffs, standards, and rules of origin
that can raise administrative and business costs.

Free trade agreements (FTAs) are increasingly business activity and assessment of current FTAs
viewed as the major vehicle of trade policy and in East Asia. The panel consisted of experts from
diplomacy in the Asia and Pacific region. In Asia, Australia, India, Indonesia, Japan, Peoples
the number of FTAs seems set to increase in the Republic of China, and Singapore, in addition to
next decade as East Asia plays a catch-up game two representatives from the private sector. Part II
with other regions. was a one-and-a-half-day technical workshop to
Researchers have pointed out that the trend discuss in greater detail country-level FTA
toward FTAs in East Asia is associated with
economic benefits, such as wider market access,
greater market opportunities, upgrading of In this issue
technology and productivity, and the spread of
efficient production practices.
Others suggest, however, that the formation of
a large number of bilateral FTAs could pose
challenges including discrimination against
outsiders, trade and foreign direct investment
diversion, and, above all, Asian noodle bowls.
Asian noodle bowls are trading arrangements
characterized by complex and overlapping tariffs,
standards, and rules of origin that can raise
administrative and business costs. According to
these experts, this can be a particular problem for
small- and medium-sized enterprises with limited
capacity to deal with these issues. This is part of
the reason for considering consolidation of Asian
noodle bowls into a single, region-wide FTA.
The Asian Noodle Bowl Conference, held on
1718 July 2008, consisted of two parts. Part I was
a half-day conference on the impact of FTAs on

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 A s i a n D e v e l o p m e n t
strategies, issues related to the formation of an East
Asian FTA, and an enterprise survey on FTA
impacts on business activity.
Country experts appear to have different views
on whether there is a need to form an East Asian
FTA. One view, for instance, is that the Association
of Southeast Asian Nations (ASEAN) is still in the
process of building its economic community and,
ADB/ADBIs Flagship Study on
Infrastructure and Regional Cooperation
The ADB/ADBI flagship study on Infrastructure
and Regional Cooperation examines the key
issues and challenges facing cross-border
infrastructure development in Asia. The study
attempts to outline what the region needs to
address in terms of policies and best practices to
meet these challenges.
The studys second workshop was held in two
parts both focusing on technical aspects of the
research papers. The workshops two parts drew 68
participants; 24 researchers presented their work
on the studys four themes: trade and logistics,
transnational infrastructure networks, policies and
institutions, and financing infrastructure. Valuable
comments were solicited from policymakers and
experts from the academic community, think tanks,
and the private sector.
The first part, Policies and Institutions and
Financing Infrastructure, was held in New Delhi
on 1214 June 2008. ADB India Country Director
Tadashi Kondo delivered welcome remarks,
followed by opening remarks by ADBI Dean
Masahiro Kawai. Alok Sheel, Secretary of the
Economic Advisory Council to Indias Prime
Minister, delivered the keynote speech on
financing Asias infrastructure. Biswa N.
Bhattacharyay, Special Advisor to the ADBI Dean
and the task manager of the flagship study, gave
the introduction to the workshop and presented the
objectives, scope, and structure of the study.
The first part of the workshop focused on policies and institutions and financing infrastructure.
2
B a n k I n s t i t u t e
once it accomplishes this task, ASEAN will have
gained the confidence to advance the integration
process. Preliminary findings of the enterprise
survey include that more firms indicated positive
impacts of FTAs than those that indicated negative
impacts, and that small- and medium-sized
enterprises tend not to use FTAs, whereas large
firms do tend to use FTAs.
ONGOING RESEARCH
The major conclusions of the first part of this
workshop include:
(i) identify a set of policies and institutions that
can provide conducive environments, such as
the establishment of additional coordination
mechanisms and regional policy and
institutional frameworks for encouraging
public-private partnerships in regional or
cross-border infrastructure development;
(ii) identify impediments to inter-governmental
coordination and harmonization of legal and
regulatory frameworks, policies, procedures,
environmental and social safeguards, and
other measures and suggest best practices;
(iii) suggest modalities and new schemes of
financing based on learning experiences from
other regions to finance regional infrastructure
by governments, multilateral and bilateral
donors, and the private sector; and
(iv) identify ways to strengthen and integrate
regional financial systems, including capital
markets and bond markets for efficient
financing of regional projects.
The second part of the workshop, Trade and
Logistics and Transnational Infrastructure
Networks, was held in Bangkok on 34 July 2008.
ADB Southeast Asia Director General Arjun
Thapan provided welcome remarks, followed by
opening remarks by ADBI Dean Masahiro Kawai.
The major conclusions of the second part of the
workshop include:
(i) identify the types of
regional infrastructure,
such as transport and
energy infrastructure,
needed for the
development of
regional production
networks and supply
chains in order to
connect production
 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

