FINANCIAL REFORMS IN EMERGING ECONOMIES WITH REFERENCE TO ASIAN COUNTRIES

April 13, 2023

Introduction

Developing countries also known as the emerging markets are fast becoming the driver of global growth.The diversification that emerging markets provide is they tend to perform differently than developed markets and have been successful at decoupling from the greater longer term woes of the mature economies. A modest growth pickup to about 6 percent in 2013 would result mostly from strengthening external demand, with accommodative monetary stances across the region.

April 13, 2023

To sustain economic growth over the medium term and make growth more inclusive, a diverse policy agenda will be required in different parts of Asia, ranging from economic rebalancing to strengthening the sources of private sector–led investment to reforms in goods,labor markets.The existing opportunities and challenges from rapid demographic change have also contributed to the growth factor of Asian economies.

April 13, 2023

Following are some important objectives of this paper :-

• The policy agenda for advanced economies—and the implications for Asian economies.

• The virtues and benefits of further economic cooperation within Asian economies.

• Importance of fiscal consolidation and sustaining growth in Asian economies.China

India

Malaysia

April 13, 2023

1.POLICY AGENDA IN ADVANCED ECONOMIES AND IMPLICATIONS FOR ASIAN COUNTRIES

• In the midst of global economy, where momentum continues to slow,the expected global growth of 3.3 percent in 2012 and 3.6 percent in 2013 is expected to slowdown,it is also spreading in regions that have previously performed well.

• This year, growth in emerging Asia fell to its lowest level since 2008—partly from domestic slowdowns in China and India, but also because of strong gusts from storms in the west.

April 13, 2023

2. INCREASED ECONOMIC COOPERATION WITHIN ASIAN COUNTRIES

Trade integration

Asia has already made great strides. Over the past decade, trade within Asia tripled, and regional trade among emerging Asia grew even faster.With Asian trade, many tributaries flow together as a single great river. A typical pattern is that Asian economies send intermediate goods to China, which assembles them into final goods for exports. In fact, intermediate goods now account for over 70 percent of all Asian exports.

Financial integration

More than 90 percent of ASEAN cross-border portfolio investment flows are with advanced economies outside Asia. Malaysia, for instance, is a big direct investor in Cambodia, Indonesia, Thailand, and Vietnam.Greater regional financial integration could open up a host of new benefits. It can boost domestic demand—partly by making it easier for small businesses in countries to gain access to credit.

April 13, 2023

3.IMPORTANCE OF FISCAL CONSOLIDATION AND SUSTAINING GROWTH IN ASIAN ECONOMIES

Country circumstances will also determine the appropriate pace of fiscal consolidation. Coordinated and collective action by asian policymakers will also help in particular, by pursuing ongoing initiatives to maintain and deeper strong regional trade integration.

Automatic stabilizers––that is, automatic tax revenue declines and spending increases that dampen the impact of the shock––should be the first line of defense.Calibrating the appropriate near-term support for growth without fanning inflationary and financial stability risks is the key near-term challenge for policymakers.

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DIRECTIONS FOR POLICY FRAMING

There is room to spend more on healthcare and education, which are at relatively low levels in Asia. There is room to cover more people under pension and unemployment insurance schemes—only 20 percent of the working-age population is covered in emerging Asia, as opposed to 60 percent in the OECD. There is room to raise minimum wages for the poor, which are relatively low in Asia.Introduction of minimum wage policy should be made compulsory for all emerging nations in Asia. And there is room to improve access to financial markets—right now, nearly 60 percent of the people in East Asia are excluded from the formal financial system.

April 13, 2023

Conclusion

There is an increasing impetus in different economies to establish an institutional framework to coordinate the work of different regulatory agencies and to provide oversight of the future.

This papers attempts to recommends setting up a financial sector oversight agency in emerging asian economies to redefine the objectives and avenues of financial development in light of recent events in major Asian emerging economies.

April 13, 2023

Thank You

Abhishek Pande

Faculty

Orange School of Business

April 13, 2023