Publication in Economics, Politics and Public Policy in East Asia and the Pacific

Reducing Indian poverty: Income transfers through social safety nets

Authors: Raghbendra Jha, ANU; Raghav Gaiha, Delhi; and Manoj Pandey, ANU

One of the paradoxes of modern India is the coexistence of high rates of economic growth and widespread malnutrition. Thus, between 2000 and 2005, real GDP per head and real per capita consumption grew at impressive rates of 5.4 per cent and 3.9 per cent per annum respectively. Yet more than 75 per cent of the population has a daily per capita calorie consumption below the minimum requirements for Indians. Concurrently, the food subsidy bill has been rising rapidly and was a staggering Rs 370 billion for households beneath the poverty line (BPL) in 2009-10.

Now, the government is seeking to enact a National Food Security bill (NFSB) which purports to provide 25 kilograms of rice or wheat per month to each BPL family at Rs 3 per kilogram, failing which, a poor person can seek redress. Read more…

What Japan needs to do to end deflation

Author: Ulrich Volz, German Development Institute

Japan is again haunted by deflation. While the nation is following the beef bowl price wars between fast food restaurants on television, the prices of consumer goods are falling and households are tightening their purse strings. Concurrently, companies are holding back investment and trying to cut costs to remain competitive.

Last November the Japanese government acknowledged the resurgence of the country’s deflation problem and passed on the buck to the Bank of Japan and pressured it to do something about it. Read more…

How can Asia strengthen its voice at the G20?

Author: Pradumna B. Rana, RSIS, Singapore

The G20 summit is a process that is evolving and no one can predict exactly where it will end up. The group was self appointed the ‘premier forum for international economic cooperation’ and there remain important questions related to membership and agenda that need to be addressed. In Pittsburgh, US President Barack Obama announced that the G20 would replace the G8. Two G20 summits are planned for this year — in Toronto and Seoul in November. While the Toronto summit will take stock of the implementation of exit strategies from the expansionary macroeconomic policies, the Seoul summit has selected two additional longer term issues for discussion — financial safety nets to better insulate emerging markets from systemic instability, and actions to close the development gap, especially for the poorest. Issues related to climate change could also be addressed at the G20 summit.

So how should Asia respond? Read more…

Is China or India ageing better?

Author: Amitendu Palit, ISAS, Singapore

Chinese and Indian demographies will be rather different three decades hence. What kind of economic outcomes are the differences expected to create?

With 1.4 billion and 1.2 billion people respectively, China and India currently account for 37 per cent of the world population. Thirty years later, they are expected to account for roughly the same share of world population. The overall numbers, however, hide some fundamental changes that will have occurred by then. Read more…

Chinese politics — Not an oxymoron!

Author: Evan A. Feigenbaum, CFR

I have a Ph.D. in Chinese politics—which means I have an abiding faith in the idea that, yes, China actually does have politics. That’s always been true, even in the authoritarian depths of the Mao Zedong era. And it’s been true in nearly every aspect of Chinese life, including atop the commanding heights of the economy.

Ten years ago, I wrote a book about how contending networks of generals and technicians fought pitched battles in China’s defense industry at the height of the Mao era. They fought over everything from budgets to weapons designs to procurement priorities to whether China should invest in basic or applied research. Read more…

Can Malaysia escape a trap of its own making? – Weekly editorial

Author: Peter Drysdale

Malaysia’s recently presented New Economic Model is, on paper, a hugely ambitious strategy for changing the country’s economic and social direction and, hopefully, its economic and political fortunes.

The government of Prime Minister Najib seems inclined to embrace its principles and try to forge a new direction in Malaysian economic and social policy. In the 1980s Malaysia was among the brightest stars in the Southeast Asian economy, with growth around 8 per cent a year and a huge transformation away from its comfortable plantation and minerals past towards a new industrial future, driven by foreign investment and rapidly growing exports of consumer electronics to regional and global markets. Read more…

Exit Australia’s Kevin Rudd – Special editorial

Author: Peter Drysdale, Editor, East Asia Forum

Many of our international readers are perhaps justifiably baffled by the overthrow last week of former Australian Prime Minister, Kevin Rudd, by Australia’s new Prime Minister, Julia Gillard.

Rudd stood tall on the international stage. He led a government, alone among all the OECD countries, that steered Australia successfully through the Global Financial Crisis, without recession. He was among the most effective of the protagonists that influenced the launching of the G20, meeting this weekend in Toronto, a new group that has promise of providing a greater measure of international and political security because it is more representative of global power than its predecessor, the G8, and is more adept at dealing with the problems in global economic governance. Read more…

What’s behind Malaysia’s New Economic Model

Author: Shankaran Nambiar, MIER

Malaysia’s New Economic Model (NEM) is a framework that promises to bring the country out of its middle-income status, and push it into the realm of a high-income economy. The NEM proposes to do this through eight Strategic Research Initiatives (SRIs). These SRIs include re-energising the private sector, developing a quality workforce, and creating a competitive domestic environment. Growth is also considered, both in terms of enhancing the sources of growth and ensuring the sustainability of growth. Other initiatives target the public sector, affirmative action and building Malaysia’s knowledge-base and infrastructure.

