- Alfred Schipke
- Published Date:
- April 2015
Frontier and Developing Asia
The Next Generation of Emerging Markets
© 2015 International Monetary Fund
Cover design: IMF Multimedia Services Division
Joint Bank-Fund Library
Frontier and developing Asia: the next generation of emerging markets / editor: Alfred Schipke. – Washington, D.C. : International Monetary Fund, 2015.
- p. ; cm.
Includes bibliographical references and index.
1. Economic development – Asia. 2. Economic development – Developing countries. I. Schipke, Alfred, 1959- II. International Monetary Fund.
HC415.E44 F76 2015
Disclaimer: The views expressed in this book are those of the authors and do not necessarily represent the views of the International Monetary Fund, its Executive Board, or management.
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- PART I | INTRODUCTION
- 1 | The Growing Importance of Frontier and Developing Asia
- Alfred Schipke
- 2 | Lessons for Frontier Economies from the Recent Experience of Emerging Markets
- Itai Agur, Mangal Goswami, Shinichi Nakabayashi, and Sunil Sharma
- PART II | TRANSFORMING ECONOMIES AND GROWTH
- 3 | Diversification, Growth, and Volatility
- Chris Papageorgiou, Nikola Spatafora, and Ke Wang
- 4 | Growth Slowdown: Are Frontier and Developing Asian Countries Different?
- Longmei Zhang and Damien Puy
- 5 | Achieving Inclusive Growth
- Ravi Balakrishnan, Chad Steinberg, and Murtaza Syed
- PART III | STRENGTHENING POLICY FRAMEWORKS
- 6 | Financial Sector Deepening and Transformation
- Era Dabla-Norris, Yasuhisa Ojima, and Marco Arena
- 7 | Addressing Financial Sector Vulnerabilities
- Todd Schneider, Faisal Ahmed, Rina Bhattacharya, Sergei Dodzin, Souvik Gupta, Jongsoon Shin, and Xuan Tu
- 8 | Frontier Markets in Asia and Beyond
- Nehad Chowdhury, Martin Edmonds, and Chris Walker
- 9 | Monetary Policy Frameworks: An Assessment
- Ashvin Ahuja, Nombulelo Duma, Sarwat Jahan, Yasuhisa Ojima, and Alexandra Peter
For some time now, emerging markets have played an ever-more important role on the global economic stage. Today they account for half of the world’s GDP and are a key driver of global growth. At the same time, a new group of countries is getting more and more attention, including from global investors. These are fast-growing low-income countries often referred to as frontier economies.
Within Asia, this group includes countries such as Bangladesh, Cambodia, Mongolia, and Vietnam. They are located in the world’s fastest-growing region and benefit from favorable population dynamics. Many of these economies face similar macroeconomic and institutional challenges. Will they become the next generation of emerging markets? What are the policy lessons that might be relevant for other low-income countries?
This book addresses these questions, based on our experience of working with Asia’s emerging, frontier, and developing economies over many years. We highlight that continued structural transformation and increased emphasis on inclusive growth will be critical to achieve the full potential of these countries. Also, drawing on the success of today’s emerging markets, high growth and rapid structural transformation needs to be complemented by increased investment in “soft” infrastructure to avoid crises down the road. In particular, to realize the strong potential of frontier and developing Asia, upgrading of monetary and fiscal policy frameworks and continued strengthening of financial sector regulation and supervision will be critical.
The IMF is contributing to the progress the frontier economies are making through our ongoing policy dialogue, analytical work, and capacity building. I am confident that this book will contribute to this effort and also raise awareness around the globe of the great potential that Asia’s frontier economies have to lift their countries to a new level of widely shared growth and well-being of their citizens.
International Monetary Fund
Work on frontier economies is in its infancy and publications on the subject are limited. This book aims to fill part of this void. It relies on cross-country analytical work and draws on experience in today’s emerging market economies to provide insights and make recommendations relevant for policymakers, think tanks, and academics.
