Towards A Common Future

This book includes a good number of burning issues relating to the sustainable development of countries like China, India, Indonesia, the Philippines, Malaysia, Singapore, Taiwan Province of China and Australia. Not only that, it will include some of the important organizations, institutions and cultural issues for economic cooperation among the Asia Pacific Region countries and the world.

China is approaching to a new phase of economic development, termed as the 'new normal', which is characterized by slower but quality economic growth. This chapter aims to interpret China’s ‘new normal’ from the New Institutional Economics and Marxian viewpoint and also reviews the factors inducing China’s successful economic transformation to a new stage. The former school of thought is primarily concerned with the ‘supply-side’ driver of increasing economic output and efficiency and requires a free and open market for ideas to sustain China’s economic growth or advance itself into a global centre of technological innovation or scientific discovery. The latter school of thought, however, shares the Marxian concern of the 'demand-side' driver of increasing economic output and calls for an egalitarian pattern of income distribution for sustaining economic growth in the future. In light of these views, the chapter evaluates how far China has prepared itself for a soft landing to the 'new normal'.

This chapter contains a theoretical study of opening up, followed by empirical discussions of the unbalanced development of the Chinese regions. Applying an inframarginal methodology, we build a theoretical model based on the concepts of comparative advantage and transaction efficiency to explain opening up and inequality in developing economies. Our model and accompanying empirical evidence imply that an increase in domestic transaction efficiency reduces inequality within a developing economy while an increase in international transaction efficiency enhances the overall welfare level in a developing economy. These and other results have important implications for China in its policy making.

This chapter describes the main features of the “One Belt, One Road” Initiative, which is also called the “Belt and Road (B&R)” Initiative, and analyses possible economic impacts of the Initiative on various countries. The Initiative, suggested by China at the end of 2013, includes several routes on land and sea that connect together many cities in China, Central and South Asia, the Middle East, and Europe. These routes not only facilitate the transport of commodities and people between cities, but also promote the development of the cities along the routes.

This chapter investigates the status of financial integration among the Asian economies by analysing several measures of financial integration. Moreover, it provides an in-depth analysis of the status of sub-regional integration within Asia, viz. economic freedom, capital control, foreign direct, portfolio investment etc. It is observed that the East and Southeast Asian integration is far ahead of that of South Asia. Apart from the already leading role of Japan, India is likely to play a significant role in the entire economic integration at the regional level since India has a unique role to play in the integration of South Asia.

Micro enterprises have remained an important part of the Indian economy from ancient times. Uniquely innovated through ‘Craft Technology’, some products like ‘muslin’ enjoyed pride of place in medieval India and attained fame in foreign countries until the emergence of factory-made cloth. Even today, these enterprises are at the helm of harnessing innovations for commercial purposes. However, they need technological synergies through collaborations with universities, R&D institutions and incubators. This chapter aim to explore the business models and innovative practices of micro enterprises in the Indian hinterland. It also attempts to standardize those business models, their innovations and practices, with possible synergies through collaborations that may be replicated in other developing countries.

All over the world economic activities are being increasingly organized by corporate entities, as governments are withdrawing from economic and welfare activities. Enterprises have become dominant players in all countries despite having variations in their institutional governance systems. The economic resources and technology owned and managed by these enterprises are massive. It is therefore expected that these enterprises should be encouraged and motivated to help mitigate the social and environmental problems of poverty, illiteracy, climate change, etc. By combining the creation of economic value and serving social needs, “shared value” is created. In comparison to corporate social responsibility programmes, shared values, as a concept, become an integral part of the successful corporate strategies of a large number of enterprises. This chapter aims to examine the role of Indian enterprises in creating shared values and meeting social responsibility in India. The chapter uses a content analysis technique to collect information from the latest annual reports, sustainability reports and business responsibility reports of selected companies listed on the Bombay Stock Exchange.

The chapter gives an overview of the recent state of the Japanese economy, and a snapshot of its “lost decades”: the fall in GDP growth and high unemployment coupled with a two-decade-long deflationary phase. The demographic factors also seem to be unfavourable, that have provided no real hope for a “demand driven recovery”. On the policy front, the chapter sheds light on the initiatives taken to rebuild and accommodate the macroeconomic shocks, and how effective those steps are. Though India, as an emerging economy, and Japan, as a developed one, are hardly comparable, the chapter attempts to overlay select Indian economic indicators on the Japanese equivalents. It shows that it was during the 1990s when India started to take off that the worst economic downturn in Japan’s history occurred with no recovery until very recently.

The mottainai ethics were originally based on one’s modesty and subjective ideals, respecting the virtues of thrift, moderation and self-realization. This chapter aims to shed light on a dimension of the cultural or perception gap between the Japanese and the Indians, mainly with reference to the concept of mottainai in the Japanese language. This research uses an analytic induction framework of qualitative and narrative type analysis on a strategy of collecting data through relatively unstructured interviews with the Japanese expatriates who manage joint-ventures in India. We find those Japanese expatriates feel that Indian business people and workers are less concerned with training and enhancing themselves to achieve a better quality of life. The Japanese investors perceive wastefulness or opportunity loss in business in India, which may create a potential, mutual mind barrier to entry.

