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1、ASIAN DEVELOPMENT BANKAsian Economic Integration Report 2023Trade,Investment,and Climate Change in Asia and the PacificThis report shows how smart trade and investment policies,and regulatory cooperation in the Asia and Pacific region can help economies tackle climate change,recover from the pandemi

2、c,and support resilient and sustainable development.Analyzing topics including global value chains,investment,the movement of people,and regional cooperation initiatives,it outlines the economic and environmental challenges the region currently faces.It explores how trade and investment policies can

3、 support climate action and highlights why a joined-up approach is essential to help deepen the digital economy;strengthen supply chains;and foster greener businesses,markets,and trade.About the Asian Development BankADB is committed to achieving a prosperous,inclusive,resilient,and sustainable Asia

4、 and the Pacific,while sustaining its efforts to eradicate extreme poverty.Established in 1966,it is owned by 68 members 49 from the region.Its main instruments for helping its developing member countries are policy dialogue,loans,equity investments,guarantees,grants,and technical assistance.TRADE,I

5、NVESTMENT,AND CLIMATECHANGE IN ASIA AND THE PACIFICFEBRUARY 2023ASIAN ECONOMICINTEGRATIONREPORT 2023ASIAN ECONOMIC INTEGRATION REPORT 2023Trade,Investment,and Climate Change in Asia and the PacificAsiAn Development BAnk6 ADB Avenue,Mandaluyong City1550 Metro Manila,Philippineswww.adb.orgASIAN DEVELO

6、PMENT BANKTRADE,INVESTMENT,AND CLIMATECHANGE IN ASIA AND THE PACIFICFEBRUARY 2023ASIAN ECONOMICINTEGRATIONREPORT 2023Creative Commons Attribution 3.0 IGO license(CC BY 3.0 IGO)2023 Asian Development Bank6 ADB Avenue,Mandaluyong City,1550 Metro Manila,PhilippinesTel+63 2 8632 4444;Fax+63 2 8636 2444w

7、ww.adb.orgSome rights reserved.Published in 2023.ISBN 978-92-9270-031-7(print);978-92-9270-032-4(electronic);978-92-9270-033-1(ebook)Publication Stock No.TCS230031-2DOI:http:/dx.doi.org/10.22617/TCS230031-2The views expressed in this publication are those of the authors and do not necessarily reflec

8、t the views and policies ofthe Asian Development Bank(ADB)or its Board of Governors or the governments they represent.ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.The mention of specific companies or produ

9、cts of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.By making any designation of or reference to a particular territory or geographic area,or by using the term“country”inthis publication,ADB does not inte

10、nd to make any judgments as to the legal or other status of any territory or area.This work is available under the Creative Commons Attribution 3.0 IGO license(CC BY 3.0 IGO)https:/creativecommons.org/licenses/by/3.0/igo/.By using the content of this publication,you agree to be bound bytheterms of t

11、his license.For attribution,translations,adaptations,and permissions,please read the provisions andterms of use at https:/www.adb.org/terms-use#openaccess.This CC license does not apply to non-ADB copyright materials in this publication.If the material is attributed toanother source,please contact t

12、he copyright owner or publisher of that source for permission to reproduce it.ADB cannot be held liable for any claims that arise as a result of your use of the material.Please contact pubsmarketingadb.org if you have questions or comments with respect to content,or if you wish toobtain copyright pe

13、rmission for your intended use that does not fall within these terms,or for permission to use theADB logo.Corrigenda to ADB publications may be found at http:/www.adb.org/publications/corrigenda.Notes:In this publication,“$”refers to United States dollars,“”refers to euros,“B”refers to baht,“NZ$”ref

14、ers to NewZealand dollars,“SLRs”refers to Sri Lanka rupees,“SUM”refers to sum,and“Tk”refers to taka.ADB recognizes“Brunei”as Brunei Darussalam;“China”as the Peoples Republic of China;“Hong Kong”as Hong Kong,China;“Korea”and“South Korea”as the Republic of Korea;“Kyrgyzstan”as the Kyrgyz Republic;“Rus

15、sia”as the Russian Federation;and“Vietnam”as Viet Nam.Cover design by Erickson Mercado.All masthead photos are from ADB.Printed on recycled paperiiiCONTENTSTables,Figures,and Boxes.vForeword.xAcknowledgments.xiiAbbreviations.xivHighlights.xvi1.Regional CoopeRation foR tRansfoRmative eConomiC ReCoveR

16、y 1References.152.tRade and global value Chains 18Recent Trends in Asias Trade .18Asias Intraregional Trade.21Progress of Global and Regional Value Chains.25Special Topic:Food and Energy Crisis and Asias Trade.30Asias Free Trade Agreement Policy.38Digital Economy Agreements and Policy Interventions.

17、40Trade-Related Measures and Temporary Restrictions.46References.533.CRoss-boRdeR investment 57Recent Trends in Foreign Direct Investment.57Policy Focus:Investment Tax Incentives in Asia and the Pacific.69Policy Recommendations.83References.84Annex 3a:Foreign Direct Investment Regulatory Restrictive

18、ness in the Telecommunications Sector.884.finanCial CoopeRation 89Special Topic:The Issue of Dollar Dependence in Financing and Trade Invoicing.103References.1095.movement of people 111Migration.111Remittances.121Tourism.132 References.147Contentsiv6.updates on subRegional CoopeRation initiatives 15

19、6Integration Index Estimates for Subregional Initiatives.156Central Asia Regional Economic Cooperation Program.158Greater Mekong Subregion Program.165Brunei DarussalamIndonesiaMalaysiaPhilippines East ASEAN Growth Area and IndonesiaMalaysia Thailand Growth Triangle.169Bay of Bengal Initiative for Mu

20、lti-Sectoral Technical and Economic Cooperation.172South Asia Subregional Economic Cooperation.176South Asian Association for Regional Cooperation.180The Pacific:Regionalism to Support Resilience.183Promoting Climate Change Agenda as a Cross-Cutting Theme.186References.189Annex 6a:Subregional Integr

21、ation Indexes .1917.theme ChapteR:tRade,investment,and Climate Change in asia and the paCifiC 193Introduction.193The Trade/Investment and Climate Change Nexus.195Emissions from Production,Demand,and Trade.196Impact of Industrial Structure and Technique.202Foreign Direct Investment Impact on Environm

22、ental Outcomes.207Challenges in Greening Trade and Investment.215How Can Trade and Investment Policies Be Integrated with Climate Action?.221Promoting Trade in Environmental Goods and Services.222Nurturing Green Businesses.224Bilateral,Regional,and International Cooperation.228Carbon Pricing Mechani

23、sms.235Background Papers.244References .245Annex 7a:Potential Impact of Trade Facilitation on Greenhouse Gas Emissions.256Annex 7b:Analyzing the Environmental Content of International Investment Agreements.259Annex 7c:Measures of Asias Exposure and Vulnerability to the European Union Carbon Border A

24、djustment Mechanism.2608.statistiCal appendiX 263 Regional Groupings.263 Table Descriptions.263 Methodological Note and UpdateAEIR Cross-Border Investment Firm-Level Data.266vTABLES,FIGURES,AND BOXEStables 1.1 Comparison of Digital Trade Provisions in Regional Agreements 13 2.1 New Regional Trade Ag

25、reements in Asia and the Pacific,December 2021December 2022 39 2.2 Recently Upgraded/Expanded Trade AgreementsAsia and the Pacific 40 2.3 Selected Digital Trade Agreements in Asia and the Pacific 42 3.1 Top 10 Destinations of Foreign Direct InvestmentWorld and Asia and the Pacific 58 3.2 Top Recipie

26、nts of Increased Foreign Direct Investment in Asia and the Pacific,Firm-Level 61 3.3 Average Project and Deal Size by SectorAsia and the Pacific 62 3.4 Top 10 Sources of Foreign Direct InvestmentWorld and Asia and the Pacific 67 3.5 Explicit Restrictions in Investment LawsSelected Asia and Pacific E

27、conomies 71 3.6 Economies Providing Investment Tax Incentives with Sector Conditions 76 3.7 Investment Tax Incentives by Domestic Laws and Granting Authorities 79 3.8 Examples of Green Incentives Used in Selected Asia and Pacific Economies 79 5.1 Top Extraregional Host Economies of Asia and Pacific

28、Migrants 112 5.2 Top 10 Migrant Sending Economies in Asia and the Pacific and COVID-19 Indexes 113 5.3 Status of Policies to Facilitate the Global Compact on Migration in Major Migrant Host Economies 119 5.4 Remittance Inflows by Recipient Region 123 5.5 Remittance Inflows by Recipient Subregions 12

29、4 5.6 International Tourism:Export Revenues and Contribution to Gross Domestic ProductAsia and the Pacific 136 6.1 Selected Economic Indicators,2021Central Asia Regional Economic Cooperation Program 158 6.2 Selected Economic Indicators,2021Greater Mekong Subregion 165 6.3 Selected Economic Indicator

30、s,2021Bay of Bengal Initiative for Multi-Sectoral Technical 173 and Economic Cooperation 6.4 Selected Economic Indicators,2021South Asia Subregional Economic Cooperation 177 6.5 Selected Economic Indicators,2021South Asian Association for Regional Cooperation 180 7.1 Examples of Low-Emissions or Gre

31、en Certification Schemes 226 A1 Asia-Pacific Regional Cooperation Integration Index 269 A2 Regional Integration IndicatorsAsia and the Pacific 271 A3 Trade SharesAsia and the Pacific,2021 272 A4 Free Trade Agreement StatusAsia and the Pacific,as of November 2022 273 A5 Cross-Border Portfolio Equity

32、HoldingsAsia and the Pacific,2021 274 A6 Cross-Border Portfolio Debt HoldingsAsia and the Pacific,2021 275 A7 Foreign Direct Investment Inflow ShareAsia and the Pacific,2021 276 A8 Remittance Inflows ShareAsia and the Pacific,2019 277 A9 Outbound Migration ShareAsia and the Pacific,2020 278 A10a Inb

