AID FOR TRADE IN ASIA AND

THE PACIFIC PROMOTING CONNECTIVITY FOR INCLUSIVE

DEVELOPMENT

Cyn-Young Park Director

Regional Cooperation and Integration Division

Economic Research and Regional Cooperation Department

Asian Development Bank

7 February 2018 | University of South Pacific, Suva, Fiji

1

Key Messages Aid for trade flows account for about 40% of total official development

assistance to Asia in 2015. Globally, Asia is amongst the largest recipients

of AfT.

Fast growing e-commerce presents abundant growth opportunities for the

region.

Aid targeted at tradable services sectors can be an important catalyst in

promoting inclusive economic growth and structural transformation.

Promoting connectivity is a priority to expand trade in services and achieve

inclusive growth in geographically challenged economies of Asia and the

Pacific.

AfT should target further improving infrastructure, building an enabling policy

and regulatory environment to advance growth in services trade, and

promote the integration of geographically challenged economies into

regional and global markets.

2

Regional Trends in Aid for Trade and

Trade Costs

4

AfT flows to Asia and the Pacific have been growing steadily

-80

-60

-40

-20

0

20

40

60

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Asia and the Pacific

TPR (on left, $ million)

BPC (on left, $ million)

INF (on left, $ million)

Aid for Trade (on right, % of ODA)

-50

-40

-30

-20

-10

0

10

20

30

40

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

World

TPR (on left, $ million)

BPC (on left, $ million)

INF (on left, $ million)

Aid for Trade (on right, % of ODA)

Official Development Assistance and Aid for Trade, 2002–2015 ($ million, %)

ODA = Official Development Assistance.

Note: Total aid for trade (AfT) is the sum of INF (aid for infrastructure), BPC (aid for building productive capacity) and TPR (trade policy

and regulations and trade-related adjustment).

Source: ADB calculations using data from OECD. Creditor Reporting System. http://www.oecd.org/ (accessed April 2017).

5

0

10

20

30

40

50

60

70

80

0.0

0.5

1.0

1.5

2.0

2.5

2002–05 avg.

2006–08 avg.

2009–11 avg.

2012–14 avg.

2015 2016 2010–11 avg.

2012–14 avg.

2015 2016

Commitments Disbursements

(%)

($ b

illio

n)

Central Asia East Asia

South Asia Southeast Asia

Pacific Aid for Trade (on right, % of ODA)

Source: ADB calculations using data from OECD. Creditor Reporting System (accessed 25 January 2018).

ADB's Aid-for-Trade Contribution by Subregion,

2002–2016

6

0.0

0.5

1.0

1.5

2.0

2.5

2002–05 avg.

2006–08 avg.

2009–11 avg.

2012–14 avg.

2015 2016 2010–11 avg.

2012–14 avg.

2015 2016

Commitments Disbursements

Economic infrastructure Building productive capacity Trade policies and regulations

Source: ADB calculations using data from OECD. Creditor Reporting System (accessed 25 January 2018).

ADB's Aid-for-Trade Contribution by Category,

2002–2016 ($ billion)

Aid for trade enhances trade performance and helps reduce

the burden of trade costs

7

8

Reducing trade costs remains a priority

Distance to ‘Best Performer Frontier’ in

Trading Across Borders by Region and

Asia’s Subregions, 2014 and 2016

0 20 40 60 80 100

Central Asia

Pacific

South Asia

Southeast Asia

East Asia

Africa

Middle East

Asia and the Pacific

Latin America

North America

EU-28

2016 2014

Note: Asia includes developing economies only.

Source: ADB calculations using data from World Bank. Doing Business

Database. http://doingbusiness.org

(accessed March 2017).

Trade, Inclusive Growth, and

Employment for Women

10

Trade can deliver inclusive growth and quality jobs

1,393 1,351

1,141 1,143

1,036

812

709

581

467 435

330

51.1

47.1

38.0 36.4

31.8

24.0

20.3

16.3

13.0 12.0

9.0

0

10

20

30

40

50

60

0

200

400

600

800

1,000

1,200

1,400

1,600

Hea

dco

un

t ra

tio

(%

)

He

adco

un

t (m

illio

n)

Population below the $1.90 a Day Poverty Line, Asia and the Pacific (2011 PPP)

Source: ADB estimaes using World Bank. PovcalNet Database. http://iresearch.worldbank.org/PovcalNet/home.aspx (accessed 4 October 2016).

11

“Evidence is compelling that participation in global value chains generate more jobs for women”

12

“AfT can support targeted policies that increase opportunities for women”

The Digital Economy and Trade

Connectivity

14

Fast growing e-commerce presents abundant growth

opportunities for Asia and the Pacific

15

Technology can be leveraged to improve inclusiveness of trade-driven growth

Internet Users and Mobile Cellular and Fixed Broadband Subscriptions in Asia and the

Pacific, 2000–2015 (per 100 people)

0

20

40

60

80

100

120

140

2000 2005 2010 2015

a. Mobile cellular subscriptions

0

5

10

15

20

25

2002 2005 2010 2015

b. Fixed broadband subscriptions

Note: For fixed broadband subscriptions, 2002 reported the required (earliest year) data for the largest number of constituent countries in each subregion.

Source: World Bank. World Development Indicators. http://www.data.worldbank.org (accessed April 2017).

0

10

20

30

40

50

2000 2005 2010 2015

c. Internet users

16

In order to unlock the potential of service trade and e-commerce in

the region, it is imperative to take on the following measures:

Boost market access by removing barriers to digital trade.