Recent developments between China and Japan are seemingly shaping a collision course and creating tensions in their bilateral economic relations. Economically, both countries are important to each other and any adverse event is likely to have a bigger long-term impact on their economies. This is because of the depth and width of the economic and financial engagement developed between them. On the one hand, China is now Japan’s biggest trading partner. Japan, on the other hand, has a substantial amount of investment in China. All the major Japanese companies are now deeply engaged in production in China and it is a strategic spot in their international supply chain. Similarly, short-term Japanese portfolio investment is playing an important role in the Chinese stock markets. Beyond these economic and financial linkages, Japan, in recent years, has been seeing an increasing number of open-wallet Chinese tourists to the delight of its sluggish economy. This chapter examines the possible economic impact of any disruption of this interconnection between China and Japan.

Asia’s fourth-largest economy, South Korea, has been facing a unique situation: to create an economic space between Japan and China. The situation has become harder due to China’s enhanced technological progress and rapid catch-up growth, which poses a competitive challenge to major Korean exporting industries. Japan, on the other hand, also has price competitiveness stemming from the lower yen and its technological superiority. The study finds that the recent ‘nut in a new nutcracker’ situation has posed totally different predicaments to the Korean economy from the previous one in the late 1990s. In the past, Korea has carried out structural reform and technological innovation to overcome its current predicaments and to avoid secular stagnation. As Korea’s manufacturing industry has been developed sufficiently, it should find opportunities in service sectors and higher value-added industries. It should also reform to enhance supply-side efficiency since structural problems—chaebol, the educational system and dependence on old industries—hamper gains and growth.

In the presence of more than one scenario on the interaction of growth, environmental regulation and environmental quality, it is unclear what shape is assumed by the relation between environmental degradation and income per capita (that is, the environmental Kuznets curve). Evidence based on Australian data is presented, suggesting that the environmental Kuznets curve EKC is valid for carbon dioxide, in the sense that an inverted U-shaped curve is observed for several measures of CO₂ emissions. The results, however, cannot be generalized because the relation between environmental degradation and income per capita is time-varying and country-specific. It also depends on how environmental degradation and income per capita are measured.

With the latest global crisis unfolding in 2008 with the revelations of financial and ethical wrongdoings, academic and practical discourse surrounding the corruption phenomenon and integrity-building policies have been taken to new heights. The backdrop is actively redefined state-society relations: modern demands upon the institutions include responsiveness and accountability. Country-specific experience when dealing with governance issues might provide valuable insights. Taiwan possesses vast experience with integrity-building and anti-corruption policies despite its challenging political history. The unique five-branch government system has proved instrumental. The Control Yuan (CY) is a constitutionally defined supervisory branch and the institutional embodiment of a centuries-old respected tradition of incorruptible censorate. It provides a channel for citizens’ grievances and non-judicial ‘triage’ in cases of suspected malfeasance. Corruption is a media impactful phenomenon and a wrongfully implicated party may deal with the negative fallout for years; hence, due process and independence of partisan divisions are of paramount importance.

This chapter raises the current issues in Indonesia that link the instability of exchange rates to the deindustrialization phenomenon. This association has not been studied directly in previous studies. This chapter finds that these problems are interrelated and cannot be separated from each other. Deindustrialization problems in Indonesia, which are explained by the decline in manufacturing exports, decline in manufacturing labour productivity, the trade balance deficit and investment displacement from the tradable sector (manufacturing), directly and indirectly affect the exchange rate. The implication of this chapter is that government should pay attention to the Indonesian manufacturing sector in solving the exchange rate problem.

East Asia has become a lucrative market and an important destination as well as a source of direct investment. At the same time, Southeast Asia has seen greater stabilization and growth. On this Asian canvas, the Trans-Pacific Partnership could have become a trade and investment platform, bringing a power balance in East and Southeast Asia. This chapter discusses the notion of development, the struggles of workers, the spread of consumerism and the challenges faced in the near future in the Asia-Pacific Region. In discussing the expansion of regionalization from Eastern to Western ends of the region, the chapter examines the outcomes of the processes that have been imposed upon the culture and people of the region. Some of these processes include the struggle of workers from a global perspective, the spread of consumption in both popular culture and Asian pop culture, and the dynamics of globalization in incorporating the region into the global system.

The global financial crisis provides a number of reasons for Asia to develop infrastructure for regional connectivity, to achieve sustainable economic growth, strengthen competitiveness, create opportunities for business and reduce overdependence on the financial resources of the West. The Asian Development Bank (ADB) estimates infrastructure investment needs in the decade between 2010 and 2020 to be far more than what the World Bank or the ADB are able to finance. In this context, this chapter explores the background behind Asia creating the Asian Infrastructure Investment Bank (AIIB) and examines the infrastructure investment milieu in the Asia-Pacific Region. It puts forth the framework, purpose and functions of the AIIB along with the challenges faced with respect to the establishment of the bank in the existing global multilateral financial framework. The AIIB provides an opportunity for Asian economies that have long been under-represented in the existing global multilateral financial frameworks, to look to the bank to meet their infrastructure investment needs, provided the lending terms are competitive.

For a common future, the countries in the Asia-Pacific Region (APR) have a number of convergent issues that may very well be manifested by the term ‘sustainable development in peace and cooperation’, which can bring them together on a single platform. But we cannot underestimate the adverse potential of the divergent issues existing in the region. The difference in positions taken on those can derail any drive for unity, and even on economic orientation, in the region. However, both of them may ultimately influence the destination of the region including how effectively the countries in the APR can create a common future for them. Thus, any move towards a common future of sustainable development in the APR may not be easy.