33、ound Tourism ShareAsia and the Pacific,2020 279 A10b Outbound Tourism ShareAsia and the Pacific,2020 280Tables,Figures,and BoxesvifiguRes 1.1 Merchandise Trade Value GrowthAsia and the Pacific 2 1.2 Trade-Related Measures Imposed on Asia and the Pacific 2 1.3 Services Trade Value GrowthAsia and the

34、Pacific 3 1.4 Inward Foreign Direct InvestmentAsia and the Pacific 3 1.5 Average Statutory Corporate Income Tax Rate and New Investment Incentives by Region 4 1.6 Nonresident Portfolio InflowsAsia and the Pacific 4 1.7 Perceived Solvency RiskAsia and the Pacific 5 1.8 Remittances GrowthSelected Asia

35、n Economies 6 1.9 International Tourist ArrivalsSelected Asian Economies 6 1.10 Overall and Dimensional Integration IndexesAsia and the Pacific 7 1.11 Indexes of Regional Integration 8 1.12 Carbon Intensive and Non-Carbon Intensive Foreign Direct Investment by Host Region 9 1.13 Digital Services Tra

36、de RestrictivenessWorld and Asia and the Pacific 11 2.1 Merchandise and Services Trade Volume and Real Output Growth Asia and the Pacific versus World 18 2.2 Monthly Trade,by Value and VolumeAsia and the Pacific 20 2.3 Shipping Costs and Freight RatesWeekly Indicators 20 2.4 Manufacturing Purchasing

37、 Managers Index 21 2.5 Confidence and Production Indexes versus Asia and Pacific Trade 22 2.6 Confidence and Production Indexes versus Asia and Pacific Trade by Commodity 23 2.7 Intraregional Trade ShareMerchandise versus Services Trade 24 2.8 Merchandise and Services Trade of Asia and the Pacific,B

38、y Partner 24 2.9 Intraregional Trade Shares by Asian Subregion 25 2.10 Global and Regional Value Chain Participation Rates and Shares of Their Components 27 2.11 Global and Regional Value Chain Participation RateAsia and the Pacific 27 2.12 Regional Value ChainGlobal Value Chain Intensity By Region

39、28 2.13 Regional Value ChainGlobal Value Chain Intensity by Major SectorAsia and the Pacific 28 2.14 Regional Value ChainGlobal Value Chain IntensityAsian Subregions 29 2.15 Decline in Global and Regional Value Chain Participation in Asia and the Pacific 30 2.16 Changes in Asias Simple and Complex G

40、lobal and Regional Value Chain Participation Rates 30 2.17 Growth of Trade Values and Volumes in Selected Food and Energy CommoditiesAsia and the Pacific 31 2.18 Average Prices of Food and Energy Commodities in Selected Major Commodity Markets 32 2.19 Number of Effective Food Trade Restrictions,2022

41、 33 2.20 Food and Energy Net TradeSelected Asian Economies 34 2.21 Foreign Exchange Rates of Asian Economies 35 2.22 Changes in Estimated 2022 Import Prices of Food and Energy Commodities in Local Currency 37 Asia and the Pacific 2.23 Newly Effective Free Trade AgreementsAsia and the Pacific 39 2.24

42、 Digital Policy InterventionsSelected Asian Economies 46 2.25 Trade-Related MeasuresAsia and the Pacific 47 2.26 Share of Total Trade Covered by Restrictive and Liberalizing Interventions by RegionWorld 48 2.27 Share of Total Trade Covered by Restrictive and Liberalizing Interventions by Asian Subre

43、gion 49 2.28 Share of Total Trade Subject to Trade Interventions from 2019 to 2022,by Selected Commodity Group 50 Asia and the Pacific 3.1 Total Inward Foreign Direct InvestmentBalance of Payments 58Tables,Figures,and Boxesvii 3.2 Quarterly Global Inward Foreign Direct InvestmentFirm-Level 59 3.3 Fo

44、reign Direct Investment by Mode of EntryAsia and the Pacific,Firm-Level 60 3.4 Quarterly Inward Foreign Direct InvestmentAsia and the Pacific,Firm-Level 61 3.5 Total Inward Foreign Direct Investment to Asia and the Pacific by SectorFirm-Level 62 3.6 Inward Greenfield Foreign Direct Investment Job Cr

45、eationAsia and the Pacific 63 3.7 Intraregional Foreign Direct InvestmentAsia and the Pacific,Firm-Level,by Mode of Entry 64 3.8 Greenfield Investment in Asia and the Pacific,by Selected Business Activity20032007 65 versus 20172021 3.9 Foreign Direct Investment Concentration IndexFirm-Level Investme

46、nt 66 3.10 Global Outward Foreign Direct Investment by SourceBalance of Payments 67 3.11 Quarterly Outward Foreign Direct InvestmentAsia and the Pacific,Firm-Level 68 3.12 Average Statutory Corporate Income Tax Rate by Region and Subregion,19802021 72 3.13 Corporate Income Tax Revenue,2010 and 2019

47、72 3.14 Revenue Forgone in Corporate Income Tax and Investment in Selected Asia and Pacific Economies,2019 73 3.15 Average Revenue Forgone by Tax TypeSelected Economies 74 3.16 Investment Incentives By Type,20112021 75 3.17 Broadband and Mobile Subscriptions and Service Cost in 2020 81 3.18 Regulato

48、ry Framework for Infrastructure Sharing in the Telecommunications Sector 82 4.1 Selected Commodity Prices 89 4.2 Federal Open Market Committee Participants Assessments of Appropriate Monetary Policy 90 4.3 Benchmark Monetary Policy Rate 90 4.4 Policy Rate Differential with the United States Policy R

49、ateSelected Asian Economies 91 4.5 2-Year Bond Yields and Foreign Exchange RateSelected Asian Economies and the United States 91 4.6 10-Year Bond Yields and Foreign Exchange RateSelected Asian Economies and the United States 92 4.7 Credit Default SwapsSelected Asian Economies 92 4.8 High Yield Index

50、es 92 4.9 Nonresident Portfolio FlowsSelected Asian Economies 93 4.10 Foreign Exchange RateSelected Asian Currencies 93 4.11 Volatility Index 94 4.12 Financial Stress Index 94 4.13 Sovereign Stripped Spreads 95 4.14 Stock Price IndexSelected Asian Economies 95 4.15 Total Bond Return IndexSelected As

51、ian Economies 96 4.16 Volume of Corporate Bond Issuance and Policy RateSelected Asian Economies 96 4.17 Variance Decomposition for Equity ReturnsAsia and the Pacific 97 4.18 Variance Decomposition of Bond ReturnsAsia and the Pacific 97 4.19 Debt Service Ratio of the Nonfinancial Private Sector 97 4.

52、20 Sectoral Debt RatioSelected Asian Economies 98 4.21 Corporate FinancingEmerging Asia 99 4.22 Bank Profitability IndicatorsSelected Asian Economies 100 4.23 Bank Nonperforming Loan RatioSelected Asian Economies 101 4.24 Cross-Border AssetsAsia and the Pacific 101 4.25 Change in Outward Portfolio I

53、nvestmentAsia and the Pacific 102 4.26 Cross-Border Loans and Deposit FlowsAsia and the Pacific 102 4.27 Cross-Border LiabilitiesAsia and the Pacific 103 4.28 Change in Inward Portfolio InvestmentAsia and the Pacific 104Tables,Figures,and Boxesviii 4.29 Currency Composition of Asia and the Pacifics

54、International Total Investment,2021 104 4.30 Currency Composition of Asia and the Pacifics International Debt Investment,2021 105 4.31 Currency Composition of Latin America and the Caribbeans International Total Investment,2021 106 4.32 Currency Composition of Latin America and the Caribbeans Intern

55、ational Debt Investment,2021 106 4.33 Currency Shares of Asia and the Pacifics International Investment Assets and Liabilities 107 4.34 Share of Trade with the United States and Trade Invoice in United States Dollar 108 5.1 Status of International Points of EntryGlobal 111 5.2 Migration to and from

56、Asia and the Pacific,by Region,19902020 113 5.3 Outflow of Migrants from Selected Asian Economies 114 5.4 Distribution of Employed Migrants in Major Host Economies by Level of Skills 116 5.5 Visas Issued to Asian Migrants in Select Migrant Host Economies 117 5.6 Status of Policies to Facilitate Orde

57、rly,Safe,Regular,and Responsible Migration and Mobility of People,2021 118 5.7 Remittance Inflows to Asia and the Pacific,and the World 121 5.8 Financial Flows in Selected Regions 122 5.9 Top 10 Remittance Recipient Economies in Asia and the Pacific 126 5.10 Average Total Cost of Remitting$200 131 5

58、.11 International Tourist Arrivals 133 5.12 Monthly Tourist Arrivals by Asian Subregions 134 5.13 International Tourism Receipts 135 5.14 International Travel Restrictions 138 5.15 COVID-19 Vaccination Profile by Region 139 5.16 Fully Vaccinated Persons and COVID-19 Cases 139 5.17 Outbound Tourism f

59、rom the Russian Federation and Ukraine,2019 140 5.18 Crude Oil and Jet Fuel Price Indexes 140 5.19 Barriers to Recovery of Global Tourism 141 5.20 Source Markets for Inbound Tourism in Asia and the Pacific,2019 142 6.1 Overall Integration Indexes,by Subregional Initiative 157 6.2 Dimensional Estimat

60、es by Subregional Initiative,2020 157 6.3 Investments by Funding SourceCentral Asia Regional Economic Cooperation Program 159 6.4 Investments by SectorCentral Asia Regional Economic Cooperation Program 159 6.5 Total Portfolio By SectorSouth Asia Subregional Economic Cooperation,20012022 177 6.6 ADB

61、Regional Investment in the PacificLoans and Grants,20102022 185 6.7 ADB Regional Investment in the PacificLoans and Grants by Sector,20102022 185 7.1 Number of Disasters,20002021 193 7.2 Production-and Demand-Based Carbon EmissionsAsia versus Non-Asia 197 7.3 Gross Domestic Product by Economic Activ

62、ity 198 7.4 Share of Industrial Inputs in Total ImportsAsia and the Pacific,European Union,United States 198 7.5 Embodied Carbon Emissions in Exports 199 7.6 Embodied Carbon Emissions in Imports 200 7.7 Asian Subregions Carbon Emissions Embodied in Exports by Destination,2019 200 7.8 Asian Subregion