clusters and gateways

within the region and
significantly reduce
trade and logistics
costs;
(ii) further deepen analysis
of the socio-economic
impacts of regional
infrastructure projects
on economic growth
and development,
The second part of the workshop focused on trade and logistics and transnational
poverty reduction, and infrastructure networks.
social conditions,
focusing on subregional and cross-subregional infrastructure networks on different countries
(such as Greater Mekong Sub-region, South and different sectors or types of people within
Asia, and Central Asia) projects in the transport each country, and suggest best practices for
and energy sectors; and designing and implementing regional
(iii) analyze the distributional impacts of regional infrastructure projects.

East Meets West on Trade Costs CONFERENCE

ADBI and the Inter-American Development Bank The participants agreed that expanding and
co-organized a conference on Trade Costs and improving the necessary physical and institutional
Regional Cooperation in Lima under the infrastructure would reduce trade costs and
framework of the Latin America/Caribbean and therefore increase trade. Empirical evidence
Asia/Pacific Economics and Business Association discussed in the conference suggested that the
(LAEBA) on 1718 June 2008. explosive growth of Asias exports in recent
The conference addressed common issues and decades has been enabled by increases in the
concerns of trade costs and regional cooperation in quality and quantity of trade-related infrastructure
both Asia and Latin America/Caribbean. The (see Figure).
objective was to examine key issues and View conference materials on the IADB website, accessible via
challenges in reducing trade costs and enhancing www.adbi.org/event/2537.laeba.2008.conference/.
intra- and inter-regional cooperation. Studies
presented in the conference focused on analysis of
policy issues through empirical and case studies at
national, subregional, and regional
levels. The discussion papers for Infrastructure Performance Index
Asia included: Afghanistan 1.1
2.37
Trade Costs in the Greater Pakistan
India 2.9
Mekong Sub-region: A CGE1 Cambodia 2.5
Approach; Viet Nam 2.26
Philippines 2.83
Trade Costs, Production Indonesia 3.16
Fragmentation, and Regional Thailand 3.33
4.27
Integration in Asia; Malaysia
Singapore 3.62
Trade Costs and Trade Patterns in Taipei,China 4.06
South Asia; Hong Kong, China 3.2
Korea, Rep. of 3.44
Port Competition and Japan 4.11
Coordination; and Germany 4.19
4.07
Transforming Trade Competition United States
Australia 3.65
into Coordination in PRC.2 Source: Arvis, Jean-Francios, Monica Alina Mustra, John Panzer, Lauri Ojala, and Tapio Naula. 2007.
1
CGE = computable general equilibrium Connecting to Compete: Trade Logistics in the Global EconomyThe Logistics Performance Index
2
PRC = Peoples Republic of China and Its Indicators. Washington, DC: World Bank.

