Asia Rising: Growth and Resilience in an Uncertain Global Economy

Abstract

Asia Rising: Growth and Resilience in an Uncertain Global Economy. Edited by Hal Hill and Maria Socorro Gochoco-Bautista. Cheltenham, UK: Edward Elgar and Asian Development Bank, 2013. Pp. xvi + 424. Asia Rising takes stock of Asian economies in the aftermath of the 2008-09 Global Financial Crisis (GFC) and evaluates challenges and opportunities for continued growth. It opens with an editorial overview; continues with thematic chapters on a variety of topics linked by a common concern with investment; and concludes with country studies of Malaysia, Indonesia, India, China, Thailand and the Philippines. The seventeen contributing authors are economists either in regional academic institutions or at the Manila-based Asian Development Bank. The book's central concern is, in the editors' words, developing middle-income Asian countries maintain their economic dynamism and navigate through deep economic crises against the backdrop of continuing global uncertainty and instability (p. 3). The focus is on macroeconomic dimensions, notably in managing the inevitable slowdown from earlier decades of rapid growth and dealing with the effects of external economic challenges, like the GFC, that threaten to push domestic savings, investment and financial development off their desired paths. The primary contribution is to help us understand better how investment, the wellspring of economic growth, is affected by global shocks in a set of economies with imperfect markets, policies and institutions. Authors of the thematic chapters deploy a wide variety of methods and data. Chapter 2 by Emmanuel De Dios and Geoffrey Ducanes, entitled Institutions and Governance, deploys a linear regression model with a 164-country data set to investigate the influence of institutions on change in investment/GDP ratios from 1991-95 until 2002-06. They conclude that and institutional factors do exert an influence on investment in Asia and that they form part of the explanation of the observed investment behaviour in the region. Similarly, Chapter 3, by Douglas Brooks and Eugenia Go, sets up a Solow-type aggregate growth model and then proposes a large array of infrastructure investment proxies to be included as additional explanatory variables, in estimates based on a panel of 123 countries over the period 1971-2005. They report (among other things) that investments in telecomms, road and air transport systems and energy consumption all support economic growth. However, this chapter reports neither data nor econometric results, so it is impossible to evaluate the authors' claims. More generally, the use of global data sets and generic models in both these chapters makes it a priori difficult to identify phenomena specific to developing Asia. In other thematic chapters, Kyoji Fukao (Chapter 4) sets up a dynamic macro growth model and uses it to evaluate the likely impacts of an exogenous drop in productivity growth on capital accumulation and other indicators of economic structure and performance. Charles Horioka and Akiko Terada-Hagiwara (Chapter 5) and Shin-ichi Fukuda (Chapter 6) present careful examinations of Asian (rather than global) cross-country data to explore, respectively, the role of demographic trends as drivers of household savings rates, and the contribution of financial development to investment growth. Diane Desierto (Chapter 7) presents a textual analysis of ASEAN investment treaties. The six country chapters document responses to the 1997-98 Asian Financial Crisis (AFC) and GFC, taking a more narrative approach. Chapters on China (by Siow Yue Chia) and Thailand (Bhanupong Nhidiprabha) are both very nice examples of near-term macroeconomic history. As with the earlier chapters, a concern with investment (or, in some cases, the lack of it) is common to nearly all the country chapters. Several make the point that domestic investment rates were quick to decline, yet slow to recover during the 2000s for reasons that went well beyond the AFC itself to deeper weaknesses, notably the lack of complementary infrastructure or governance institutions. …