63、s Carbon Emissions Embodied in Imports by Source,2019 200 7.9 Average Annual Net Carbon Emissions Balance by Major Trade Partners,20142019Asian Economies 201 7.10 Net Carbon Emission Balance with the Peoples Republic of China,20142019 202 7.11 Production Carbon Emission Factor by Region 202 7.12 Pro

64、duction Carbon Emission Factor by Asian Subregions 203 7.13 Carbon Emissions Intensity of Gross Exports and Imports,by Region 203Tables,Figures,and Boxesix 7.14 Carbon Emissions Intensity per Industry and Trade Shares per Region,2018 204 7.15 Carbon Emissions Embodied in Exports By Sector,2018 205 7

65、.16 Carbon Intensive and Non-Carbon Intensive Foreign Direct Investment by Host Region 209 7.17 Carbon Intensive and Non-Carbon Intensive Foreign Direct Investment by Asian Subregions 210 7.18 Job Creation in Greenfield Foreign Direct Investment for Carbon Intensive and Non-Carbon Intensive Industri

66、es 210 7.19 Sources of Greenfield Foreign Direct Investment for Asia and the Pacific 211 7.20 Estimated Greenfield Foreign Direct Investment toward Environmental Goods and Services 212 7.21 Correlation of Stringency and Enforcement of Environmental Regulations 213 7.22 Total Environmental Goods Impo

67、rts and Exports by Region 216 7.23 Share of Regional Environmental Services in Total Imports and Exports 217 7.24 Price of Solar Modules in the Top Producing Economies 217 7.25 Environment-Related Certifications by Region and in Asia and the Pacific 219 7.26 Preferential Trade Agreements and Environ

68、mental Provisions 220 7.27 International Investment Agreements with Environmental Reference,by Region and Treaty Element 221 7.28 Carbon Pricing Initiatives Implemented in Asia and the Pacific 222 7.29 International Investment Agreements with Environmental Reference,by Provision 231boXes 1.1 Regiona

69、l Trade Agreements Help to Mitigate the Adverse Impact on Trade Flows During Crisis 10 2.1 Growing Global and Regional Export Shares of the Peoples Republic of China 19 2.2 Gravity Model Estimation of Bilateral Exports 26 2.3 Trade-Restricting Measures Arising from the Russian Invasion of Ukraine 52

70、 3.1 Key Changes in Firm-Level Data Compilation 66 3.2 Investment Provisions in the Regional Comprehensive Economic Partnership 69 3.3 Adapting Investment Tax Incentives to New Tax Rules 78 3.4 Competition in the Telecommunications Sector in Asia and the Pacific 81 5.1 Economic Crisis and Remittance

71、 Inflows:The Cases of Sri Lanka and Pakistan 125 5.2 The Impact of the Russian Invasion of Ukraine on Money Transfers to Central Asia 128 5.3 The Sharpest Downturn in International Tourism Since 2000 136 5.4 Thailands Tourism Transformation Approach:DASH Model 143 7.1 Carbon Dioxide Emissions Embodi

72、ed in International Trade Data Set 197 7.2 Classification of Carbon Intensive and Non-Carbon Intensive Industries 208 7.3 Outbound Foreign Direct Investment of the Peoples Republic of China and the Belt and Road Initiative 214 7.4 Certification and Net-Zero Goals:The Case of Hydrogen 225 7.5 Innovat

73、ive Approaches to Climate Financing and Catalyzing Private Sector Investments 227 7.6 Toward Consistent Methodologies for the Calculation of Embedded Emissions 228 7.7 Assessing the Investment Effects of Environmental and Climate Change Elements of 232 International Investment Agreements 7.8 Singapo

74、reAustralia Green Economy Agreement 236 7.9 The Landscape of Carbon Pricing Instruments 237 7.10 The Process of Implementing the European Unions Carbon Border Adjustment Mechanism 238 7.11 Reaching Net Zero through an International Carbon Market:Evidence for Asia and the Pacific 241xFOREWORDThe COVI

75、D-19 pandemic,economic consequences of the Russian invasion of Ukraine,persistent geopolitical tensions on the trade and technology fronts,and growing investor jitters over high inflation and interest rates have created a challenging environment for governments to navigate a path toward inclusive an

76、d resilient recovery.Meanwhile,climate change is one of the biggest threats to achieving sustainable development.While climate goals are ambitious,difficulties in reaching global consensus on how to achieve them only add to concerns about how to rebuild economies on a sustainable footing.Against thi

77、s backdrop,the Asian Economic Integration Report 2023 highlights the power of regional cooperation as a force for inclusive,resilient,and sustainable economic development.Despite continued disruption to economic activities,regional trade and cross-border investment demonstrate strong resilience.The

78、reopening of borders is slowly allowing tourism to pick up speed,even as international arrivals remain well below pre-pandemic levels.However,more can be done to strengthen international trade and investment.Regional value chains remain tilted toward low value-added,low-tech sectors,while services t

79、rade continues to face regulatory hurdles.Broadening gains from digital trade requires better coordination to build coherent and comprehensive regulatory regimes across borders.These challenges underscore the need to intensify regional cooperation,including through implementing trade and investment

80、agreements.The reports theme chapter highlights the structural role of trade and investment in Asia and the Pacific in the fight against climate change in the context of Asias fast-paced industrialization contributing significantly to global carbon emissions.At the same time,the region is more vulne

81、rable to climate risks than any other part of the world.Carbon dioxide emissions from the region have tripled since 1995 and now account for half of global emissions.That scale of carbon output and Asias position as a net exporter of emissions to the rest of the world puts the region on the frontlin

82、e of climate change.The report stresses,however,that the right mix of policies and governance systems can make trade and investment an important part of the climate solution.Regional and international cooperation in trade and investment are essential for tackling climate change and greening the glob

83、al economy.The Asia-Pacific Economic Cooperation-led environmental goods list,intended to shepherd tariff reductions among members,is a good example of how regional commitments can advance global cooperation.Policy makers can further support climate action by facilitating trade in environmental good

84、s and services such as solar panels,wind turbines,and wastewater management that can improve resource efficiency and technology transfer.Efforts to support green business are also crucial for building a sustainable production and trading system,and reinforcing environmental and climate change chapte

85、rs in free trade agreements and investment treaties is pivotal for decarbonizing trade and investment.Fostering innovative and flexible instruments to foster international carbon markets offers unique opportunities for reducing global carbon dioxide emissions and leakages across borders,especially w

86、hen establishing and linking national emission trading systems based on concerted efforts by policy makers and stakeholders are emerging as a feasible solution.ForewordxiI hope this report will encourage more discussions on how the region can make concerted efforts to tackle pressing climate issues,

87、advance green trade and investment,and support economic recovery through stronger regional cooperation and voluntary compliance.albert parkChief Economist and Director GeneralEconomic Research and Regional Cooperation DepartmentAsian Development BankxiiThe Asian Economic Integration Report(AEIR)2023

88、 was prepared by the Regional Cooperation and Integration Division(ERCI)of the Asian Development Banks(ADB)Economic Research and Regional Cooperation Department,under the overall supervision of ERCI Director Cyn-Young Park.Jong Woo Kang coordinated overall production assisted by Mara Tayag.ERCI cons

89、ultants under Technical Assistance 6753:Asian Economic Integration:Building Knowledge for Policy Dialogue,20212022(Subproject 2)contributed data compilation,research,and analysis.Contributing authors include Sanchita Basu-Das,Rolando Avendano,and Ryan Jacildo,with data support from Pilar Dayag and L

90、ovely Ann Tolin(Regional Cooperation for Transformative Economic Recovery);Jong Woo Kang,Pramila Crivelli,Joshua Anthony Gapay,Kevin Daniel Quizon,Donna Faye Bajaro,and Gerald Gracius Yee Pascua(Trade and the Global Value Chains);Rolando Avendano,Clemence Fatima Cruz,Ryan Jacildo,John Lourenze Poqui

91、z,and Lovely Ann Tolin,with data support from Kristine Anne Gloria(Cross-Border Investment);Jong Woo Kang and Ana Kristel Lapid,with data support from Carlos Cabaero (Financial Integration);and Kijin Kim,Sanchita Basu-Das,and Ma.Concepcion Latoja,with data support from Pilar Dayag and Zemma Ardaniel

92、(Movement of People).The chapter“Updates on Subregional Cooperation Initiatives”was consolidated by Paulo Rodelio Halili,with data support from Pilar Dayag and based on contributions by regional departments in ADB:Central Asia Regional Economic Cooperation Secretariat including staff from the Region

93、al Cooperation and Operations Coordination Division of the Central and West Asia Department and the Public Management,Financial Sector,and Regional Cooperation Division of the East Asia Department(Central Asia Regional Economic Cooperation subsection);Greater Mekong Subregion(GMS)Secretariat(GMS sub

94、section);Regional Cooperation and Operations Coordination Division,Southeast Asia Department(Brunei DarussalamIndonesiaMalaysiaPhilippines East ASEAN Growth Area and Indonesia-Malaysia-Thailand Growth Triangle);Thiam Hee Ng,Dongxiang Li,Lani Garnace,and John Mercurio of the South Asia Department(Bay

95、 of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation);Thiam Hee Ng,Tadateru Hayashi,Pia Corrina Reyes,Esnerjames Fernandez,Jesusito Tranquilino,and Leticia de Leon of the South Asia Department(South Asia Subregional Economic Cooperation);Thiam Hee Ng,Dongxiang Li,Lani Garnace,

96、and Subash Sharma of the South Asia Department(South Asian Association for Regional Cooperation);and Rosalind McKenzie and Cara Tinio of the Pacific Department(Pacific subsection).Jong Woo Kang,Rolando Avendano,and Pramila Crivelli coordinated and contributed to the production of the theme chapter,“

97、Trade,Investment,and Climate Change in Asia and the Pacific,”with support from Mara Tayag.Background papers were provided by Emma Aisbett,Zemma Ardaniel,Sanchita Basu-Das,Wenting Cheng,Matthew Cole,Virender Kumar Duggal,Torsten Ehlers,Robert Elliot,Joshua Anthony Gapay,Bruce Jones,Jong Woo Kang,Kiji