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 A s i a n D e v e l o p m e n t
Another Look at
Growth and Development
The
government
must provide
leadership and
vision, adopt
effective
communication
strategies, and
build
consensus.
A. Michael Spence, recipient of the 2001 Nobel
Memorial Prize in Economic Sciences and
chairman of the independent Commission on
Growth and Development, which is supported by
the World Bank, bilateral donors, and the William
and Flora Hewlett Foundation, discussed the
Commissions work to deepen the understanding of
sustained and inclusive growth and development
on 24 March 2008.
Professor Spence noted that 12 (now revised to
13 with the addition of Brazil) economies have
achieved sustained high growth, showing 7% or
more for 25 years or more. There is a wider range
of countries that have experienced recent growth
accelerations. The jury, however, is still out on
whether these more recent growth accelerations can
be transformed into sustainable growth dynamics.
These economies have different starting points,
growth patterns, and drivers of growth, but they
appear to have common elements that sustained
their growth momentum. These include leveraging
the global economy; market incentives and
decentralization; high levels of savings and public
and private investment; resource mobility; stable
and functional investment environment; political
leadership and effective, pragmatic, and (when
Changing Demographics and
Asias Development
Mahani Zainal Abidin, Director-General of the
Institute of Strategic and International Studies in
Malaysia, discussed the impact of changing
demographics and the need for human capital in
Asias development on 25 March 2008. She first
noted two contrasting demographic trends in Asia:
North East Asian countries of East Asia has been
experiencing falling population growth rates and a
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B a n k I n s t i t u t e
DISTINGUISHED SPEAKER
needed) activist government; and pragmatism and
willingness to experiment. For countries that have
sustained high growth, the transition period from
low to high income is shorter (see Figure).
Growth Dynamics: Transitions in Years
as a Function of the Growth Rate
Source: Authors calculations.
Professor Spence pointed out that the
government should be pragmatic and should not be
guided by dogma. The role of the government
evolves over time as the economy matures,
expands its capabilities, and integrates into the
global economy. The government must provide
leadership and vision, adopt effective
communication strategies, and build consensus.
Finally, Professor Spence noted some global
trends such as rising income inequality and resistance
to globalization; impacts of global warming on
developing countries; global implications of the
growth of the Peoples Republic of China and India;
demographics, aging, and migration; and global
governance, imbalances, and the rising influence
and impact of developing countries that pose the
challenge of policy coordination with new
important players. These trends need to be given
more attention by key world leaders.
Read a more detailed summary of Professor Spences seminar
at www.adbi.org/event/2512.spence.distinguished.speaker/.
DISTINGUISHED SPEAKER
growing aging population while the rest of East
Asia has had high population growth rates with a
relatively young population age structure. At the
same time, a substantial level of migration flows is
being seen, particularly in South East Asia.
Dr. Mahani argued that the emergence of new
economic powers in Asia can be based on
population size. Aside from providing large
 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

markets for products and services, countries with

rapidly increasing populations can attract
investment, and they therefore have the potential to
become centers for production. However,
demographic characteristics can be a strength or a
burden to a country, so managing demographic Emergence of
factors is an essential strategy. new economic
powers in
Read a more detailed summary of Dr. Mahanis seminar at Asia can be
www.adbi.org/event/2513.mahani.distinguished.speaker/. based on
population
size.

Northeast Asia: Current DISTINGUISHED SPEAKER

Challenges and Future Prospects

of the most input-intensive in the world. Since the

country conducted half of its foreign trade with the
Soviet Union, the disintegration of the latter
brought about a massive trade shock. The North
A solution to
the North Korean industrial economy imploded and, deprived
Korean food of industrial inputs, agricultural output plummeted.
crisis will He indicated that in the short-run, food aid is
continue to
depend on
needed to respond to the current food crisis.
future However, Noland suggested that the long-run
diplomatic solution to North Koreas chronic food problems
developments.
was for the country to open up externally and
Marcus Noland, Senior Fellow at the Peterson export manufactured goods, mining products, and
Institute for International Economics in other goods. He emphasized that a permanent
Washington, DC, discussed the making of the solution to the North Korean food crisis and its
North Korean famine in the 1990s. He pointed out economic revival would continue to depend on
in his 18 April 2008 seminar that North Korea future diplomatic developments.
pursued collectivization of its agriculture after the Read a more detailed summary of Marcus Nolands seminar at
Korean War and made the agricultural system one www.adbi.org/event/2524.noland.distinguished.speaker/.

Bridging Research and Policy DISTINGUISHED SPEAKER

Chalongphob Sussangkarn, Distinguished

Fellow at the Thailand Development Research
Institute and a former finance minister of Thailand,
delivered a lecture entitled Bridging Research and
Policy: Perspectives from Experiences in Research
and in Government on 29 July 2008. He stressed Research and
the importance of developing trust and networking policy are
multi-
with public agency officials in a partnership mode dimensional
to make research results much more effective than and complex,
can be achieved by either party working alone. so bridging the
two is
Technical transfer of knowledge is also necessary necessarily
to cultivate long-term networking between think complex.
tanks and public sector agencies.

5
 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Dr. Chalongphob takes the view that because
both research and policy are multi-dimensional and
complex, the bridging is necessarily complex.
Thus, how to make best use of the policy research
and bridging capacities already available in
developing countries will be the biggest future
challenge, rather than simply concentrating on
building more policy research and bridging
capacities.
Read a more detailed summary of Dr. Chalongphobs seminar
at www.adbi.org/event/2633.sussangkarn.distinguished.
speaker/.