The book would not have been possible without valuable comments, feedback, and contributions from many economists within and outside the IMF. It also benefited from discussions at the 2013 Joint International Monetary Fund–Japan International Cooperation Agency high-level conference on “Frontier Asia: Economic Transformation and Inclusive Growth” in Bangkok.
The authors would like to thank Ranee Sirihorachai for an excellent job keeping the ball in the air—that is, coordinating the many contributions and comments. Special thanks go to Eric Van Zant for editing the manuscript and to Joanne Johnson of the IMF Communications Department, who did her usual outstanding job coordinating production and publication.
Itai Agur is an economist and joined the IMF–Singapore Regional Training Institute in October 2011. Prior to that he was an economist in the Research Department of the Netherlands central bank, De Nederlandsche Bank, where he worked on issues related to financial stability and macroeconomic forecasting. From 2004 to 2008, Mr. Agur completed his PhD at the European University Institute, Florence, Italy, and has MSc and BSc degrees from the University of Amsterdam. Chapters from his PhD thesis won him the 2007 Young Economist Award of the European Economic Association and the 2008 Arrow Award for Junior Economists from the Berkeley Electronic Press.
Faisal Ahmed is IMF Resident Representative in Cambodia. Previously, Mr. Ahmed worked in the IMF’s Monetary and Capital Markets, Strategy, Policy, and Review, and African Departments. Prior to joining the IMF in 2003, he worked as an actuary for a global insurance company for four years and was an external research economist at the Central Bank of the Republic of Turkey and a visiting scholar at the Federal Reserve. Mr. Ahmed has a PhD and an MA in economics from the University of Minnesota and an MFin in finance from Princeton University, and is a Certified Financial Analyst charterholder.
Ashvin Ahuja, Senior Economist in the IMF’s Asia and Pacific Department, leads missions to Lao P.D.R. He covered China and Hong Kong SAR from 2010 to 2012. Before joining the IMF in 2010, Mr. Ahuja worked at the Bank of Thailand. He holds a PhD in economics from the University of Minnesota.
Marco Arena is Senior Economist in the Low-Income Countries Unit of the IMF’s Strategy, Policy, and Review Department. Mr. Arena holds a master’s degree and a PhD in economics from the University of Maryland. Before joining the IMF, he worked as an economist at the World Bank.
Ravi Balakrishnan is Deputy Division Chief of the North American Division of the IMF. His previous positions at the IMF include working on the World Economic Outlook and serving as the IMF’s Resident Representative based in Singapore. His policy and research interests cover labor and job dynamics, inequality, inflation dynamics, exchange rate dynamics, and capital flows. His research has been published in the European Economic Review, the Journal of International Money and Finance, and IMF Staff Papers. He has a PhD in economics from the London School of Economics.
Rina Bhattacharya is Senior Economist in the Bilateral Surveillance Review Division of the IMF’s Monetary and Capital Markets Department. Previously, Ms. Bhattacharya worked on low-income and emerging market economies in the IMF’s Fiscal Affairs, Middle East and Central Asia, and African Departments. Prior to working at the IMF she was a lecturer at the University of Sussex in Brighton, United Kingdom and subsequently worked at the U.K. Treasury and the Bank of England. While at the IMF she took a two-year leave of absence to work for the Organisation for Economic Co-operation and Development in Paris. Ms. Bhattacharya holds a BA in economics from Cambridge University, a master’s degree in development economics from Oxford University, and a PhD in economics from Yale University.
Nehad Chowdhury joined the IMF in 2011 as an economist in the Monetary and Capital Markets Department. Prior to that he spent eight years at Goldman Sachs, where he was ultimately an Executive Director in London and responsible for advising governments in emerging markets on risks related to their balance sheets and public finances. Mr. Chowdhury has a master’s degree in international economics from Harvard University’s Kennedy School of Government and a BA in economics from Haverford College.