98、n Kim,Jolly La Rosa,Christina Pak,John Lourenze Poquiz,Kevin Daniel Quizon,Wyatt Raynal,Prachi Srivastava,Shawn W.Tan,Mara Tayag,Lovely Ann Tolin,Lee White,Norihiko Yamano,and Liyun Zhang.Ricky Li,Joachim Monkelbaan,and Vesselina Ratcheva provided access to World Economic Forums environmental regula

99、tions data and the Climate Trade Zero initiative.The theme chapter benefited from comments and suggestions provided by Lei Lei Song and the participants of the following workshops and events:“ADB Virtual Inception Workshop on Trade,Investment,and Climate Change in Asia”held on 24 March 2022;“ADB-ADB

100、I Virtual Conference:Trade,Investment,and Climate Change in Asia”held on 2021 July 2022;“AEIR 2023 Theme Chapter Internal Workshop:Impact of Trade and Investment on Climate ACKNOWLEDGMENTSAcknowledgmentsxiiiChange in Asia and the Pacific”held on 5 October 2022;and“Workshop:Asian Economic Integration

101、 Report 2023”held on 16 November 2022.The overall guidance and comments of ADB Chief Economist Albert Park on the theme chapter are gratefully acknowledged.James Unwin and Eric van Zant edited the manuscript.Joseph Manglicmot typeset and produced the layout.Erickson Mercado created the cover design

102、and assisted in typesetting.Tuesday Soriano proofread the report.Ana Kristel Lapid,Clemence Fatima Cruz,and Carol Ongchangco assisted in proofreading.Support for AEIR 2023 printing and publishing was provided by the Printing Services Unit of ADBs Corporate Services Department and by the Publishing a

103、nd Dissemination Unit of the Department of Communications.Carol Ongchangco,Amiel Bryan Esperanza,Angel Love Roque,Marilyn Parra,Pia Asuncion Tenchavez,and Nanette Lozano provided administrative and secretarial support,and helped organize the AEIR workshops,launch events,and other AEIR-related webina

104、rs and briefings.Terje Langeland,with support from Lean Alfred Santos,of the Department of Communications coordinated the dissemination of AEIR 2023.xivABEC Almaty-Bishkek Economic CorridorADB Asian Development BankAEIR Asian Economic Integration ReportAPEC Asia-Pacific Economic CooperationARCII Asi

105、a Regional Cooperation and Integration IndexASEAN Association of Southeast Asian NationsASEAN+3 ASEAN plus the Peoples Republic of China,Japan,and the Republic of Korea BCA border carbon adjustmentBIMP-EAGA Brunei DarussalamIndonesiaMalaysiaPhilippines East ASEAN Growth AreaBIMSTEC Bengal Initiative

106、 for Multi-Sectoral Technical and Economic CooperationBIT bilateral investment treatyBOP balance of paymentsBRI Belt and Road InitiativeCAREC Central Asia Regional Economic CooperationCBAM Carbon Border Adjustment MechanismCCESP Climate Change and Environmental Sustainability ProgramCDM Clean Develo

107、pment MechanismCIT corporate income taxCO2 carbon dioxideCOVID-19 coronavirus diseaseCPIS Coordinated Portfolio Investment SurveyCPTPP Comprehensive and Progressive Trans-Pacific PartnershipCROP Council of Regional Organisations of the PacificDTA deep trade agreementsECD economic corridor developmen

108、tESCC Energy Sector Coordinating CommitteeETM Energy Transition MechanismETS emissions trading schemeEU European UnionFDI foreign direct investmentFTA free trade agreementGCM Global Compact for Safe,Orderly and Regular MigrationGDP gross domestic productGEA green economy agreementGHG greenhouse gasG

109、loBE Global Anti-Base ErosionGMS Greater Mekong SubregionGVC global value chainABBREVIATIONSAbbreviationsxvHFTC highly facilitated trade corridorsHS Harmonized SystemICT information and communication technologyIIA international investment agreementIMF International Monetary FundIMT-GT IndonesiaMalay

110、siaThailand Growth TriangleISDS investorstate dispute settlementISO International Organization for StandardizationIT information technologyJSI joint statement of intentkm kilometerLAC Latin America and the CaribbeanLao PDR Lao Peoples Democratic RepublicM&A merger and acquisitionMC12 12th Ministeria

111、l Conference of the World Trade OrganizationMNE multinational enterpriseMOU memorandum of understandingMRA mutual recognition agreementMVNO mobile virtual network operatorNAICS North American Industry Classification SystemNPL nonperforming loanNTB nontariff barrierOECD Organisation for Economic Co-o

112、peration and DevelopmentPRC Peoples Republic of ChinaR&D research and developmentRCEP Regional Comprehensive Economic PartnershipRED II EU Renewable Energy Directive IIRIF Regional Investment FrameworkRTA regional trade agreementsRVC regional value chainSAARC South Asian Association for Regional Coo

113、perationSASEC South Asia Subregional Economic CooperationSDG Sustainable Development GoalSEZ special economic zoneSME small and medium-sized enterpriseSO2 sulfur dioxide SRMTS SAARC Regional Multimodal Transport StudyTECO2 carbon dioxide emissions embodied in international tradeTVET technical-vocati

114、onal education and trainingUK United KingdomUNESCAP United Nations Economic and Social Commission for Asia and the PacificUNFCCC United Nations Framework Convention on Climate ChangeUS United StatesUSP University of the South PacificVCM voluntary carbon marketWTO World Trade OrganizationxviHIGHLIGHT

115、S Regional integration in asia and the pacific is progressing steadily Regional integration,as measured by the Asia-Pacific Regional Cooperation and Integration Index,has progressed steadily over the past 15 years and remained stable in 2020 despite the pandemic.The Asia-Pacific Regional Cooperation

116、 and Integration Index subindexes such as trade and investment,infrastructure,and digital connectivity have been notably buoyant.Southeast Asia fares better than other subregions in the dimensions of trade and investment,money and finance,infrastructure and connectivity,institutional arrangements,an

117、d people and social dynamics.Looking ahead,it is critical to deepen regional cooperation to address pressing climate challenges and advance trade and supply chain resilience,the digital economy,and sustainable tourism recovery.With Asias growing role in the fight against climate change,regional coop

118、eration is vital for decarbonizing its production,and trade and investment.Trade and Global Value Chains asias trade growth remains strong,but headwinds are increasing After the strong rebound in 2021 pushed Asias merchandise trade volume 11.3%higher than its pre-pandemic level,growth in trade has m

119、oderated in 2022.More recent high frequency data such as container freights and packing indexes as well as new export orders of global manufacturing purchasing managers point to a slowdown in the regions trade growth momentum.Tightening monetary policies to contain inflationary pressures in many adv

120、anced economies are affecting external demand and do not bode well for the regions exports.Overall,Asias trade is more correlated with industrial production cycles inside and outside the region than with consumer confidence,reflecting the regions trade structure,which relies more heavily on intermed

121、iate goods exports(57%of Asias total exports in 2021)and imports(70%of Asias total imports in 2021)than on consumer goods.Regional trade integration continues to deepen,although regional value chain linkages remain focused on less sophisticated sectors The regions intraregional trade share declined

122、slightly to 58.2%in 2021 from 58.5%in 2020,which is higher than the average of 57.4%between 2015 and 2019.Whereas the European Union(EU)and North American intraregional trade shares have stagnated over the past 3 decades,Asias has grown steadily,in part due to the weight of the Peoples Republic of C

123、hina(PRC).While both Asias global value chain and regional value chain(RVC)participation rates rose in 2021,its RVC relies more on simple networksproduction involving border-crossing oncethan complex ones.Likewise,its RVC displays stronger linkages in primary and low technology sectors than in high

124、technology and business services,suggesting the possibility of cultivating closer value chain linkages in high value added,high technology sectors.Recent trade cooperation and liberalization momentum offered by the Regional Comprehensive Economic Partnership and other bilateral and regional trade ag

125、reements are expected to help deepen RVC linkages,laying the groundwork for regional production and trade to become more resilient to global shocks.The regions growing interest in establishing digital trade rules on the free flow of data across borders can also promote innovation,competitiveness,eff

126、icient value chains,and economic growth.Highlightsxvii Regional cooperation is crucial to prevent harms from export bans and trade restrictions on food and energy prices Commodity price surges,prompted by the Russian invasion of Ukraine,have moderated lately.Export bans on food commodities such as w

127、heat,corn,and palm oil have exacerbated food price inflation,and dozens of such restrictions are still in place.Weakening local currency values through 2022 also added to the pains of growing import bills for the major food and energy importers of the region.Food and energy price increases have vary

128、ing impacts on Asian economies,depending on their status as a net importer or exporter,as well as the scale of their import bills and export revenues relative to economic size.Unlike crude oil and natural gas,major food importers are among the poorest economies in the region.To mitigate food securit

129、y risks posed by supply shocks and logistical hurdles,policy makers should strengthen international cooperation to eliminate trade restrictions and streamline commodity supply chains,promote trade facilitation,and cultivate alternative transportation routes.Cross-Border Investment global foreign dir

130、ect investment(fdi)flows to asia and the pacific continue to recover to pre-pandemic levels Based on balance of payments data,inward FDI expanded by 64.3%in 2021 worldwidenearly 7%higher than in 2019.FDI to Asia and the Pacific recovered in 2021,up 19.1%from 2020,accounting for 40%of global inward F

131、DI in 2021,and down from 55%in 2020.The PRC remains the top destination for global FDI in Asia,followed by Hong Kong,China and Singapore.Firm-level data similarly highlight Asias resilience in attracting FDI.Greenfield investment to the region grew a modest 0.8%in 2021 after declining 40.9%in 2020,w

132、hile the value of mergers and acquisitions recovered by 10.1%after a 10.0%loss.Recent years have seen greenfield investments increase in other business activities besides manufacturing.From 2003 to 2021,the share of greenfield investment in Asia increased in activities such as electricity(from 4%to