Tax Audit Seminar for Enhancing Fairness SEMINAR

Tax audits are widely used in

developing countries to support
self-assessment by taxpayers of
income and other entries in their
tax returns. Audits are also
important for achieving fairness
in taxation among both individual
and corporate taxpayers. Twenty-six senior tax audit officials from member countries of the Association of
However, globalization of Southeast Asian Nations (ASEAN) participated in the seminar.
economic activities has made business
transactions more complicated, so tax authorities
need to develop new measures to get useful
information on entities and their full business
transactions.
ADBIs fifth Tax Administration Seminar
organized in collaboration with the Malaysian
Tax Academy and the governments of Japan,
Malaysia, Singapore, and Thailandaimed to
meet this need by introducing more advanced tools
and methods pertaining to tax audits and
examinations. The seminar was held at the
Malaysian Tax Academy on 2426 June 2008.
Some instruments and measures for enhancing
audits suggested during the seminar were:
more effective legal frameworks (including
taxpayers record-keeping obligations, authority
to access books and records, sound management
of third-party information, and sanctions for non-
compliance);
sound management of information systems for
data collection, records, and analysis; and
use of risk management principles to select cases
for auditing.
Read an executive summary of the seminars proceedings at
www.adbi.org/files/Tax-Seminar-V-Executive-Summary.pdf.

Organic Agriculture: Market-based Development

Strategy for Achieving the Millennium Development Goals
ADBI Senior Research Fellow Sununtar Setboonsarng
presented the results of her work at the 16th International
Federation of Organic Agriculture Movements World
Organic Congress on 1620 June 2008 in Modena, Italy.
Presenting cross-country empirical evidence, she showed
how organic farming engages the poor, providing
environmental services while pulling them out of poverty.
Organic food and fiber contribute to:
Income and food security (Millennium Development
Goal [MDG] 1) by allowing higher profit and more
diversified food systems for home consumption. Improved
income generally leads to better education (MDG 2).
Health (MDG 4, 5, 6) by reducing pesticide exposures
and improving dietary quality.
Environment and mitigating climate change (MDG 7)
by restoring soil fertility and biodiversity, purifying water,
sequestering carbon in the soil, and reducing fossil fuel use.
Global partnerships for development (MDG 8).
Effectively, international trade of organics is a market-
based strategy for consumers to transfer payment for
environmental services to the poor, who have comparative
advantage in producing organics.
A myth, a caution, and a recommendation:
Does organic mean lower yield? Lower yields may occur
in fertile irrigated land, but evidence shows that organic
farming increases yield in marginal and degraded land,
where many of the poor reside.
Promotion of genetically modified organisms must be
done with extreme caution because their long-term impacts
on health and the environment are unclear. Corporations
intellectual property rights issues must also be resolved.
The public sector could assist in harmonizing standards,
developing carbon credit schemes, and endorsing organics
as environmental goods under the World Trade
Organization to further reduce poverty and mitigate
climate change.
For related reading, see ADBI Discussion Papers 49, 54, 101, 106, and
107 at www.adbi.org/discussion-papers. View Sununtar
Setboonsarngs presentation at www.adbi.org/conf-seminar-
papers/2008/06/23/2596.organic.agriculture.poverty.reduction/.

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 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Labor Migration Management and CONFERENCE

Regional Integration in Asia

illustrated the social dimensions

Thirty-three participants from Asia and the Pacific participated in the conference.
The Regional Conference on Labor Migration
Management in the Process of Regional
Integration, sponsored by ADBI, the International
Organization for Migration (IOM), and
Chulalongkorn University, took place at the IOM
Regional Office for Southeast Asia in Bangkok
from 27 to 30 May 2008. Thirty-three senior
government delegates and speakers from Asia and
the Pacific took part in the four-day event to
discuss regional and sub-regional trends and issues
in labor migration management.
The conference was divided into five sessions.
The first session provided an overview of labor
migration and its impact on the global economy.
The second session demonstrated the link between
labor migration management and regional
economic integration. Labor migration policies and
other issues in labor-sending and labor-receiving
countries were also discussed. The third session
of labor migration from human
rights, irregular migration, and
public health to brain drain and
brain gain issues. The final
session focused on how
countries can maximize the
development aspects of labor
migration; the session included
presentations on the role of
remittances in poverty reduction and potential
policies for regional technical accreditation among
Asian countries. The participants also had an
opportunity to learn from each other through
country presentations that outlined national labor
migration experiences and challenges, as well as
policy responses. In an effort to encourage
multilateral thinking and collaborative approaches
to migration management, participants were
separated into four sub-regional groupings to
examine common challenges and identify policies
and mechanisms to address these challenges. The
participants noted the need for closer
collaboration on migration policies and
management to more equally distribute the
benefits of labor migration management in the
context of regional integration.
Read a more detailed summary of the conference at www.adbi.
org/event/2533.labor.migration.management.conference/.

