“Developing Asia´s strong economic growth is in large part due to increased economic and financial ties within the region but greater integration can bring contagion and other risks and we must address those threats through closer cooperation,” an ADB statement quotes Iwan J Azis, head of ADB´s Office of Regional Economic Integration, as saying. [break]“Ultimately, integration should improve everyone´s standard of living in the region.”
Close integration speeds up the transmission of a crisis in one country to another as has been seen recently in Europe. In addition, greater integration may increase the income inequalities within countries even as it reduces the inequalities between countries.
With integration rising and set to continue in Asia, the region´s governments need to cooperate more to offset these risks, the report says.
To counter the threat of economic or financial contagion, Asia must strengthen safety nets like the swap arrangements set up in the ASEAN+3 (Association of Southeast Asian Nations and China, Japan and South Korea) and South Asia. These safety nets need to be big and flexible enough to deal with future crises that may be transmitted in different ways to previous crises, and they need to be backed by an effective surveillance mechanism, the report says.
To ensure that all those countries benefit from closer integration, the region needs to build more transport links to increase access to cross-border markets since the region´s infrastructure is now woefully inadequate.
Allowing workers to move more freely would also help reduce income disparities. Asia also needs to improve its policy, regulatory and institutional frameworks -- such as complicated trade procedures or cumbersome customs clearance -- to boost intra-regional activity, the report says.
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