Era Dabla-Norris is a Deputy Chief in the Strategy Unit of the IMF’s Strategy, Policy, and Review Department. She has worked extensively on a range of analytical and policy issues in emerging market and developing countries in Africa, Asia, Latin America, and the Middle East. She has diverse research interests and has published actively in a number of areas, including the determinants of growth in advanced and developing countries, fiscal policy and institutional frameworks, the drivers of official and private flows, monetary policy frameworks, assessing reserve adequacy, and the nexus between public investment efficiency and growth. Her current research focuses on policies, tools, and instruments for managing volatility, financial deepening and inclusion, and structural transformation and productivity-enhancing reforms in advanced and developing countries.
Sergei Dodzin is Senior Economist in the Asia and Pacific Department and a mission chief for Kiribati. He worked on various IMF country teams, including Malaysia, Myanmar, and Singapore and, prior to joining the Asia and Pacific Department, Serbia during the global financial crisis. He also worked on an external assignment at the U.K. Financial Services Authority during 2007–08, where he was involved in supervisory assessment of complex financial institutions and research and supervisory projects. His research interests include international economics, finance, and macro-financial linkages. Mr. Dodzin holds a PhD in economics from Harvard University.
Nombulelo Duma, a national of South Africa, is Senior Economist in the Monetary and Capital Markets Department. Ms. Nombulelo joined the IMF in 2003 and has worked in a number of countries across IMF departments (Asia and Pacific, Middle East and Central Asia, Fiscal Affairs). She has worked on various financial stability issues, including through participating in Financial Sector Assessment Programs. Prior to joining the IMF, she worked as an economist at the South African Reserve Bank. She holds graduate degrees in economics from the University of Natal in South Africa and in finance from The George Washington University.
Martin Edmonds is Senior Management Information Officer in the Global Capital Markets Division of the IMF. He worked previously in the Asia Department of the World Bank and at a boutique asset management firm. Mr. Edmonds holds an undergraduate degree from Georgetown University and an MBA from New York University. He is a Certified Financial Analyst charterholder.
Mangal Goswami has been Deputy Director of the IMF–Singapore Regional Training Institute since June 2010. Before that, he was Senior Economist in the IMF’s Monetary and Capital Markets Department, where he participated in a number of Financial Sector Assessment Programs and was a member of the IMF Working Groups on Systemically Important Financial Institutions and Markets and Information Gaps. He was also a country desk economist in the IMF’s Middle East and Central Asia Department. Before joining the IMF in November 2000, Mr. Goswami was an economist at ABN AMRO Bank’s Global Trading Unit in Singapore and at the Research Department of the Federal Reserve Bank of Kansas City. He has a PhD in economics from Kansas State University and a BA from Coe College in the United States.
Souvik Gupta is an economist in the IMF’s Asia and Pacific Department. He is currently working on Bangladesh, the largest financial assistance program by the IMF for a low-income country so far. He has a master’s degree in economics from the University of Maryland at College Park and a master of philosophy degree in economics from Delhi University, India. His interests include monetary policy and macro-financial issues. Prior to joining the IMF he worked as an economist in a leading private sector bank in India.
Sarwat Jahan, a national of Bangladesh, is an economist in the Low-Income Countries Strategy Unit of the IMF’s Strategy, Policy, and Review Department. Ms. Jahan holds a Master of Social Sciences degree from the University of Dhaka, Bangladesh and a PhD in economics from Cornell University. Before joining the IMF, she worked at the World Bank and taught at Tufts University.
Shinichi Nakabayashi has been at the IMF–Singapore Regional Training Institute since 2011. He was a professor of international finance and public economics at the Graduate School of Public Policy, University of Tokyo, from 2008 to 2011. Mr. Nakabayashi has considerable experience in the design and implementation of public policy, having worked as a senior official at the Japanese Ministry of Finance (Director of the Economic Policy Research Office), the Organisation for Economic Co-operation and Development in Paris (First Secretary of Japan’s Permanent Delegation), and the IMF (Advisor, Asia and Pacific Department). In July 2010, he coauthored the book The Analysis of the World Economy from the Perspective of Currencies: Dollar, Euro, RMB, and Yen (in Japanese). A sequel, The Economics of G20: International Policy Coordination and the Growth Strategy for Japan (in Japanese), was published in January 2012. Mr. Nakabayashi has an MPhil in economics from Oxford University and a BA from the University of Tokyo.
