2014 Annual Competitiveness Ranking And Simulation Study For Asean-10 And Development Strategies To Enhance Asia Economic Connectivity

Khee Giap Tan, Sangiita Wei Cher Yoong;Sasidaran Gopalan;Le Phuong Anh Nguyen;

• Publisher: WSPC
• Year: 2016
• ISBN:
  9789813109728
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

With the launch of the ASEAN Economic Community in December 2015, ASEAN is at a crossroads once again. Having braved through various crises since its establishment in 1967, how can ASEAN leverage on increasing integration to maintain its growth momentu

Chapter 1

ACI PROPOSED MASTER PLAN FOR ASIA ECONOMIC CONNECTIVITY VISION 2030 (AECV2030)

1.1Introductory Notes

Both the Association of Southeast Asian Nations (ASEAN) and China, as well documented within the general story of Asia, are heralded as successful models of economic growth and development in their own right.¹ India is emerging and potentially progressing as a new regional engine of growth. Lessons can be learned from its history and globalisation as facilitated by the increasingly ubiquitous information communication technology (ICT) and evolving geo-economics and geopolitics. While levels of economic competitiveness as well as national idiosyncrasies differ in ASEAN, China and India, their out-ward-looking approach to international trade, foreign direct investment (FDI) and migration of multinational corporations (MNCs) is key to such adaptation with alacrity. The leaps they made have lifted millions out of poverty, contributed to the increase in the global middle-income class and created new economic dynamics with far-reaching ramifications. With populous Asia regions, including Northeast Asia, South Asia and Southeast Asia, hosting some two-thirds of global humanity, there is a pressing need for a more balanced and sustainable economic growth and development, commensurate with environmental sustainability.

With rising China and emerging India rendering their strong presence in global economics and finance, Asia is at a crossroads again. All Asian countries have both national goals and ambitions to fulfil, coupled with amicable competition with each other, based upon the principles of collaboration, cultivation of trust and stability, and a pro-active form of trade diplomacy. The Asia Competitiveness Institute (ACI) at the Lee Kuan Yew School of Public Policy (LKYSPP), National University of Singapore (NUS), resonates with this evolving trend through many pioneering studies on competitiveness of ASEAN, Greater China, India and Indonesia,² including a process in envisioning a master plan for Asia, the Asia Economic Connectivity Vision 2030 (AECV2030) with Asian aspirations. This ACI study aims to offer astute workable policies and strategies for regional economic cooperation through five broad proposals, facilitated by the 21^st century globalisation under a collective mindset. The Asian story via the AECV2030, with ASEAN and China initiating the journey, can go from strength to strength to enact a defining sequel for Asia as a whole in the new millennium.

A key priority of the ACI is evidence-based research using quantitative methodologies for policy-evaluation and formulation. For ASEAN, China and India in the AECV2030, the ACI has a database drilled down to the granularity of sub-national statistics, supplemented and complemented by surveys and consultative meetings with all stakeholders from government, private sector to non-governmental organisations (NGOs). Moreover, all literature and information, including formal academic publications and informal information such as media reports, are built up into an ACI Catalogue as a continuing research into regional integration.³ The case for the AECV2030 in this chapter focuses on aligning national positioning for best interests to seek sectoral engines for growth in response to global and local trends through more in-depth studies, as the array of opportunities offered for selection is infinite.

Various combinations and permutations for national as well as sub-regional involvement across ASEAN and China in the first instance will involve India. Be it the ASEAN way⁴ with its ASEAN-X principle,⁵ maritime ASEAN and/or mainland ASEAN, having ASEAN-10 at the centre of the Asia Pacific provides sufficient options and flexibility, which can be replicated in the AECV2030 with an equally diverse China.⁶ It is paramount to accommodate different stages of economic growth and development to match national and regional aspirations. New modalities including numerous forms of public-private partnerships (PPPs), growth clusters in economic corridors and NGOs will enhance the menu of options, with emphasis on sustainable development based on competiveness. It is a sea change, literally and figuratively.

President Xi proposed the 21^st Century Maritime Silk Road initiative in his speech to the Indonesian Parliament on 2^nd October 2013, which Premier Li Keqiang reiterated at the 16^th ASEAN China Summit in Brunei on 9^th October 2013.⁷ China’s version of the 21^st Century Maritime Silk Road, with its emphasis on connectivity with Southeast Asia, South Asia and Africa, is a system of multi-modal and multi-track connections.⁸ With a diverse spectrum of stakeholders and owners in projects to galvanise the ACI’s five broad proposals, the AECV2030 is deemed best driven by ASEAN leadership, with ASEAN track record for open, consultative and consensual decision-making. A pragmatic collaborative model, used to articulate each party’s competitiveness and interests comprehensively and feasibly, could then tap into other ACI studies’ rich in-house database and extensive network of research think tanks, government departments and private sector partners, which include civil societies.