Viet Nam: Where Is It Heading ?

Increasing Pressure on Vietnamese Dong to Depreciate
17300 Experts from the
region gathered at
17100 Official rate Floor rate ADBI on 29 July
Ceiling rate InterBank rate 2008 to assess Viet
16900 Parallel mrk rate
Nams most recent
16700 macroeconomic
Band widened from Band widened from condition. The
Dong per US$

16500 0.5% to 0.75% (24/12/2007) 0.75% to 1% (10/03/2008) discussion focused

on key questions
16300
including: Is Viet
16100
Nam headed for a
currency crisis?
15900 What lessons could
countries that
15700 Band widened from experienced a crisis
1% to 2% (27/06/2008)
in 19971998 offer
15500
to Viet Nam?
6
07 -07

07 20

07 /25
20 /29

08 7

08 4

08 8

08 4
20 /30

0 8 /5

08 5

08 1

08 7
08 4

08 0

08 4

08 0
20 /28
20 /4/3

0 8 /9

08 6

08 2
20 /28

0 8 /6

08 2

08 6

08 2
20 /28

20 /6/3

08 9

08 3

08 8

08 3

08 7
20 7/1
20 /7/5

08 9

08 3

08 7

08 1

5
-0

20 /1/

20 /1/1

20 1/1

20 /1/2

20 2/1

20 2/2

20 /2
20 /3/

20 3/1

20 3/1

20 3/2

20 4/1

20 4/2

20 5/1

20 5/1

20 /5/2

20 /6/

20 /6/1

20 6/1

20 6/2

20 /2

20 /7/

20 7/1

20 7/1

20 /7/2

/2
20 8/2

20 /4

20 /5
20 12/

20 12

/1

/2

/3

/4

/5

/6

/7
T1

20 T8

08

08
08

08

08

08

08
08
/1

/
0
/

Time (Months) Source: State Bank of Viet Nam

7
 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Recent Brown Bag Lunches

How Can We Prepare for
CONFERENCE
Shrinking Populations?

Many countries in the world are experiencing the
demographic shift toward a shrinking population.
With rising longevity, declining fertility, and the
baby boomers retirement, societies are aging more
rapidly now than they have in the past. This
presents a significant economic challenge not only
for developed countries, but also for some emerging
economies, particularly those in East Asia.
Population aging has significant impacts on almost
every economic aspect of society. It reduces the
labor supply and national savings; raises demands
for health, medical, and care-giving services for
seniors; and can strain public finances. Because of
this, economic adjustments will likely be needed in
fields such as public finance and social security
systems, fiscal policy, financial market
development, and capital and labor mobility.
On 3 June 2008, ADBI held the Public
Finance/Social Security System and
Intergenerational Issues in De-population
Society International Conference, in collaboration
with the Policy Research Institute, Japans Ministry
of Finance, and Hitotsubashi University. The
conference focused on the impact of shrinking and
aging populations on economies pension systems
and related issues. The conference assessed the
issues faced by Asian countries such as Japan,
Peoples Republic of China, and Republic of Korea,
and European countries such as Germany and
Sweden. Resolving social security issues such as
pension and medical care, in which one generation
depends upon funds from the next, were agreed to
be the biggest challenge. The growing social
security burden is expected to affect economic
vitality and public finance due to its influence on
the labor supply and productivity. The participants,
who included economic experts, government
officials, and academics, discussed the policy
challenges of depopulation and exchanged views on
appropriate policy responses and suggestions for
regional cooperation in Asia and Europe.
The search for an optimum social security
system brought about many important policy
discussions on how the timing and implementation
of macroeconomic policy could adjust to structural
changes in society. A variety of issues were
discussed, including the participation of older
people and women in the labor force (in order to
offset the decline in the number of workers) as well
as immigration policy adjustments and investment
in technological innovation (in order to stimulate
labor productivity and provide medical care in the
future). Finally, there was a comment that current
global problems like the recent food crises and
environmental issues should be considered to
address depopulation in societies.