133、13%),and information and communication technology and internet infrastructure(from 1%to 4%),while contracting in extraction activities(from 11%to 2%).Meanwhile,outward investment from Asia recovered by 15.2%in 2021,based on balance of payments data.Japan and the PRC remain the largest sources of FDI

134、 from Asia.Having been robust in 2021,FDI flows may subside in 2022,given the uncertain global environment.FDI to Asia is likely to remain resilient as the region attracts FDI from a more diversified pool of investors.Investment chapters in new megaregional agreements,such as the Regional Comprehens

135、ive Economic Partnership,may complement efforts to promote investment.tax incentives for foreign investment ought to be reexamined amid changes in international tax rules Corporate income tax(CIT)incentives are a significant component of investment packages,in the form of instruments such as tax rat

136、e reductions,tax holidays,investment tax allowances,and tax credits.In Asia,CIT incentives represented 50%of all tax-related investment measures from 2011 to 2021.While well-targeted,nonredundant tax incentives can foster new industries and support firms during downturns,they can also be costly and

137、reduce the tax base.While CIT accounts for 21%of tax revenues in developing Asia,the estimated foregone revenue related to CIT measures in economies where information is available is about 2.2%of tax revenuesand can be as high as 5.8%.New global tax rules will limit tax competition and offset the us

138、e of tax incentives for foreign investment in the future.Economies in the region need to reassess their incentive structures accordingly and exercise caution when considering new ones.Greater premium can be placed on regulatory incentives that favor certain projects or sector characteristics.Cross-b

139、order cooperation will be critical for the regions effective adoption of global tax rules while balancing the use of tax incentives,and for designing appropriate incentives to encourage investment in key areas including green industries.HighlightsxviiiFinancial Cooperation growing uncertainties in g

140、lobal economic growth prospects and worsening financial conditions could put pressure on capital inflows and local currencies Nonresident portfolio inflows of debts and equities rebounded strongly after plunging in March 2020 during the onset of the pandemic,and remained robust throughout 2021.Since

141、 the United States(US)Federal Reserve Systems first interest rate hike in March 2022,however,net nonresident portfolio inflows turned negative although the scale of the net outflows are still relatively mild.Regional currencies have also seen a decline in their value relative to the US dollar.Stock

142、market performances have been lackluster in 2022,reflecting tightening liquidity and financial conditions and a slowing economy.Debt-to-gross domestic product ratios across sovereign,corporate,and household sectors increased post-pandemic in many regional economies.Given the heightened financial unc

143、ertainties,policy makers need to remain vigilant in monitoring financial market conditions and guarding against a buildup of systemic risks and potential spillover effects.If financial uncertainty and evaporation of dollar liquidity trigger sharp exchange rate volatility,it could have negative impac

144、ts on balance sheets and debt management.Therefore,regional financial safety nets,such as the ASEAN+3s Chiang Mai Initiative Multilateralisation,need to be strengthened to provide a backstop in case of liquidity and balance of payment crunches.The ASEAN+3 Multi-Currency Bond Issuance Framework,a pol

145、icy program under the Asian Bond Markets Initiative,could promote common bond issuance in the region based on a regionally standardized framework.asias financial integration has progressed steadily Intraregional inward portfolio debt ratio increased to 29%in 2021,from 28%in 2017,while the inward equ

146、ity ratio rose to 21%from 18%,and cross-border bank loan and deposit inflow ratio grew to 38%from 37%.Stronger regional financial integration could help recycle a greater portion of regional savings into regional investments.Growing financial interconnectedness,however,has also highlighted the risks

147、 of cross-border spillover and contagion effects,which might be triggered by regional shocks and financial distress.Economies in the region could strengthen an array of safety nets,such as their international foreign exchange reserves,bilateral swap arrangements,and regional financial arrangements s

148、uch as the Chiang Mai Initiative Multilateralisation.Policy measures to help cushion impacts from global and regional shocks could include temporary capital flow management and foreign exchange measures,and macroprudential arrangements.Movement of People as more borders reopen and travel requirement

149、s ease,outbound migration from asia and the pacific continues to increase Asian migrants resumed emigration to major host economies where labor demand is improving,such as in the Middle East,North America,some European economies,and Oceania.In 2022,the aftermath of the Russian invasion of Ukraine ag

150、gravated the condition of Central Asian migrants,while the subregion experienced a sudden large jump in inflow of skilled Russian workers and businesses seeking safety.While work visa issuance in major developed host economies has yet to recover,labor shortages and demand for more high-skilled worke

151、rs could open more opportunities for Asian migrants.Regional cooperation initiatives need to aim at improving international migration governance frameworks to uphold the tenets of the Global Compact for Migration,including migrant rights,cooperation and partnerships,and socioeconomic well-being.Thes

152、e could drive and sustain global recovery and revitalize the development impact of international migration.Highlightsxix Remittance inflows display resilience alongside rising relative economic contribution Inflows to the region recovered with a 3.4%growth in 2021,reaching$325.5 billion,after a 1.9%

153、dip in 2020.Since 2019,remittance inflows also overtook tourism receipts as the second-largest type of financial inflow following net FDI inflows.Except for East Asia and Oceania,remittance inflows to Asian subregions improved in 2021,bolstered by recovery in major host economies in North America,th

154、e Middle East,and Europe.In 2022,the Russian invasion of Ukraine led to large money transfers from the Russian Federation to Central Asia,accompanied by Russian workers and companies.The average cost of sending$200 to Asia was 5%in the second quarter of 2022still higher than the Sustainable Developm

155、ent Goal target of 3%by 2030.Advancing knowledge transfer on digital financial platforms,promoting greater transparency,and improving the remittance infrastructure could help lower remittance costs.An enabling legal and regulatory environment could also contribute to cross-border interoperability an

156、d further promote formal remittance channels.tourism recovery has picked up speed,but the level of international tourist arrivals remains much below the 2019 level International tourist arrivals in Asia and the Pacific rose 399%year-on-year for the first 8 months of 2022,but only to about 10.3%of th

157、e pre-pandemic 2019 numbers.Among the subregions,Southeast Asia reached 20%of the pre-pandemic level,while Central Asia and South Asia touched 50%.The variation is largely driven by differences in the pace of border reopening,public health protocols,and peoples confidence in overseas travel.The PRCs

158、 zero-COVID policy held back the tourism recovery in East Asia.The Russian invasion of Ukraine also continued to pose a downside risk to Asian tourisma potential loss of about one-third of the Russian Federations outbound tourists,especially to the PRC,Thailand,and some Central Asian economies.Highe

159、r fuel prices translating to higher airfares and travel expenses,alongside weak global growth prospects,are dampening the recovery momentum.Experts foresee the global tourism sector rebounding to 2019 level by 2024.For post-pandemic recovery,economies in the region need to look at several policy opt

160、ions to build sustainability and resilience while addressing pre-pandemic challenges that include narrow source markets,mass tourism,lack of infrastructure,and high informality.While some policy options can be developed at the national level,greater regional cooperation is needed to deal with the pr

161、olonged challenges.Theme Chapter:Trade,Investment,and Climate Change in Asia and the Pacific asia and the pacific is one of the most vulnerable regions to climate change risks yet emits the largest volume of carbon dioxide Annual temperatures have risen faster in the last 30 years than in any other

162、region,and are now 0.86C above the 19812010 average.Asia is also increasingly facing more extreme precipitation incidences such as storms,floods,and landslides,having borne the brunt of almost 40%of disasters worldwide in the past 2 decades.Ironically,it is responsible for about a half of global ann

163、ual carbon dioxide(CO2)emissions.Co2 emissions embodied in asias production increased sharply,surpassing its demand Emissions embodied in production in the region have almost tripled since 1995,largely reflecting the unparalleled pace of economic growth and manufacturing to satisfy demand,both withi

164、n the region and in export markets.Massive global demand for manufacturing goods,including carbon intensive ones,may not have been met without Asias rapid expansion of production capacity,which also increased CO2 emissions as a byproduct.Rapid growth has involved heavy resources consumption in the p

165、roduction of goods,with manufacturings share now exceeding 20%of gross domestic product,which is higher than the 11%share in the US and 15%share in the EU.Asias fast incorporation into the global value chain through industrialization,while helping promote economic growth and prosperity,has also cont

166、ributed to this byproduct.Asias CO2 emissions embodied in production have grown much faster than the consumption side,with the region exporting CO2 emissions to the rest of the world.many asian economies are net exporters in their Co2 emission balances with developed economies in europe and north am

167、erica In 2019,Asias production-based CO2 emissions were 17.2 giga tonnes.After exporting 4.5 giga tonnes and importing 3.5 giga tonnes,the region consumed 16.2 giga tonnes of CO2 emissions.This left a 1.0 giga tonne positive CO2 emissions balance for the region.Total CO2 emissions from gross exports

168、 have risen almost threefold over 20 years although the trajectory has moderated recently.The regions CO2 emissions from gross exports had overtaken Europes in 2003,led by East Asia.On the other hand,Asias total CO2 emissions embodied in gross imports have risen more slowly than for exports over tho

169、se years.better emissions-reducing technology,stricter environmental regulation,and growing environmental consciousness have moderated the emissions intensity in asias production and exports over the past 2decades However,Asia still records the highest CO2 emission intensities in both production and

170、 exports.This is partly due to the regions industrial structure,with high shares of traded products coming from carbon intensive industries.The share of carbon intensive exports in Asia was 62.3%in 2018,while it was 40.2%for the EU plus the United Kingdom,and 37.3%for North America.The share of indu

171、strial inputs in Asias total imports,at about 60%,was also higher than for other regions,reflecting a significant import share of intermediate goods for production in Asia rather than final consumption goods.The regions relatively high dependence on manufacturing compared with primary and services s

172、ectors also contributes to high CO2 emissions.The effect of this factor is likely to diminish as more Asian economies develop and transition to more services-driven and digital economies.there is room to improve asias low carbon competitiveness in high carbon intensive industries With economic size

173、and industrial structure held constant as factors,many Asian economies demonstrate higher CO2 emission intensity(emissions per output or export value)than the US and EU economies in such sectors as utility and basic metals.However,significant heterogeneity is apparent across economies.For example,so