Given the multiplicity of the SRIs, if one were asked to select the key factors, what would they be? Read more…

Asia, geoengineering, and the grim realities of climate negotiations

China's Xie Zhenhua and Su Wei

Author: Jonathan Symons, Hong Kong Institute of Education

Climate change is a key threat to Asia’s future economic and political stability and Asian states are responsible for an increasing percentage of global emissions. China, as the world’s largest emitter, has been widely condemned for its intransigence at the 2009 Copenhagen negotiations. However, its defenders counter that China’s commitment to reduce emission intensity by at least 40 per cent between 2005 and 2020 is a comparatively ambitious promise.

This debate misses the point: that mitigation efforts premised on the negotiation of national emissions targets are doomed to fail. State interests and conceptions of fairness are too divergent for the existing negotiation framework to avert dangerous climate change. Read more…

How to play a ‘responsible great power’ role: China’s post-tsunami assistance to Aceh

A Chinese rescue team preparing to depart for Haiti.

Author: Miwa Hirono

To fulfil its international responsibilities, China’s argument goes, it has increased its involvement in non-traditional security issues, including post-disaster assistance. China has provided international post-disaster assistance since 2003, having dispatched rescue teams to Algeria, Iran, Pakistan, Aceh, Yogyakarta, and most recently, Haiti. China’s efforts, especially in Haiti, have attracted international praise. Its purportedly skilled and professional international rescue team was amongst the first that arrived in the disaster zone.

Post-disaster assistance, however, presents China with a significant political challenge. Read more…

India’s exchange rate conundrum

Author: Renu Kohli

The debate on exchange rate policy tends to surface during periods of prolonged and undue appreciation. At its centre is the degree of flexibility that is beneficial for the economy as a whole.

The issue is not about following a policy of persistent undervaluation, as occurred in China, but to avoid excessive determination by capital account movements; the shift to a flexible exchange rate regime in 1998 being widely accepted. There is a trade-off between exchange rate deployment to attract foreign capital and macroeconomic stabilisation vis-à-vis growth promotion through exports. Read more…

When will India attend to Naxalism?

A Naxal on patrol.

Author: Vikas Kumar, CSSE

According to the latest estimates, the Indian economy continues to grow at a rate of 8 per cent. But the question of whether this economic growth will create opportunities for all sections of society remains hotly contested.

In 2004, the National Democratic Alliance lost the parliamentary elections to the Congress-led United Progressive Alliance (UPA). This election was largely decided on the question of whether the fruits of economic growth were accessible to the poor, minorities, tribes, and socially underdeveloped communities. UPA subsequently won the 2009 parliamentary elections as well. Yet despite the ascendancy of the Indian centre-left, in the last five years, extreme left-wing insurgency, or Naxalism, which is opposed to the economic policies of New Delhi, has emerged as the single biggest challenge to the Indian state and economy.

This situation is historically unprecedented. Read more…

China and climate change in the post-Copenhagen era

Author: Xiujun Xu, CASS

The problem of anthropogenic climate change has become increasingly evident. The IPCC’s Climate Change 2007: Synthesis Report shows the global surface temperature increased 0.74 °C in the past 100 years (1906-2005), mostly because of the impact of greenhouse gas emissions. More drastically, China’s National Assessment Report on Climate Change predicts that average temperatures in China will rise by 2-3 °C over the next 50-80 years if no action is taken. Even if one is not completely convinced by the science, the likelihood of climate change occurring means that the most prudent course is to take action. Indeed, as the Copenhagen summit illustrates, most nation-states have already begun to take action.

An examination of China’s response to climate change shows that such action has had, and will continue to have, many serious consequences, both domestically and internationally. Read more…

The G8/G20 in Canada—what can we expect?

Author: Wendy Dobson, University of Toronto

The G20 meeting this weekend in Canada has a heavy agenda and high expectations. Leaders face a serious challenge to demonstrate determination to follow through on the September 2009 Pittsburgh summit’s framework for strong, sustainable and balanced growth.

Prior to that June 26-27 meeting Canada also chose to host a G8 side show. Its challenge is to avoid any appearance of being an executive committee meeting before the G20. Read more…

Lost in transition, or why non-leading powers should concern Beijing and Washington

Author: Ja Ian Chong, HKUST

Power transitions in international relations—real or perceived—are unsettling. This is especially so for non-leading states. Their interests depend on shifts in the international system that they cannot shape. Leading powers should, however, pay attention to how non-leading states react to expectations of change in the global political environment. Their reactions, especially when considered together, can exacerbate or moderate security dilemmas among the leading powers and has the potential to affect regional and even systemic stability.

Beijing and Washington should be particularly concerned that non-leading powers in the Asia-Pacific find much uncertainty in China’s rise as well as America’s future regional role. Read more…