Recent Brown Bag Lunches

Brown Bag Lunch Seminars, JuneAugust 2008
Thanong Bidaya, visiting research
fellow and former finance minister
of Thailand, presented his paper,
Thailands Crisis, Recovery
and Restructuring: A Policy
Perspective, at an ADBI brown
bag lunch seminar. He pointed
out that financial restructuring
efforts alone were not sufficient
to recover economic growth but
that parallel efforts in economic
restructuring through appropriate
institutional changes were key
engines for balanced and
sustainable growth after the
1997 financial crisis.
Other presenters in brown bag
lunch seminars have covered
topics from trade and logistics to
regional financial integration
and cooperation (see Table).

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 A s i a n D e v e l o p m e n t
Simplification and Harmonization of
Rules of Origin
Senior trade officials from member countries of the Association of Southeast Asian Nations (ASEAN) and the South Asian
Association for Regional Cooperation as well as the Peoples Republic of China, Republic of Korea, and ASEAN Secretariat
participated in the workshop. They produced recommendations for the simplification and harmonization of preferential rules of
origin to facilitate cross-border trade.
Rules of origin (ROOs) are a set of rules used to
determine the nationality of a tradable good.
Multiple sets of ROOs have come to coexist as free
trade agreements (FTAs) have proliferated. These
ROOs have become an important trade issue,
mainly because the common practice of
manufacturers to outsource parts/components
from different countries makes it complicated to
determine the nationality of final products. This
presents difficulties for United Nations members,
which must report trade statistics including the
country of origin of imports and exports. More
importantly, customs authorities face difficulties in
determining what rate of customs duty to apply to
products.
The workshop on Simplification and
Harmonization of Rules of Origin aimed to draw
implications and recommendations for
simplification and harmonization of preferential
ROOs to facilitate cross-border trade. Senior trade
officials from member countries of the Association
of Southeast Asian Nations (ASEAN) and the
South Asian Association for Regional Cooperation
(SAARC) as well as the Peoples Republic of
China, Republic of Korea, and ASEAN Secretariat
participated in the workshop, which was opened by
ADBI Capacity Building and Training Director
Worapot Manupipatpong. The workshop was held
B a n k I n s t i t u t e
WORKSHOP
at ADBs Thailand Resident Mission in Bangkok
on 1821 March 2008 by ADBI in collaboration
with ASEAN/SAARC Secretariats, United Nations
Conference on Trade and Development
(UNCTAD), government of Japan, and ADBs
Office of Regional Economic Integration.
The participants reviewed the ROO policies of
major trading partners (European Union, Japan,
and United States) and examined the World Trade
Organization (WTO) draft of a product-specific
harmonized ROO that had been developed by the
World Customs Organization. They also examined
preferential ROOs such as the generalized system
of preferences and ROOs of the North American
Free Trade Agreement, ASEAN Free Trade Area,
and South Asia Free Trade Agreement.
Recommendations proposed include an early
adoption of the WTO harmonized ROO;
application of best practices of existing FTA ROOs
in new FTA negotiations; harmonization of
definitions of technical terms used in FTA ROOs;
use of the WTO draft harmonized ROO in new
FTA ROOs where possible; and full use of the
advance ruling system on a country of origin
determination by authorities.
View an executive summary of the workshop proceedings and
other materials at www.adbi.org/event/2503.roo.workshop/.
9
 A s i a n D e v e l o p m e n t
Infrastructure and Trade in Asia
A new book, Infrastructure and Trade in Asia,
edited by Douglas H. Brooks and Jayant Menon,
discusses important concepts relating to
infrastructure and trade, particularly the regional
perspective of rising trade, infrastructure
investment, and regional integration and
cooperation. The book contains nine chapters,
which explore aspects of the implementation of
trade-related infrastructure facilities, and their
impacts on poverty, trade, investment, and
macroeconomic balances.
Chapter 1 presents the books central argument:
that efforts to expand and enhance infrastructure
services will reduce the costs of doing business and
of international trade, helping to maximize growth
and the benefits of regional trade and investment
integration.
A framework for considering the role of
infrastructure in regional cooperation is presented
in Chapter 2. John Weiss employs a modified
formulation of the effective rate of protection to
quantify the empirical significance of broader trade
cost barriers. He finds that infrastructure
investments and interventions reduce trade costs
and hence stimulate closer trading linkages.
Factors affecting the time and money required
to move goods across borders under the scope of
trade facilitation are discussed in Chapter 3.
Philippa Dee et al. examine various methods used
to measure the economic effects of reforms aimed
at facilitating trade.
A framework for analyzing how soft
infrastructure can contribute to reducing trade costs
and strengthening regional cooperation in
developing Asia is provided in Chapter 4. Haider
Khan argues that the existence of and
improvements in soft infrastructure are negatively
correlated with trade costs.
Welcome, Japanese Representative Office
10
B a n k I n s t i t u t e
FEATURED PUBLICATION
A modified gravity model
is employed in Chapter 5 to
demonstrate that variations in
tariffs, transport costs, and
infrastructure facilities have a
significant influence on
regional trade flows in Asia.
Prabir De finds that higher
tariffs or transport costs and
poorer quality infrastructure
have negative impacts on trade.
The impacts of road improvement in the Lao
Peoples Democratic Republic are examined in
Chapter 6. The findings by Jayant Menon and
Peter Warr show that reducing transport costs
through rural road improvement generates
significant reductions in poverty incidence.
The impact of infrastructure development on
regional economic integration is discussed in
Chapter 7. Christopher Edmonds and Manabu
Fujimura examine the role of road infrastructure
for regional integration in the Greater Mekong
Subregion. Their findings suggest that improved
quality of road infrastructure in border areas has a
positive impact on trade flows between
neighboring countries.
The Millennium Development Goal water
target in Asia is the focus of Chapter 8. P.B. Anand
argues that per capita income, economic growth,
and the provision of water infrastructure are highly
correlated with achieving this water target.
Questions relating to financing infrastructure
development are addressed by Douglas H. Brooks
and Fan Zhai in Chapter 9. They find that
infrastructures effects on trade and economic
growth depend on the financing mode chosen and
the investing countrys initial conditions.
On 1 September 2008, ADBI welcomed a new neighbor
at its offices in Kasumigaseki Building: ADBs Japanese
Representative Office is now sharing the eighth floor.
ADBI looks forward to the enhanced synergy with
ADB headquarters expected from this move.
Japanese Representative Office Resident Director General
Kuniki Nakamori (seated, right) and (left to right) Staff
Consultant Akiko Mochizuki, Senior Admin. Asst. Keiko
Hamada, Asst. Admin. and External Relations Officer Keiko
Kawazu, and Liason Specialist Shunichi Hinata, pictured here
with ADB President Haruhiko Kuroda (seated, left) and Chief
Advisor to the President Shuichi Hosoda.
 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Selected Upcoming Events