174、me Asian economies would show lower emission intensity than developed economies even in some carbon intensive sectors.This is because economies can use different energy sources and production technologies.asia has attracted the largest share of global fdi in carbon intensive industries,but its share

175、 in global non-carbon intensive fdi is increasing Trends in Asias greenfield investment reflect its role as a global manufacturing hub.On average,Asia hosted 33.1%of global carbon intensive FDI flows from 2008 to 2016,above industrialized regions such as North America(29.7%)and Europe(22.5%).East As

176、ia and Southeast Asia host nearly three-quarters of the regions carbon intensive FDI,mainly in manufacturing,retail trade,mining,gas and oil extraction,and utilities.At the same time,the region lags only Europe as a destination for FDI in non-carbon intensive industries,accounting for 20%of global g

177、reenfield investment in these sectors.By source,intraregional FDI flowsinvestments from other Asian peersalso reflect an important shift.They make up about 45%of the carbon intensive investments in the region,followed by investments from North America(28.5%)and Europe(24%).Yet,participation from Asi

178、an investors in non-carbon intensive industries is growing rapidly,having tripled from 9.8%to 31.5%from 2008 to 2016,suggesting an encouraging shift in regional investment toward cleaner industries.fdi into environmental goods and services is also growing in asia The regions estimated share of green

179、field FDI in environmental goods and services grew from 3.4%in 2005 to 11.4%in 2021,with a major share concentrated on renewable energies.Indeed,an average 41.6%of foreign investment in environmental goods and services was destined for solar electric power projects and 20.5%for wind electric power.T

180、his could facilitate the transfer of green technology from foreign investment and firms,which is crucial for the adoption of emissions abatement technologies.HighlightsxxTrade and investment policies should be part of the climate action trade and investment in environmental goods and services can he

181、lp mitigate climate change Clean and renewable energy goodssuch as solar panels and wind turbinesand resource-efficiency goods are critical to reduce greenhouse gas emissions.They encourage low-carbon production techniques and reallocate resources toward activities with low-emission intensities.Asia

182、s trade in environmental goods is remarkable in this regard as it accounts for more than 40%of the global volume,both as exporter of renewables and importer of environmental management appliances,among other products.On the other hand,the regions environmental services trade lags far behind other re

183、gions,accounting for less than 2%of the global total,suggesting there is great room to develop and cultivate its industrial potential.With better and more affordable access to green technologies,asian businesses have a massive opportunity to improve resource efficiency while reducing their environme

184、ntal footprint However,challenges remain in leveraging this promise.A narrow scope and lack of consensus on the definition of environmental goods,along with tariff and nontariff measures on environmental products in some Asian economies,limit the benefits.Promoting trade in environmental goods will

185、require preferential treatment for a broader range of goods,including rapidly changing technologies in areas such as energy and resource efficiency.Further,a regional initiative to define and liberalize environmental services is imperative.interoperability of certification schemes and mutual recogni

186、tion could be pathways to lower regulatory burdens and facilitate green trade Interoperability should be an essential component of nationally developed certification schemes.An important step toward this is the alignment of embedded emissionsemissions over the supply chain or parts thereofaccounting

187、 methodologies.Recent experience suggests that interoperability can best be supported through a modular approach to boundary definition for embedded emissions accounting.This will ensure that embedded emissions are calculated for distinct modules along the supply chain.Likewise,mutual recognition ag

188、reements(MRAs)for conformity assessment can also facilitate access to markets.MRAs can simplify the verification process by a specific conformity assessment body.Adoption of MRAs will help reduce redundant efforts and technical duplication,while ensuring much-needed convergence to encourage green tr

189、ade.trade agreements can be useful for fostering climate policies,yet further progress needs to be made Environmental provisions in preferential trade agreements across the world have increased dramatically from 2provisions per agreement on average in 1990 to 87 provisions in 2018.They have been imp

190、ortant in removing barriers to climate-friendly goods,services,and technologies.Trade agreements also outline other areas for climate mitigation such as the use of alternative energy and net-zero goals.In addition,trade facilitation measures,in particular those promoting digitalization,can help redu

191、ce carbon emissions by increasing transparency,simplifying customs procedures,improving border agency coordination,and shortening delays at borders.Raising the coverage and depth of environment and climate change provisions or incorporating a separate chapter on climate change mitigation efforts int

192、o regional trade agreements can help ensure their effectiveness in achieving climate goals.international investment agreements(iias)could also be better utilized to promote climate action With climate-related litigation on the rise,there is further scope to align IIAs with net-zero commitments.As it

193、 stands,the existing IIA network falls far short of effectively supporting climate goals.Less than 10%of bilateral investment treaties in Asia contain environmental and climate-related references.Most of them aim to reserve policy space for environmental regulation,prevent lowering environmental sta

194、ndards to attract investment,and encourage environmental cooperation.Empirical assessments show that the inclusion of environmental and climate-related references in bilateral investment treaties has a moderate but positive impact on non-carbon intensive FDI inflows.HighlightsxxiAs investment framew

195、orks become more ambitious in their climate policy,economies could pursue introducing a model agreement or“opt in”mechanisma multilateral agreement where economies can flexibly join to modify old agreementswhich includes substantive standards on environmental protection and access to investorstate d

196、ispute mechanisms in climate-related cases.Further,Asian agreements could expand coverage to areas beyond environmental regulation to support climate mitigation,including market access for climate investment,green investment incentives,and investment facilitation in green industries.new modalities o

197、f international cooperation are emerging to implement climate action in trade and investment novel and practical international green economy collaborations are looming These can help Asian economies accelerate actions on the identification,certification,and freer trade of green products,and facilita

198、te innovation and green technology transfers.Memorandums of understanding and joint statements of intent could build the entry level framework.While being low-cost in terms of required resources with low risk involved(as they are generally not legally binding),they could be a step toward more ambiti

199、ous collaboration(including legally binding agreements).Further,green economy agreement(known as GEA)offers an innovative,promising avenue for cross-border collaboration to tackle climate change by combining green industrial policy objectives with the depth,commitment,and legal standing of a formal

200、agreement.Through GEA,economies could pursue deep regulatory collaboration and facilitate trading in environmental goods and services across borders,among other achievements.Carbon pricing is crucial for curbing emissions efficiently Momentum is growing for the use of market-based mechanisms,either

201、through a carbon tax or carbon pricing system.However,Asian economies have yet to seize the momentum fully.New measures such as border carbon adjustments also loom largeparticularly in the EU.While the details of its implementation are yet to be finalized,the Carbon Border Adjustment Mechanism will

202、likely have a negative impact on the welfare of developing economies.Potential controversies remain,surrounding possible conflict with the principle of voluntary mitigation efforts,inadequacy in capturing the global social costs of carbon emissions,and questions on World Trade Organization complianc

203、e.Economies with a high exposure of trade in emission-intensive industries could be affected more than others.Asian economies need to be monitoring developments closely and to take steps to mitigate risks under the changing trade environment.a global approach could offer the best solution for the re

204、duction of emissions and carbon leakages across borders An international framework on cross-border carbon measures or a global carbon pricing mechanism can help resolve deficiencies in unilateral approaches.While a fully functional international emissions trading system as outlined in Article 6.4 of

205、 the Paris Agreement may not be feasible in the short term,bottom-up approaches can build the foundations for a global carbon market.As an intermediate process,direct and indirect linking of existing emissions trading schemes can be more effective than fragmented approaches in reducing mitigation co

206、sts,limiting carbon leakage,and fostering convergence in carbon prices.Regional carbon market alliances can also further facilitate trade of carbon assets,increase transparency,and harmonize standards.Regional economies will need support to take full advantage of these opportunities.Technical assist

207、ance and capacity building could provide knowledge on different carbon market models and help employ the most efficient technical options for implementation.Highlightsxxii1Regional Cooperation for transformative economic Recovery1While the COVID-19 risk dissipates,emerging challenges keep Asias econ

208、omic outlook modest.Asia and Pacific economies are emerging from the lows of the protracted coronavirus disease(COVID-19)pandemic with reduced hospitalization and eased border restrictions.1 However,the challenges are not altogether over.The growth slowdown in the United States(US)and Europe coupled

209、 with a dip in domestic activity in the Peoples Republic of China(PRC)are weighing on Asias growth prospects.Policy rate hikes across the world to rein in surging inflation,exacerbated by the escalation of geopolitical tensions and the PRCs zero-COVID policy for a period that constrained the supply

210、chains,provide another drag.In light of the buildup of headwinds,the Asian Development Outlook 2022 Supplement in December pared the growth forecast for developing Asia to 4.2%in 2022 and 4.6%in 2023(ADB 2022a).The expected growth rate for the region is weaker than the 7.0%expansion rate recorded in

211、 2021.Cross-border economic activities are progressing unevenly across trade,investment,and tourism.International flows were treading contrasting paths midway through 2022.The growth in value of the merchandise and services trade of Asian economies has remained robust although losing some traction a

212、mid persistent weakness in domestic conditions of key external markets and the tense geopolitical climate.Foreign portfolio investments have pulled back as near-term uncertainties rise,while foreign direct investment(FDI)inflows are seemingly holding up well,indicative of a robust longer-term invest

213、or outlook.In the meantime,tourist arrivals and remittances are recovering briskly in a number of economies.Goods trade in the region continues to expand through the third quarter(Q3)of 2022,but the momentum is decelerating in line with the global trend.Asias merchandise exports value growth has slo

214、wed to about 12%year-to-date from 29%in the same period the previous year(Figure 1.1).The regions merchandise imports largely follow a similar trend,rising by about 14%year-on-year from January to September 2022,down from 31%12 months earlier.Notable drivers include the weakening global economy,as t

215、he US,the European Union(EU),and the PRC hobble;the ongoing Russian invasion of Ukraine;and some degree of base effects,owing to the strong growth the previous year.There are some encouraging indications even though the economic outlook is still challenging.Besides slowly tapering food and fuel pric

216、es,the agreement reached on Ukraines grain exports signals an openness to compromise,although the situation remains precarious overall.2 The decline in shipping cost is another welcome development.The Global Container Freight index has notably fallen by about 75%since September 2021,1 Asia and the P

