The UN Economic and Social Commission for Asia and the Pacific (Escap), which is monitoring the spending of fiscal stimulus packages in the region, is calling for intra-regional trade to be expanded.
Governments and multilateral institutions such as the ADB are dishing out hundreds of billions of dollars, as they to restore economic growth in the face of what many claim is the worst global recession since the 1930s.
The G20 group asked the UN to monitor the outcome of spending packages, and in Asia the task has devolved to Escap.
Escap under secretary general Noeleen Heyzer told Emerging Markets: “We have been given the role, by the G20, to monitor whether these stimulus packages and the increased funding [given to] international financial institutions are doing what they are supposed to be doing.”
Escap is charged with making sure that fiscal stimulus is not applied just to reviving growth in economies where it is applied, and stabilising financial systems, but also that the spending is “supportive of development”, she said. “This means monitoring where investment goes and whether it contributes to inclusive and sustainable development.”
Heyzer said that Escap has presented two reports to 53 governments in the region. One key conclusion points to “the need to facilitate inter-regional trade in Asia”. Looking to domestic markets to revive demand is not enough. “Only China, India and Indonesia have large enough domestic markets to stimulate economic growth.
“Others need inter-regional markets. But if you are going to have inter-regional markets then in order to do that you have to have trade facilitation across borders. We have been given the role especially of facilitating the removal of non-tariff barriers across borders. Such as trying to establish standards and customs arrangements.”
Another key aspect of Escap’s work is to try to ensure that fiscal stimulus efforts are coordinated across national borders, Heyzer said. This applies particularly to the large part of fiscal stimulus packages to be spent on infrastructure.
In infrastructure development, such as transport systems, “you can not go country by country”, argued Heyzer. “Unfortunately Asia is more integrated with the rest of the world than with itself, and therefore these stimulus packages should fill the need for infrastructure that connects in terms of transport, rail, information technology.”
Social protection systems also need to be coordinated across international borders, in order to help stimulate personal consumption. Even currency policies need to be coordinated to avoid “competitive devaluation of currencies and beggar-thy-neighbour policies”, Heyzer said.