Improve the availability and quality of connectivity

infrastructure

Institute legal, regulatory and institutional reforms

Intensify regional efforts to modernize and harmonize

regulations.

Close data gaps and limitations

17

Mainstreaming gender into ICT initiatives

can promote women’s entrepreneurial

activities

Aid for Trade and Services

19

“Aid targeted at tradable services sectors can be an important catalyst in promoting inclusive economic growth and structural

transformation.”

20

0

2,000

4,000

6,000

8,000

10,000

12,000

Distribution of Aid for Trade in Services in Asia and the Pacific ($ million)

Central Asia East Asia

South Asia Southeast Asia

Pacific

Note: Services AfT include six aggregate sectors: transport and storage; communications; energy; banking and finance; business and other services; tourism.

Source: ADB calculations using data from OECD. Creditor Reporting System. http://www.oecd.org/ (accessed April 2017). UNComtrade. https://comtrade.un.org/

(accessed June 2017).

.

Asia takes the lion’s share of services AfT

0

200

400

600

800

1,000

1,200

1,400

1,600

Services Trade by Region ($ billion)

Africa Americas

Asia and the Pacific Europe

0

5,000

10,000

15,000

20,000

25,000

30,000

Global Aid for Trade in Services by Region ($ million)

Africa Americas

Asia and the Pacific Europe

21

“Aid that enhances economic infrastructure and boosts productive capacity is positively correlated with services trade across the region.”

Targeted AfT can boost trade in services

AFG ARM

AZE GEO

KAZ

KGZ

PAK

TAJ UZB

BAN

BHU

IND

MLD NEP SRI

PRC

MON CAM

INO

LAO

MAL

MYA

PHI THA

VIE

FIJ

KIR RMI FSM

PNG

SAM SOL

TIM

TON

TUV

VAN

12

14

16

18

20

22

24

26

28

12 14 16 18 20 22

Log

of

ave

rage

se

rvic

es

trad

e

Log of AfT in economic infrastructure

Economic infrastructure Central Asia

South Asia

East Asia

Southeast Asia

Pacific

Linear (CentralAsia)Linear (South Asia)

Linear (East Asia)

Linear (SoutheastAsia)Linear (Pacific)

Services Trade and AfT: Asia and the Pacific (average 2002–2015)

AFG ARM

AZE GEO

KAZ

KGZ

PAK

TAJ UZB

PRC

MON

BAN

BHU

IND

MLD NEP SRI

CAM

INO

LAO

MAL

MYA

PHI THA

VIE

FIJ

KIR RMI FSM

PNG

SAM SOL

TIM

TON

TUV

VAN

12

14

16

18

20

22

24

26

28

12 13 14 15 16 17 18 19 20 21

Log

of

ave

rage

se

rvic

es

trad

e

Log of AfT in productive capacity

Productive capacity

“Empirical analysis shows a

significant impact of AfT on

services trade across all

subregions, most pronounced for

South Asia and Southeast Asia.”

22

Integrated and coherent policies—together with more trade liberalization and regulatory reform—are critical for services trade

Promoting Connectivity in the Sealocked Economies of the

Pacific

24

Small size and remoteness are key bottlenecks to trade for Pacific countries

25

Improving the business environment and reducing trade costs remain as priorities

0 10 20 30 40 50 60 70

Kiribati (Rank 152)

FSM (Rank 151)

Marshall Islands (Rank 143)

Palau (Rank 136)

PNG (Rank 119)

Solomon Islands (Rank 104)

Fiji (Rank 97)

Samoa (Rank 89)

Tonga (Rank 85)

Vanuatu (Rank 83)

Seal

ock

ed

eco

no

mie

sA

sia

2016 rankings (Overall distance to frontier scores, 2014 and 2016

2016 20140 20 40 60 80 100

FSM

VAN

KIR

SOL

FIJ

PNG

RMI

SAM

TON

PAL

Average

Seal

ock

ed e

con

om

ies

Asi

a

2016 2014

Distance to Frontier in the Ease of

Trading Across Borders Ease of Doing Business Rankings (out of 190)

Note: Asia refers to developing Asia.

Source: World Bank. Doing Business Database (accessed March 2017).

26

Aid for trade promotes growth and trade in services in geographically challenged economies…

Mean services trade and AfT: aggregate services

(geographically challenged economies, 2002-2014)

… with the most pronounced impact on tourism services for sealocked

economies

AFG

ARM

AZE

BHU

KAZ

KGZ

LAO

MON NEP

TAJ

UZB

FIJ

KIR RMI

FSM

PNG

SAM SOL

TON

TUV

VAN

12

13

14

15

16

17

18

19

20

21

12 13 14 15 16 17 18 19

log o

f avera

ge

serv

ices

trade

log of AfT in aggregate services

Landlocked economies

Sealocked economies

Linear (Landlockedeconomies)

Linear (Sealocked economies)

27

Sealocked economies can benefit from developing their tourism industries. Some of the crucial actions for this include: - establishing tourism linkages with the local economy - enhancing tourism management capacity through institutional and human capacity development - tapping private sector resources - pursuing regional integration strategies

28

Policy Prescriptions AfT should target (i) further improving infrastructure (ii) building an enabling policy and regulatory environment to advance growth in trade in services (iii) promote the integration of geographically challenged economies into regional and global markets

29

Thank You! Download at: https://www.adb.org/sites/default/files/publication/329166/aid-trade-asia-pacific-2.pdf