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8541. Asia’s Push For Monetary Alternatives

Author:
Marcus Noland
Publication Date:
12-2022
Content Type:
Special Report
Institution:
East-West Center
Abstract:
For the last quarter century, Asia has been seeking greater autonomy within the existing international monetary system. While the region has had the resources to go its own way, intraregional rivalries and a reluctance to damage ties to the US and the International Monetary Fund have put a damper on regional initiatives. Now the ascendency of China offers a path toward greater regional autonomy in monetary affairs. Asia, led by China, has been playing a two-track strategy pushing for greater influence within the existing global institutions, while developing its own parallel institutions such as the Chiang Mai Initiative Multilateralization, the Belt and Road Initiative, and the Asian Infrastructure Investment Bank. Use of the Chinese renminbi will likely grow as a trade invoicing currency but expanded use of the renminbi as a reserve currency is more uncertain. It is possible that the dollar-centered international financial system could evolve into a multipolar system with multiple currencies playing key roles.
Topic:
Monetary Policy, Finance, Economy, and Investment
Political Geography:
China, South Asia, East Asia, Asia, and Southeast Asia

8542. The Indian Farmer Makes Her Voice Heard

Author:
Sandeep Kandikuppa and Pallavi Gupta
Publication Date:
12-2022
Content Type:
Special Report
Institution:
East-West Center
Abstract:
In August 2020, thousands of farmers, mostly from Punjab, Haryana, and western Uttar Pradesh, gathered on the outskirts of India’s national capital, New Delhi, to protest the passage of three controversial “farm laws” perceived by these farmers as threats to their livelihoods and well-being. Though the farm laws would affect only a small percentage of India’s farmers, over the next 16 months the protests attracted participation from across the country, cutting across class, caste, gender, and religious identities. While the proximate driver seemed to be the farmers’ fear of losing legal protections against a collapse in the market price of their produce, broader economic, ecological, and social factors helped trigger the movement. The protestors employed several strategies that made their movement successful enough in pushing back against a hugely popular government to bring about a repeal of the laws the farmers objected to.
Topic:
Agriculture, Economics, Women, and Protests
Political Geography:
South Asia and India

8543. Strengthening Japan-ROK Relations: The Prime Time to Rebuild Relations Through Young Parliamentary Diplomacy

Author:
Hideshi Futori
Publication Date:
11-2022
Content Type:
Special Report
Institution:
East-West Center
Abstract:
South Korean President Yoon Seok-yeol began his remarkable administration by emphasizing the values of freedom and democracy, and the triangular Japan-U.S.-ROK relationship. Contrasting the previous administration, which prioritized reconciliation with North Korea, President Yoon embraced positive messages on restoring Japan-ROK relations even before taking office. On August 15, the National Liberation Day of Korea, President Yoon described Japan as a “neighbor that joins forces against the challenges that threaten freedom.” Such a posture clearly distinguishes President Yoon’s approach from that of previous South Korean administrations. Truly, even after the Yoon Administration’s approval rating began declining, Japan-ROK relations were not used politically to alleviate the pressure. One of the best takeaways from my recent visit to South Korea was Foreign Minister Park Chun’s assurance to “persistently work from a strategic perspective to improve relations with Japan, a partner that shares the universal values of freedom, human rights, and the rule of law.” Heretofore, Japan has not been able to capitalize on the precious opportunities it has been afforded to mend ties with Korea. Instead, Japan continues to take a hardline approach toward South Korea and is unable to flexibly respond, instead prioritizing Japan’s self-image, as suggested by the export control regulations toward South Korea. Since 2019, the Japanese government has tightened control regulations on exports of semiconductor materials to South Korea in response to potential seizures of Japanese assets as reparations for forced labor claims related to Japan’s 1910-1945 colonial rule of the Korean Peninsula. I believe Japan should consider changing its policies toward South Korea as South Korea has proactively improved its policies in response to Japan’s request, nonetheless, the effects have faded. From the perspective of economic security, it is also necessary to diversify Japan’s supply chain and strengthen trilateral cooperation between Japan, the United States, and South Korea. Similar voices have been raised not only from South Korea but also by Japanese experts.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, and Parliament
Political Geography:
Japan, Asia, and South Korea