ADB/ADBIs Flagship Study: Infrastructure and Regional Cooperation, 3rd Workshop on Book
Preparation (Beijing)
Selected ADB/ADBI staff and policymakers and experts from the academic community, think tanks, and the
2122 private sector will provide comments on the draft book chapters, which will be presented at the workshop. The
October chapter themes are the need for regional infrastructure, the benefits of regional infrastructure networks, enhancing
intra-regional trade and investment, financing regional infrastructure, and polices and institutions for effective
regional infrastructure.
Developing Asia Journalism Training and Awards (Tokyo)
1114 This training program will contribute to better governance through better monitoring and objective assessment by
November journalists of regional and national policies and initiatives as well as emerging economic and development trends.
Strengthening Public-Private Partnerships for Infrastructure in the Pacific Region (Brisbane, Australia)
1722 The third in a workshop series that has been initiated to improve the understanding of senior officials across the
November Asia and Pacific region, who are responsible for infrastructure development, of the benefits of PPPs, priority
actions to enable PPPs, and the design features of bankable PPP projects.
Study Finalization Workshop on ADB/ADBIs Flagship Study: Infrastructure and Regional Cooperation (Tokyo)
34
Chapters of the book, following the themes of the 3rd Workshop on Book Preparation, will be presented and
December
finalized based on comments from experts.
ADBI Annual ConferenceAsias Contribution to Global Economic Development and Stability (Tokyo)
5 December
The 11th Annual Conference will highlight research in development issues that fall under ADBIs priority themes.
Public-Private Partnerships in Infrastructure (PPPI) Days 2008 (Washington, DC)
1518
A two-day PPP conference preceded by a PPP capacity building event, and concluded with a forum for PPP
December
knowledge-sharing among public and private sector partners.
View all upcoming events at www.adbi.org/calendarofevents.