China’s proposed Maritime Silk Road, followed by its elaborated Belt & Road (B&R) that is to be facilitated by the Asian Infrastructure Investment Bank (AIIB), remains part of the ACI’s on-going research. More research studies are in the pipeline to analyse all perspectives from ASEAN to Greater China, South Asia, continuing on to Central Asia and the Middle East. Each region has its nuances to grasp. For South Asia, the emphasis is the way India on looks at the B&R. For the Middle East, the importance of Iran and its collaboration with the Gulf Cooperation Council (GCC) is clear. With the choke point in the Strait of Hormuz, the alternative Fujairah Port in the United Arab Emirates (UAE), utilised for direct access into Indian Ocean, is already operational; unsurprisingly, there is also another proposal to build a tunnel below the Strait of Hormuz. A further extension of the Chinese rail system in Tibet to be linked to that of India through the Nathu La pass can also greatly improve access to the sea from Qinghai and Tibet via Calcutta. It is all a matter of how cross-border checks and documentation of various authorities along the route for security, immigration and customs among others can flow smoothly.

1.2An Overview on Related Background

As an overview related to history, economic, trade and investment background, Section 1.2 begins by outlining the macroeconomic framework leading on to the development of the AECV2030, firstly with a brief historical overview of trade patterns as a useful preamble. Subsequently, the section elaborates on the tracing of the historical flying geese model of phased economic development. The contextual experiences of the East Asian development model have established a new paradigm of Asian trade. Given the thesis of this chapter is grounded on an ASEAN-centric approach to the AECV2030, we reported on the empirical findings of the structural vector autoregressive (SVAR) model for eight ASEAN economies. The SVAR model provides some insights from another ACI study on trade flows for the World Bank. Finally, we worked through the on-going economic restructuring of China under the era of New Normal, which then led to window of opportunities and challenges for the AECV2030.

Section 1.3 discusses the AECV2030 with Asian aspirations in greater detail. Section 1.4 is on the ACI’s mission and commitment to the AECV2030, with tentative proposed routes for the vision discussed in Section 1.5. These proposed routes, together with the new initiatives, set the agenda for five broad ACI proposals with strategic thrusts in Section 1.6. These five ACI proposals are, logically and sequentially, based on different stages of economic growth and development in synchrony with varying appetites in competitiveness. They remain a work-in-progress as the ACI plans additional field trips and events via an open consultative approach, especially to identify projects as already announced. These include those related to the new visions under President Joko Widodo and Prime Minister Narendra Modi tutelage. A consensual approach is imperative while the ACI aims to make the AECV2030 with the rising China a defining point of discussion and dialogues, living up to its name of connectivity.

Section 1.7 shows the tangible results from the projection of selected target performance indicators for 2030, which serve to monitor and track the progress in materialising the AECV2030 according to the projected outcomes. All are sensitive to socio-economic-environmental considerations of the various constituents and the region as a whole. The Asian way is to be respected,⁹ as emphasised in Section 1.8 as concluding remarks. The most important policy implication is for the AECV2030 to be ASEAN-centric. Apart from the political economy aspects of initiatives from China, involving Asia and even beyond as in the B&R, the role of ASEAN at least for such connectivity as complementing and supplementing ASEAN’s own plans makes ASEAN a natural partner in general. In particular, the AECV2030 twins well with its Master Plan on ASEAN Connectivity (MPAC) in 2010.¹⁰

1.2.1Patterns of Asian Trade

Trade as an engine of growth in economic literature is well-documented and proven, from ancient times via traditional conduits by land, to technological advances of sea-borne and air-borne trade, to ICT-facilitated electronic-trade and variants as e-commerce. Both geographical masses and space allow tradable to expand as non-tradeable to move across borders. Patterns of trade involve both composition and direction of trade, which are well researched in the literature. How trade patterns follow from theories...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• About ACI
• Foreword
• Preface
• Acknowledgements
• About the Authors
• List of Abbreviations
• List of Tables and Figures
• Chapter 1 ACI Proposed Master Plan for Asia
• Chapter 2 2014 Update on Annual Competitiveness Analysis for ASEAN-10
• Chapter 3 Examining the Causal Relationship between Financial Depth and Economic Growth in Cambodia, Laos and Vietnam
• Chapter 4 Understanding the Causal Factors Driving Economic Growth in Singapore and Malaysia 247
• Chapter 5 Singapore’s Economic Development, 1965−2020: Review, Reflection and Perspective
• Chapter 6 Concluding Remarks and Future Research Agenda
• Appendix 1: Competitiveness Analysis of ASEAN-10 Economies, 2000−2011 — List of
• Appendix 2: Competitiveness Analysis — The Algorithm