8544. After Hegemony: Japan’s role and dilemma in maintaining the rules-based order

Author:
Yu Inagaki
Publication Date:
11-2022
Content Type:
Special Report
Institution:
East-West Center
Abstract:
The phrase “rules-based order” has recently become a recurring theme in the Japan-US alliance . This is based on the recognition that the liberal international order (LIO)—which the United States built and maintained, and that Japan has significantly benefited from—is now being challenged. While the war in Ukraine has heightened the sense of crisis over global power dynamics, China has been considered the main threat to the LIO. The United States has identified China as not just a security threat but a “ most consequential strategic competitor and the pacing challenge ,” and Japan has come to view the current international environment from a larger perspective, international order. In fact, Japan has expected to play a leading role in maintaining the LIO as US international engagement weakened under the Trump administration. However, is it possible for Japan, a constrained middle power, to maintain the existing order in the face of a declining hegemon and rising challengers? This raises a classic question in international relations: What will happen to the international order after hegemony; and what can and will Japan, occupying a particular place and role in the international system, be able and willing to do regarding international order?
Topic:
International Relations, Foreign Policy, Politics, Hegemony, and International Order
Political Geography:
Japan, China, Asia, North America, and United States of America

8545. Taiwan Matters for America/America Matters for Taiwan

Author:
East-West Center
Publication Date:
09-2022
Content Type:
Special Report
Institution:
East-West Center
Abstract:
The inaugural edition of Taiwan Matters for America/America Matters for Taiwan, part of the Asia Matters for America initiative, maps the trade, investment, employment, business, diplomacy, security, education, tourism, and people-to-people connections between the United States and the Taiwan at the national, state, and local levels. This publication and the AsiaMattersforAmerica.org website are resources for understanding the robust and dynamic US-Indo-Pacific relationship.
Topic:
International Relations, Climate Change, Economics, Education, Environment, Politics, Science and Technology, Governance, Culture, Population, and Travel
Political Geography:
Taiwan and Asia

8546. New Opportunities for the United States-Kingdom of Thailand Alliance in the Indo-Pacific

Author:
Lance D. Jackson
Publication Date:
09-2022
Content Type:
Special Report
Institution:
East-West Center
Abstract:
In March 2022, the East-West Center in Washington (EWCW), in collaboration with the Royal Thai Embassy, Washington, DC, convened a two-day seminar in which experts from Thailand and the United States discussed issues and opportunities for the US-Thailand alliance. The workshop included a diverse array of discussants hailing from government, military, academic, think tank, and private sector backgrounds. This report, which adheres to the “Chatham House Rule” under which observations referred to in the report are not attributed to any individual participant, is a summary of the group discussions and the key themes from the seminar. The recent signing of the United States-Thailand Communique on Strategic Alliance and Partnership and a memorandum of understanding (MOU) focused on promoting supply chain resilience on July 10, 2022, highlight the pertinence of this report and the associated seminar. The topics detailed in this report aligned with many of the pressing issues addressed in the Communique and MOU, including expanding law enforcement cooperation, deepening cybersecurity collaboration, supporting resilient transportation corridors, advancing military modernization, and catalyzing Thailand’s bio-circular-green (BCG) economy. The report also covered topics and key themes from a series of jointly produced public webinars and an Asia Pacific Bulletin series of policy briefs on US-Thai affairs.
Topic:
International Relations, Climate Change, Economics, Education, Environment, Politics, Science and Technology, Governance, Population, Leadership, Public Health, and Travel
Political Geography:
Asia, North America, Thailand, Southeast Asia, United States of America, and Indo-Pacific

8547. The Cyclical Behaviour of Fiscal Policy During the Covid-19 Crisis

Author:
Philipp Heimberger
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses the cyclicality of fiscal policy (discretionary versus automatic) for 28 advanced economies over 1995-2021 by paying special attention to the Covid-19 crisis. We find evidence that discretionary fiscal policy during the Covid-19 crisis (2020-2021) was significantly more countercyclical than before – in particular in the Eurozone. We do not find comparable evidence for more counter-cyclicality during the financial crisis or Euro crisis, which lends support to the argument that discretionary fiscal policy responded especially forceful to stabilise the economy during the Covid-19 crisis. Furthermore, automatic fiscal stabilisers contributed significantly to counter-cyclical stabilisation, although their performance over 2020-2021 was more in line with the past than for discretionary fiscal policy. Overall, fiscal policy in non-Eurozone advanced countries is more countercyclical than in the Eurozone. However, the cyclicality varies markedly across countries. Our findings shed light on how the cyclical behaviour of fiscal policy varies across countries and time.
Topic:
Financial Crisis, Crisis Management, Fiscal Policy, COVID-19, and Euro
Political Geography:
Europe

8548. Determinants and Effects of Foreign Direct Investment in Austria: Spillovers to Novel Innovative Environmental Technologies