Yasuhisa Ojima is Senior Economist in the IMF’s Asia and Pacific Department and Mission Chief for Tonga. Before joining the IMF, he was a Director in the Credit Risk Analysis division at the Japan International Cooperation Agency and a Resident Representative for the Japan Bank for International Cooperation in Vietnam. He has published several textbooks and articles in the field of international and development economics and taught at Waseda University in Tokyo. Mr. Ojima holds degrees from Yale University and Keio University, both in economics.
Chris Papageorgiou is Deputy Division Chief in the IMF’s Strategy, Policy, and Review Department. His work is focused primarily on economic growth and international macroeconomics. He has published extensively, including in the Review of Economics and Statistics, the Journal of Monetary Economics, and the Economic Journal. He is a coeditor of the Journal of Macroeconomics and an editorial board member of the IMF Economic Review and the European Economic Review.
Alexandra Peter is an economist in the Financial Supervision and Regulation Division of the Monetary and Capital Markets Department of the IMF. She worked in the Caribbean II Division of the Western Hemisphere Department prior to her current assignment. She holds a PhD in economics from the University of Bonn. Her research interests include fiscal and monetary policy, financial regulation, and financial stability.
Damien Puy is an economist (as part of the Economist Program) in the Macro-Finance Division of the IMF’s Research Department. He also interned in 2012 in the Regional Studies Division of the Asia and Pacific Department. He holds a PhD from the European Institute in Florence, Italy. His research interests include international finance, macroeconomics, financial economics, and economic history.
Alfred Schipke is Senior Resident Representative for China. Previously, he was Division Chief in the IMF’s Asia and Pacific Department, coordinating work on southeast Asia’s frontier economies and leading missions to Vietnam. He was Division Chief in the Latin Caribbean Division of the Western Hemisphere Department, led regional surveillance missions to the eight members of the Eastern Caribbean Currency Union, negotiated a stand-by arrangement for St. Kitts and Nevis, and was Mission Chief for Saint Lucia. Mr. Schipke was the IMF’s Regional Resident Representative for Central America and Mission Chief for El Salvador. He also worked in the IMF European Department and at the Kiel Institute of World Economics. Mr. Schipke teaches international economics at Harvard Kennedy School and has published a number of books and articles. He holds a PhD in economics from Duisburg-Essen University, an MPA from Harvard University, and a BA from Indiana University of Pennsylvania.
Todd Schneider is Deputy Division Chief in the Asia and Pacific Department and mission chief for Sri Lanka and Nepal. He holds a master’s degree in international economics and Asian studies from Johns Hopkins University. Prior to joining the IMF, he was Deputy Financial Attaché in the U.S. Embassy in Tokyo and Senior Economist in the U.S. Treasury Department.
Sunil Sharma is Director, IMF–Singapore Regional Training Institute in Singapore. The institute provides training in macroeconomic and financial management and related legal and statistical issues to government officials in the Asia-Pacific region. He is also a member of the Advisory Board, Sim Kee Boon Institute (SKBI) for Financial Economics, Singapore Management University, Singapore; the Board of Directors, Mysore Royal Academy (MYRA) School of Business, Mysore, India; and the International Advisory Board, Institute of Global Finance, Australian School of Business, University of New South Wales, Sydney, Australia. Before relocating to Singapore in 2006, Mr. Sharma was the chief of the IMF Institute’s Asian Division in Washington. He was also a staff member of the IMF’s European and Research Departments and of the Capital Markets Team. Prior to joining the IMF, Mr. Sharma was on the economics faculty at the University of California, Los Angeles. He has a doctoral degree in economics from Cornell University, an MA from the Delhi School of Economics, and a BA from St. Stephen’s College, Delhi University.