Recent Discussion Papers

Can Ethical Trade Certification Contribute to the Attainment of the Millennium

Development Goals? A Review of Organic and Fair-Trade Certification
Author: Sununtar Setboonsarng
The growth of ethical consumerism in developed how the conditions under organic
countries has led to increased imports of certification and fair-trade
environmentally and socially certified products certification contribute to the
produced by the poor in developing countries. Organic achievement of the MDG targets.
products and fair-trade products are among the rapidly Read Discussion Paper 115 at www.adbi.org/discussion-
growing ethical trade products. This paper assesses paper/2008/08/25/2675.organic.fairtrade.certification/.

The Impact of Terrorism Managing Prolonged Low

and Conflicts on Growth in
Asia, 19702004
Authors: Khusrav Gaibulloev,
Todd Sandler
This paper quantifies the impact of terrorism and
conflicts on income per capita growth in Asia for
19702004. Policy recommendations indicate the need
for rich Asian countries to assist their poorer neighbors
in coping with the negative growth consequences of
political violence. Failure to assist may result in region-
wide repercussions.
Read Discussion Paper 113 at www.adbi.org/discussion-
paper/2008/07/25/2665.terrorism.impact.growth.conflicts.
asia.1970.2004/.
Fertility: The Case of
Singapore
Authors: Mukul G. Asher,
Amarendu Nandy
This paper analyzes Singapores multi-pronged
approach to managing prolonged low fertility, which
has led to population aging, labor force shortages,
increasing elderly dependency ratios, and feminization
of the elderly population. The chosen policy priorities
have created a dilemma between ensuring Singapores
business competitiveness and meeting its residents
needs and expectations.
Read Discussion Paper 114 at www.adbi.org/discussion-
paper/2008/08/22/2673.managing.prolonged.low.fertility/.

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 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Recent Research Policy Briefs

Managing Capital Flows in Asia: Policy Issues Infrastructure and Asias Trade Costs
and Challenges Author: Douglas H. Brooks
Authors: Masahiro Kawai, Mario B. Lamberte

While capital inflows can provide emerging market Infrastructure has played a key role in Asias export-led
economies with invaluable benefits in pursuing rapid growth, but the details of that contribution are
economic development and growth, they can also pose poorly understood even though infrastructure accounts
serious policy challenges for macroeconomic for huge amounts of investment. This policy brief
management and financial sector supervision. This examines and, where possible, quantifies the role of
policy brief describes the patterns of capital flows in hard and soft infrastructure in reducing Asias trade
and their impact on emerging Asian economies and costs and thereby influencing trade flows and patterns.
discusses possible policy measures to manage surges in Read Research Policy Brief 27 at www.adbi.org/research-
capital inflows while remaining consistent with the policy-brief/2008/06/25/2598.infrastructure.asia.trade.costs/.
goals of macroeconomic and financial sector stability. It
suggests options for workable national policies and
regional policy cooperation, particularly in exchange
rate management.
Read Research Policy Brief 26 at www.adbi.org/
research-policy-brief/2008/06/25/2597.managing.capital.
flows.asia.policy.issues.challenges/.

A Strategy for Small- and Medium-Sized

Enterprise Development within a National
Innovation System: The Case of the Peoples
Republic of China
Authors: Tracy Yang, Jamus Jerome Lim, Toshiki Kanamori
The small- and medium-sized enterprise (SME) sector
can play a significant role in further reforms of the
Peoples Republic of Chinas national innovation
system, which, in turn, could spur continued growth.
This policy brief highlights how issues such as
innovation, research and development, and strategic
clustering influence the SME sector, and outlines
internal and external conditions that may affect the
further development of this sector.
Read Research Policy Brief 28 at www.adbi.org/research-
policy-brief/2008/09/03/2680.strategy.innovation.system.prc/.

ADBI News ADBI Online

Publisher: Mamoru Umemoto
ADBI News reports quarterly on the activities of the Asian
Development Bank Institute. The views expressed in this
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