Author:
Mahdi Ghodsi and Branimir Jovanovic
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study investigates the determinants of FDI in Austria, as well as their spillovers to innovating technologies, productivity, and employment, using firm-level data, for the period 2008-2018. The findings point out that a decrease in the costs of trade increases investment in foreign-owned subsidiaries in Austria, and that FDI is pre-dominantly carried out in industries characterised by greater capital-intensity, higher wages, more agglomeration and regional concentration. Furthermore, FDI is higher in regions with a larger GDP and with a larger share of the population with upper secondary and post-secondary non-tertiary education. The study also finds that there are positive spillovers of FDI to the domestic economy, which are strongest and most positive for innovative activities in environmental technologies. In other words, FDI helps Austrian firms to become more innovative in major environmental technologies. Such innovative efforts are best supported at the firm-level by supporting the total assets and investment of domestic firms, and at the regional level by increasing the share of the population with higher levels of education and employing more R&D personnel. The active presence of innovative foreign MNEs that enjoy extensive technological capacities, high-skilled labour, experienced management, and large-scale resources are also conducive to innovative activities.
Topic:
Environment, Science and Technology, Foreign Direct Investment, Innovation, and Trade
Political Geography:
Europe and Austria

8549. Demography, Capital Accumulation and Growth

Author:
Robert Stehrer and Maryna Tverdostup
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Europe will be challenged by demographic changes over the next few decades, even under favourable assumptions about fertility and migration, but the economic effects are not yet fully understood. This paper studies the effects of population ageing on economic growth, capital deepening and robotisation in 27 European Union (EU) labour markets. First, we econometrically assess the effects of ageing and potential labour market shortages on growth. Second, we test the hypothesis of whether ageing leads to faster adoption of new technologies. We distinguish between various capital asset types, including non-ICT and ICT capital, tangible and intangible capital and the adoption of robots. The analysis is based on Eurostat, the European Labour Force Survey (EU-LFS) and International Federation of Robotics (IFR) data. Results indicate that ageing and demographic changes might contribute to secular stagnation, which decelerates the adoption of new technologies.
Topic:
Science and Technology, European Union, Economic Growth, Macroeconomics, Aging, Labor Market, and Capital Accumulation
Political Geography:
Europe

8550. Different Choices, Divergent Paths: Poland and Ukraine

Author:
Thorvaldur Gylfason, Eduard Hochreiter, and Tadeusz Kowalski
Publication Date:
12-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We compare the economic growth trajectories of Poland and Ukraine since 1990 to try to understand the extent to which the observed growth differentials can be traced to increased efficiency in the use of capital and other factors (intensive growth), rather than to simple accumulation of capital (extensive growth). We stress the role of qualitative factors such as education, governance and institutions. We ask whether the EU perspective and NATO membership played a role. We discuss the closely related histories of the two countries and note the stark differences between them, including their different approaches to the EU vs Russia, full vs incomplete transition to a market economy, and democracy vs anocracy, as well as different initial conditions. We compare key determinants of growth and growth trajectories, using economic as well as social indicators, and trying to disentangle efficiency and accumulation and combine path dependence and the role and scope of creative destruction. While Poland had the shortest and mildest transformation recession among CEE countries, Ukraine has been stagnant, or in decline, since 1990. The statistics we report and the stories we tell suggest that both countries have a complex relationship with democracy and that the nearly threefold difference in per capita GDP at PPP in 2021 in Poland’s favour, with the ratio of investment to GDP similar in both countries, can most plausibly be traced to: (a) Poland’s more extensive and diversified exports, and fewer restrictions on trade, in addition to more comprehensive and quicker restructuring of the national economy inspired by the EU perspective; (b) Poland’s more extensive and better-quality education; (c) Poland’s greater democracy and longer experience of democracy, lower levels of corruption, better governance, and freer press; (d) Poland’s smaller agricultural sector and greater emphasis on manufacturing; and (e) Poland’s lower inflation and higher level of financial development. Furthermore, Poland built market-friendly institutions to EU specifications and joined NATO. Against all this, Ukraine had more economic equality and lower unemployment as well as, from the early 1990s, a lower initial level of income per person, but was hampered by political divisions, path-dependent corruption and poor governance. During the global Covid-19 pandemic, Ukraine apparently suffered fewer deaths than Poland, despite fewer vaccinations.
Topic:
Economics, Education, Governance, Reform, European Union, Economic Growth, Inflation, Exports, Transition, and Labor Market
Political Geography:
Europe, Ukraine, and Poland