Emerging Asias integration has pluses and minuses

Published: Nov. 8, 2017, 9:41 a.m.

b'Since the early 20th century, emerging Asia has been subjected to the ebb and flow of lending from advanced economies. Since then the region has become more integrated into the global financial market, which has been exposed to the risk of capital flow reversals. \\n\\nIn the aftermath of the 2008 global financial crisis, capital has flowed into emerging economies, especially in Asia, in search of higher returns on investment. \\n\\nLow interest rates in advanced economies made Asia more attractive, with its higher interest rates promising bigger returns.\\n\\nThis worries the region\\u2019s policy makers. Portfolio investments are more volatile and short-lived than long-term foreign direct investments. A surge in inflows harms recipient countries, as asset prices soar, and a sudden withdrawal of capital destabilizes markets.\\n\\nRead the transcript\\nhttp://bit.ly/2yniDUp\\n\\nRead the working paper\\nhttps://www.adb.org/publications/correlations-equity-markets-asia-and-impact-capital-flow-management-measures\\n\\nAuthor\\nPornpinun Chantapacdepong was an ADBI research fellow and now assistant director at the Monetary Policy Group of the Bank of Thailand.\\n\\nKnow more about ADBI\\u2019s research on\\nGlobal Financial Crisis: http://bit.ly/2zpwYRR\\nEconomic Integration: http://bit.ly/2AjebGY'