217、acific,or Asia,consists of the 49 regional member economies of the Asian Development Bank(ADB).The composition of economies for Central Asia,East Asia,the Pacific and Oceania,South Asia,and Southeast Asia are outlined in ADB.Asia Regional Integration Center.Economy Groupings.https:/aric.adb.org/inte

218、grationindicators/groupings.2 The Government of the Russian Federation reportedly sought a review of the deal in September 2022(Bland and Clyne 2022).2Asian Economic Integration Report 2023although the prevailing rate is still high relative to the rate before the pandemic.3 On the downside,the ongoi

219、ng energy crisis in Europe could squeeze the regions economic activity,which could stifle Asias trade in the coming months.Structurally,as discussed in Chapter 2,Trade and Global Value Chains nontariff measures,such as sanitary and phytosanitary standards and technical trade barriers,remain a consid

220、erable trade hindrance.The number of active nontariff measures imposed on Asia exceeded 12,000 in 2020,which is more than threefold that in 2000(Figure 1.2).Worryingly,the trend suggests a steady increase,with data as of July 2022 already exceeding the number for the entire 2020.Growth in the region

221、s services trade value was robust through the second quarter of 2022,although like merchandise trade,the rate is gradually declining.Total services trade grew by about 20%through to the Q2 2022,compared with the same quarter of 2021(Figure 1.3).Sectors leading that growth were transportation;telecom

222、munications,computer,and information;and other business services.Gross transaction value rose close to that in the same period in 2019 before the pandemic hit.4 Advanced estimates indicate that the global momentum is sustained(WTO 2022),which bodes well for the regions trade prospects.Digital servic

223、es trade gained importance in recent years with a rise in digitally enabled cross-border trade transactions.Evidently,its share in the total services trade in Asia is estimated to have risen from less than 35%in 2005 to over 55%in 2020(ADB 2022b).However,digital regulations in Asian economies(e.g.,t

224、elecom regulations,data protection,competition policy,cybersecurity act,and others)are found to be relatively figure 11:merchandise trade value growthasia and the pacific(%change,year-on-year)201001020304050Q1Q2Q3Q4Q1Q1Q1Q2Q2Q2Q3Q3Q3Q4Q4201920192019201920202020202020202021202120212021202220222022Exp

225、ortsImportsQ=quarter.Note:Asia and the Pacific includes Hong Kong,China;India;Indonesia;Japan;Malaysia;Pakistan;the Peoples Republic of China;the Philippines;the Republic of Korea;Singapore;Taipei,China;Thailand;and Viet Nam.Source:ADB calculations using data from CEIC Data Company.3 The weekly Frei

226、ghtos Baltic Index(Global Container Freight)dropped from over$11,100 in the second week of September 2021 to about$2,800 in the last week of November 2022.See Freightos Data.Freightos Baltic Index-Global Container Freight.https:/ December 2022).4 Annualized data refer to the four-quarter moving sum.

227、The latest data are as of Q1 2022.figure 12:trade-Related measures imposed on asia and the pacific(number)02,0004,0006,0008,00010,00012,00014,000200020052010201520202022Note:Based on cumulative number of nontariff measures in force as of the end of each year.Source:ADB calculations using data from W

228、orld Trade Organization.Integrated Trade Intelligence Portal.https:/i-tip.wto.org/goods/default.aspx(accessed July2022).Regional Cooperation for Transformative Economic Recovery3While still robust,investors sentiment for the region in the medium and long terms is arguably weighed down by global econ

229、omic uncertainties and the pressure for multinational companies to reshore(Knizek,Jenner,and Dharmani 2022).On the other hand,global and domestic infrastructure expansion plans that are a part of the recovery agenda will help sustain the momentum.For example,the Group of Seven economies have launche

230、d the 5-year,$600 billion Partnership for Global Infrastructure and Investment project(Savoy and McKeown 2022),which is said to mainly catalyze private finance and use official finance on a limited scale.Enhancing the competitiveness of Asian economies investment climate in the coming years may requ

231、ire a reexamination of domestic investment laws in the context of the international tax reform being pursued,the so-called inclusive framework.As discussed in Chapter 3:Cross-Border Investment,these may include figure 13:services trade value growthasia and the pacific(%change,year-on-year)-30-20-100

232、102030Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q1Q2Q3Q420192019201920192020202020202020202120212021202120222022Q=quarter.Notes:Trade in services is computed as trade in services credits plus debits.Asia and the Pacific includes Armenia;Australia;Cambodia;Georgia;Hong Kong,China;India;Indonesia;Japan;Kazakhstan;Malaysia;

233、Nepal;New Zealand;Pakistan;the Peoples Republic of China;the Philippines;the Republic of Korea;Singapore;Taipei,China;and Thailand.Source:ADB calculations using data from International Monetary Fund Balance of Payments and International Investment Position Statistics.https:/data.imf.org/BOP(accessed

234、 November 2022).5 The definition of the Asia and Pacific region here is based on United Nations Economic and Social Commission for Asia and the Pacific(UNESCAP)and Organisation for Economic Co-operation and Development(OECD)(2022).less integrated compared with traditional merchandise trade regulatio

235、ns(e.g.,tariffs,quota,licensing standards,and procedures)(UNESCAP and OECD 2022).5Net foreign direct investment(FDI)receipts of Asian economies show resilience in the first half of 2022,although data in the second quarter hint some growing apprehensions.Traditionally large FDI recipients appear to h

236、ave had a mixed performance year-to-date(Figure1.4).FDI inflows to Australia;Hong Kong,China;India;and Japan were bulkier than the previous year while inflows into the PRC and Singapore receded marginally.The year-to-date value of inflows into these economies are notably generally higher than they w

237、ere in the same period in 2019.Inflows have also risen markedly in other developing economies in the region.Taipei,China in East Asia;and Armenia and Georgia in Central Asia have at least doubled their inflows year-to-date relative to the previous year.figure 14:inward foreign direct investmentasia

238、and the pacific($billion)050100150200250300Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q1Q2Q3Q420192019201920192020202020202020202120212021202120222022Q=quarter.Notes:Asia and the Pacific includes Armenia;Australia;Bangladesh;Cambodia;Georgia;Hong Kong,China;India;Indonesia;Japan;Kazakhstan;the KyrgyzRepublic;the Lao Peopl

239、es Democratic Republic;Malaysia;Mongolia;NewZealand;Pakistan;the Peoples Republic of China;the Philippines;the Republic of Korea;Singapore;Sri Lanka;Taipei,China;Thailand;Uzbekistan;and Viet Nam.The data refer to net direct investment liabilities(i.e.,foreign placements net of foreign withdrawals).S

240、ource:ADB calculations using data from CEIC Data Company.4Asian Economic Integration Report 2023incentives in tax,research and development,and regulations.Corporate income tax(CIT)incentives are a significant component of that work.Tax Foundation data show that CIT rates across economy groups have s

241、teadily declined over the years(Figure 1.5a)and suggest that CIT rates in Asia in 2021 are lower than Africa,Latin America,and North America but higher than in the European Union and the Middle East.Asian economies have introduced several investment incentives in recent years,particularly CIT-based

242、measures(Figure 1.5b).The aggregate number of measures in Asia is more than the tally in Europe and North America,and Latin America and the Caribbean,but less than in Africa.Asias net portfolio investments have receded in the first 9 months of 2022,reflecting near-term apprehensions about corporate

243、earnings,debt yields,and narrowing interest rate differential between regional economies and advanced economies.Steep US Federal Reserve policy rate hikes were arguably pivotal in the direction of capital flows during the period.The Federal Reserve increased its policy rate by 425 basis points betwe

244、en mid-March and end-December 2022.Capital markets subsequently wobbled,while local currencies in the region depreciated considerably against the US dollar.Reversing the net portfolio investment flows hinges on the effectiveness of inflation containment measures and the pace of stabilization in fina

245、ncial conditions(Figure 1.6).figure 15:average statutory Corporate income tax Rate and new investment incentives by Region01020304050200020102021AfricaAsia and the PacificEuropean UnionLatin AmericaMiddle EastNorth America050100150200AfricaAsia and the PacificLatin America andthe CaribbeanEurope and

246、 North AmericaCIT-based incentivesIndirect taxes/dutiesOther taxesFinancial incentives(b)New investment incentives by type(20112021,number)(a)Average statutory corporate income tax rate(%,per annum)CIT=corporate income tax.Sources:ADB calculations using data from Tax Foundation.Corporate Taxes datab

247、ase.https:/taxfoundation.org/publications/corporate-tax-rates-around-the-world/(accessed August 2022);and United Nations Conference on Trade and Development(2022).figure 16:nonresident portfolio inflowsasia and the pacific($billion)10050050100150200Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q1Q2Q3Q4201920192019201920202

248、020202020202021202120212021202220222022EquityDebt securitiesQ=quarter.Note:Asia and the Pacific includes India;Indonesia;Malaysia;Mongolia;Pakistan;the Peoples Republic of China;the Philippines;the Republic of Korea;Sri Lanka(equity);Taipei,China(equity);Thailand;and Viet Nam(equity).Source:ADB calc

249、ulations using data from Institute of International Finance.Monthly Emerging Markets(EM)Portfolio Flows Database.https:/ October 2022).Regional Cooperation for Transformative Economic Recovery5Reassuring investors arguably necessitates containment of solvency risks as debt has piled up in some econo

250、mies in the region,as discussed in Chapter 4:Financial Cooperation.Asian economies credit default swap spreads have been inching up generally since the start of 2022,although the wider dispersion indicates that the perceived risk is evolving in a dissimilar manner across the region(Figure 1.7a).The

251、JP Morgan Emerging Markets Bond Index sovereign stripped spreads underline even more the divergence in risk perception for Asian economies with the inclusion in the sample of Mongolia,Pakistan,and Sri Lankaeconomies facing more challenges than others in Asia(Figure 1.7b).The buoyancy of remittances

252、was pivotal in sustaining private consumption at the height of COVID-19 restrictions,while a recent revival of tourist arrivals brought some relief.Inflows of overseas-based individuals also partly supported the external positions of the economies.However,as with the previous year,data in recent mon