Jongsoon Shin is an economist in the IMF’s Asia and Pacific Department. He joined the IMF in 2011 and participated in various missions, including the Japan Financial Sector Assessment Program and Article IV Consultations in Indonesia and Mongolia. He also contributed to the IMF’s flagship reports, including the 2013 Spillover Report, the Global Financial Stability Report (April 2013), and the Regional Economic Outlook: Asia and Pacific (April 2014). Prior to the joining the IMF, he worked for the Korea Financial Services Commission (Banking Division) as well as for the Korea Ministry of Finance and Economy (Macroeconomic Team, and Tax Office). He holds an MBA degree in Finance from the Wharton School of the University of Pennsylvania, and earned his BA degree from the Seoul National University.
Nikola Spatafora is Lead Research Economist for East Asia and the Pacific at the World Bank. He is currently on leave from the IMF, where he has served in the Research Department, European Department, Fiscal Affairs Department, and IMF Institute. His research interests and publications focus on economic growth, structural transformation, international trade, oil and natural resources, remittances, and foreign direct investment. He has published widely, including in the Journal of International Economics, Journal of Development Economics, IMF World Economic Outlook, and World Bank Global Economic Prospects. His research has also been featured in The Economist, Financial Times, and Wall Street Journal. He holds a PhD in economics from Yale, and a BA (First Class) in politics, philosophy, and economics from Balliol College, Oxford.
Chad Steinberg is Senior Economist in the IMF’s Strategy, Policy, and Review Department. He has worked at the IMF since 2002 and was most recently a representative at the IMF’s Regional Office for Asia and the Pacific in Tokyo. His research interests include international trade, economic development, and labor markets. He holds a PhD from Harvard University.
Murtaza Syed is Deputy Division Chief in the IMF’s Strategy, Policy, and Review Department. He was previously the IMF’s Deputy Resident Representative in China, during his tenure writing research papers on China’s financial system, investment dependence, trade, demographics, and income distribution. He has also written extensively for Chinese newspapers and magazines. In previous assignments, he covered a range of Asian economies, including Japan, Korea, Hong Kong SAR, and Lao P.D.R. and participated in IMF programs in Dominica and Myanmar. Prior to joining the IMF, Mr. Syed worked at the Human Development Centre in Islamabad and the Institute for Fiscal Studies in London and taught at Oxford. He holds a PhD in economics from Nuffield College, Oxford University.
Xuan Tu is a research analyst in the IMF’s Asia and Pacific Department. She worked on Vietnam and Lao P.D.R. before covering Malaysia, Singapore, and Brunei. Ms. Tu holds a master’s degree in International Policy and Development from Georgetown University. Her research interests include economic development, monetary policy, and financial stability.
Chris Walker is Deputy Division Chief in the Global Markets Analysis Division of the IMF’s Monetary and Capital Markets Department. Previously, Mr. Walker worked in the IMF’s Western Hemisphere Department as Mission Chief for Antigua and Barbuda, and as Desk Officer for Brazil. Before joining the IMF, he was a director in fixed income research for Credit Suisse First Boston in Tokyo. Mr. Walker holds a PhD in economics from the University of Wisconsin–Madison and a B.A. in philosophy from Swarthmore College.
Ke Wang is an economist in the Western Hemisphere Department of the IMF. Previously she worked in the Strategy, Policy, and Review Department and the African Department of the IMF, and the East Asia and the Pacific Department of the World Bank. Ms. Wang is a PhD candidate in economics at the American University. Her research has focused on international economics, monetary theory, and economic growth.
Longmei Zhang is an economist in the Regional Study Division of the IMF’s Asia and Pacific Department. She joined the IMF in 2010 and worked on Romania and the Philippines before covering regional issues in Asia. She holds a PhD in economics from Goethe University Frankfurt. Her research interests include economic growth, macroprudential regulation, monetary policy, and business cycles.