AIM chief calls for further regional economic, financial interdependence

Regional economic and financial interdependence is inevitable, and poverty alleviation in the region is a key factor, according to an influential educator in ther region.

Dr. Roberto F. de Ocampo, president of the Asian Institute of Management (AIM), speaking before the 6th Regional Meeting of the Trilateral Commission Pacific Asia Group in Beijing, China recently, also zoomed in on the important role of the region’s private sector.

The trilateral commission is a major international think-tank founded in 1973 for the purpose of drawing together the highest-level group to collectively examine the common problems facing the three regions of the European Union, North America, and Pacific Asia.

The Pacific Asia Group of the commission was formed in 2000, retaining Japan and welcoming Korea, the ASEAN five, Australia, and New Zealand. China, including Hong Kong and Taiwan, continues to participate in the meetings on an individual basis. Mexico joined the North American Group in the same year.

Meanwhile, former Finance Secretary de Ocampo, one of the first Asean members of the commission, discussed ‘Managing Regional Economic Interdependence’ and focused on three concerns.

First, that economic interdependence is an unavoidable by-product of globalization; second, that the private sector had begun to play an increasingly important role in economic growth and stability; and third, that rapid technological advancement had permanently altered the mechanisms of international finance that, if not well managed, could result in less desirable outcomes.

Setting the Asian financial crisis as a backdrop, the AIM president cautioned that there are still issues that need to be addressed to ensure effective interdependence.

"There is a need to reduce tensions between countries with less than friendly relationships," he added.

De Ocampo explained that disparities across incomes and governance might make interdependence a bit longer than it would have been otherwise. Efforts must be expended to narrow the gap between these disparities. He also recognized that fighting poverty is a formidable challenge the world, especially Asia, faces.

"If integration is seen to least benefit, or even hurt the poor, then regional integration will remain unpopular with some sectors," said de Ocampo. "Thus, to make regional economic interdependence more acceptable to the poor, poverty must be alleviated," he added. Resolving these issues, de Ocampo concludes, are crucial to an effective economic interdependence.

A similar call was made by Asian Development Bank (ADB) president Haruhiko Kuroda.

"Regional economic integration holds out the promise for achieving a poverty-free, prosperous, and peaceful Asia," Kuroda said.

The ADB president pointed out that although Asia has been the fastest growing region in the world for several decades, with the exception of 1998, there is an enormous disparity in income levels, living standards, and socioeconomic conditions. Developing Asia, after all, is also home to almost two thirds of the world’s poor.

"In a region of such dynamic growth, this is simply unacceptable," he said. "Regional economic integration holds out the promise for achieving a poverty-free, prosperous, and peaceful Asia," he said.

Given the magnitude of intra-regional trade, small exchange rate misalignments can disturb trade and investment flows and create trade friction among the region’s economies. "This indicates the need for intra-regional exchange rate stabilization in the years to come, and ultimately a single currency."

The ADB president pointed out that so long as economic benefits from regional integration are substantial, political differences could be settled and compromises arrived at.

"Our objective should be not to create a fortress Asia, but a highly integrated Asia that is open to the rest of the world as well," he added. "This is open regionalism. In short, Asia should increasingly act regionally while continuing to think globally." – Ted Torres