Asian Economic Policy Review

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Latest documents

• Comment on “Fiscal Sustainability in Indonesia: Policies and Progress”
• Comment on “Design of a CBDC in a Highly Dollarized Emerging Market Economy: The Case of Cambodia”
• ASEAN Economic Integration: Addressing Challenges and Embracing Opportunities

  This paper examines the macroeconomic and development policies to spur economic integration and growth in the Association of Southeast Asian Nations (ASEAN). It reviews how economic transformation and integration have fueled growth and job creation in the region. ASEAN's increased participation in global and regional value chains, with the People's Republic of China (PRC) as a regional hub, laid the solid foundation of regional production networks. However, with the changing role of the PRC in global value chains, the region needs to renew policy initiatives to address the development challenges and seize new growth opportunities with its single market goals. The analysis suggests the region requires strategic plans for infrastructure development, digitalization, and greater integration reinforced by the removal of trade barriers, increased labor mobility, and foreign direct investment mobilization. The region's successful future also depends on cooperative policy efforts around developing e‐government and digital value chains, strengthening micro‐, small‐ and medium‐sized enterprises and startups, and building smart cities.

• Comment on “Flexible Inflation Targeting and Macroeconomic Performance: Evidence from ASEAN”
• Comment on “Fiscal Sustainability in Indonesia: Policies and Progress”
• Comment on “Challenges in Searching for Vietnam's Growth Drivers Through 2030”
• Flexible Inflation Targeting and Macroeconomic Performance: Evidence from ASEAN

  The experience of flexible inflation targeting in ASEAN‐5 has been favorable. The present paper shows improvements in macroeconomic outcomes consistent with the framework's mandated objectives: lower levels and volatility of inflation, more stable economic growth, and a well‐functioning financial system. Using difference‐in‐difference approaches, we find that, for ASEAN‐5 and developing countries, the inflation targeting framework mainly benefits adopters in terms of reducing inflation levels. In response to the challenges emanating from capital flow volatility and domestic financial imbalances, over the past 20 years, ASEAN‐5 policy frameworks have continuously evolved to incorporate various policy tools. These include, among others, foreign exchange intervention, macroprudential policy, and capital flow measures. A multitude of policy tools is arguably one of the key factors contributing to sound macroeconomic outcomes during the post‐targeting periods.

• Issue Information
• Challenges in Searching for Vietnam's Growth Drivers Through 2030

  Vietnam's long‐term economic growth comparisons with ASEAN nations have been striking since its 1986's economic reforms. Such key factors as economic liberalization, a young population and low‐cost labor, knowledge diffusion, and the manufacturing sector have driven Vietnam's growth. Until 2023, Vietnam has the potential to capitalize on several favorable circumstances, including the diversion of trade and investment from China, the growth of the middle class, and the global digital transformation. Nevertheless, Vietnam's economic growth will confront various obstacles and a declining trajectory that predates the COVID pandemic. To circumvent the risk of falling into the middle‐income trap, this paper proposes “active” economic integration, labor productivity, innovation and research and development, the services sector, and green growth as new growth drivers for Vietnam till 2030. Considering the many policy ideas put forth by the Vietnamese government and the World Bank, this paper presents several distinct recommendations on institution reform and human capital accumulation.

• Comment on “Flexible Inflation Targeting and Macroeconomic Performance: Evidence from ASEAN”

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