253、ths suggest a mixed picture.Robust inflow appears to continue in economies like Armenia,Georgia,Kazakhstan,and Samoa in 2022,with year-to-date rates outpacing those in 2021(Figure 1.8).Two factors that may underpin the strength on remittance inflows into Central Asia,as discussed in Chapter 5:Moveme

254、nt of People,are(i)the rise in energy prices that resulted in increased demand for migrants in several sectors in the Russian Federation,and(ii)the relocation of families and enterprises because of the Russian invasion of Ukraine.In contrast,the decline in remittances persists,and even steepened in

255、2022 in Bhutan and Sri Lanka.The sharp fall of the value of the Sri Lankan rupee against the US dollarabout 80%between March and October 2022resulting from the central banks decision to float the currency,coupled with dire socioeconomic and political conditions domestically,possibly means that natio

256、nals offshore are holding up from sending money home.Bhutans year-to-date remittance slump stems from the peculiar large drop in transfers coming from Australia.Meanwhile,tourist arrivals are slowly picking up and providing much-needed support to ailing tourism and affiliated enterprises.The level i

257、s still far off from 2019 arrivals in many economies,but the trajectory is on the figure 17:perceived solvency Riskasia and the pacific(basis points)(b)Sovereign stripped spread range(a)Sovereign credit default swap spread range 050100150200250300350Jan 2020Mar 2020May 2020Jul 2020Sep 2020Nov 2020Ja

258、n 2021Mar 2021May 2021Jul 2021Sep 2021Nov 2021Jan 2022Mar 2022May 2022Jul 2022Sep 2022Nov 202201,0002,0003,0004,0005,0006,0007,0008,000Jan 2020Mar 2020May 2020Jul 2020Sep 2020Nov 2020Jan 2021Mar 2021May 2021Jul 2021Sep 2021Nov 2021Jan 2022Mar 2022May 2022Jul 2022Sep 2022Notes:The black line refers t

259、o the median value.The gray lines refer to the upper and lower bounds.The blue shade refers to the range.For the credit default swap,Asia and the Pacific includes Indonesia,Japan,Malaysia,the Peoples Republic of China,the Philippines,the Republic of Korea,Thailand,and Viet Nam.The data refer to the

260、mid-spreads based on 5-year senior sovereign US dollar bonds.For the sovereign stripped spreads,Asia includes Armenia,India,Indonesia,Kazakhstan,Malaysia,Mongolia,Pakistan,Papua New Guinea,the Peoples Republic of China,the Philippines,and Sri Lanka.The data refer to JP Morgan Emerging Markets Bond I

261、ndex Sovereign Stripped Spreads.Source:ADB calculations using data from Bloomberg.6Asian Economic Integration Report 2023rise.The rate of recovery is however uneven across the region,with Georgia and Fiji enjoying larger increases than regional neighbors in annualized terms(Figure 1.9).It helps that

262、 many developing Asian economies rank well in tourism competitiveness compared with counterparts outside the region,but ample scope remains to build strategic partnerships and explore new source markets to maximize the potential of the sector,as noted in Chapter5:Movement of People.6Regional integra

263、tion is progressing steadily,with Southeast Asia integrating faster than other Asian subregions.Notwithstanding the COVID-19-induced disruption to economic activities across the world,the Asia-Pacific Regional Cooperation and Integration Index(ARCII)has remained relatively stable,declining only a ma

264、rginal 0.3%from 2019 to 2020(Figure 1.10).7 Subindexes broadly support resilience in the overall index.figure 18:Remittances growthselected asian economies(%,year-on-year)22.72.21.56.05.114.69.024.64.414.543.810.24.81.33.024.429.264.9120.9125.280302070120170Sri LankaBhutanBangladeshThailandPhilippin

265、esFijiSamoaGeorgiaKazakhstanArmenia2022 YTD2021YTD=year to date.Note:YTD data are as of October 2022 for Bangladesh;September 2022 for Armenia,Bangladesh,Georgia,Kazakhstan,Samoa,Sri Lanka,and Thailand;August 2022 for the Philippines and Fiji;and July 2022 for Bhutan.Source:ADB calculations using da

266、ta from domestic sources.figure 19:international tourist arrivalsselected asian economies(January 2020=100,12-month moving sum)020406080100120Jan 2020Apr 2020Jul 2020Oct 2020Jan 2021Apr 2021Jul 2021Oct 2021Jan 2022Apr 2022Jul 2022Oct 2022CambodiaFijiGeorgiaIndonesiaMalaysiaSri LankaThailandViet Nam0

267、20406080100120Jan 2020Apr 2020Jul 2020Oct 2020Jan 2021Apr 2021Jul 2021Oct 2021Jan 2022Apr 2022Jul 2022Oct 2022AustraliaJapanNew ZealandRepublic of KoreaSingaporeTaipei,China(b)Advanced and newly industrialized economies(a)Developing economiesSource:ADB calculations using data from CEIC Data Company

268、and domestic sources.6 For tourism competitiveness,refer to Uppink and Soshkin(2022).7 ARCII is a multidimensional measure of regional integration.The composite index captures the extent of integration with Asia in terms of trade and investment,money and finance,regional value chain,infrastructure a

269、nd connectivity,people and social dimensions,institutional arrangements,technology and digital connectivity,and environmental cooperation.Subregional indexes measure integration of the subregion with Asia as a whole.Regional Cooperation for Transformative Economic Recovery7Relative to the other regi

270、onal blocs,Asia trails the EU in its degree of regional integration while staying ahead of the Middle East,Africa,and Latin America(Figure 1.11a).Within the region,the highest degree of integration with Asia is in Southeast Asia,closely followed by East Asia.In comparison to other subregions,Southea

271、st Asia fares better in the dimensions of trade and investment,money and finance,infrastructure and connectivity,institutional arrangements,and people and social dynamics(Figure1.11b).East Asia has a slight edge in technology and digital connectivity integration while Central Asia also reports high

272、scores in this dimension.Economies covered by the subregional initiatives in Southeast Asia,specifically the Association of Southeast Asian Nations(ASEAN)and the Greater Mekong Subregion(GMS),are relatively more integrated among them than economies in other subregional programs such as the Central A

273、sia Regional Economic Cooperation Program(CAREC),and South Asia Subregional Economic Cooperation(SASEC)(Figure1.11c).All subregional initiatives showed improvement in the extent of intrasubregional integration,except for SASEC,which experienced a decline.Climate-related risks emanating from trade an

274、d investment call for deeper global cooperation.8Asia is estimated to account for about 50%of the global emissions in 2019 as discussed in Chapter 7:Theme ChapterTrade,Investment,and Climate Change in Asia and the Pacific.9 Notably,Asia has become the net emissions exporter to non-Asian economies.It

275、s carbon emissions in production have exceeded that of consumption as it is the major provider of products to meet growing global demand.Asia hosts more FDI from carbon intensive industries than other regions.On average,Asia accounted for 33%of inward carbon intensive FDI flows from 2008 to 2016 on

276、average,followed by North America(29.7%)and Europe(22.5%)(Figure 1.12).East Asia and Southeast Asia hosted about three-quarters of the carbon intensive FDI,mainly in manufacturing,retail trade,mining,gas and oil extraction,and utilities.Nevertheless,Asias share of FDI in highly carbon intensive indu

277、stries relative to non-carbon intensive industries remains within the global average.Indeed,for non-carbon intensive industries,Asia was the second destination for investments after Europe,making up for 20%of greenfield investment for the period.figure 110:overall and dimensional integration indexes

278、asia and the pacific0.00.10.20.30.40.50.60.7200620072008200920102011201220132014201520162017201820192020Trade and investmentMoney and financeRegional value chainInfrastructure and connectivityPeople and socialInstitutional arrangementsTechnology anddigital connectivityEnvironmental cooperationOveral

279、l indexNotes:Based on ADBs Asia-Pacific Regional Cooperation and Integration Index(ARCII)estimates.Higher values denote greater regional integration.Source:ADB.Asia Regional Integration Center.ARCII Database.https:/aric.adb.org/database/arcii(accessed December 2022).8 This subsection is based on Cha

280、pter 7:Theme ChapterTrade,Investment,and Climate Change in Asia and the Pacific.9 ADB calculations using data from OECD.Carbon dioxide emissions embodied in international trade(TECO2)data set.8Asian Economic Integration Report 2023Moreover,the carbon dioxide(CO2)content of trade involving Asia is hi

281、gh,which reflects the regions industrial structure with high dependence on the manufacturing sector relative to services.In 2018,carbon intensive exports comprise about 62%of the figure 111:indexes of Regional integration(c)Dimensional indexesIntegration withinsubregional initiatives,2020 (a)Dimensi

282、onal indexesIntegrationwithin the region,2020 (b)Dimensional indexesIntegration ofAsian subregions with Asia and the Pacific,2020 Money and financeRegional value chainInfrastructure andconnectivityPeople and socialintegrationInstitutionalarrangementTechnology anddigital connectivityEnvironmentalcoop

283、eration0.00.20.40.60.81.0Trade and investmentintegrationMoney and financeintegrationRegionalvalue chainInfrastructure andconnectivityPeople and socialintegrationInstitutionalarrangementsTechnology and digitalconnectivityEnvironmentalcooperationTrade and investmentintegrationTrade and investmentinteg

284、rationMoney and financeintegrationRegionalvalue chainInfrastructure andconnectivityPeople and socialintegrationInstitutionalarrangementsTechnology and digitalconnectivityEnvironmentalcooperationAsia and the PacificEULatin AmericaAfricaMiddle East0.00.20.40.60.81.0Central AsiaEast AsiaSoutheast AsiaS

285、outh Asia0.00.20.40.60.81.0ASEANCARECGMSSASECASEAN=Association of Southeast Asian Nations,CAREC=Central Asia Regional Economic Cooperation Program,EU=European Union(27 members),GMS=Greater Mekong Subregion,SASEC=South Asia Subregional Economic Cooperation.Source:ADB.Asia Regional Integration Center.

286、Asia-Pacific Regional Cooperation and Integration Database.https:/aric.adb.org/database/arcii(accessed December 2022).regions total exports,which is higher than EU+United Kingdom(UK)(40%)and North America(37%).Meanwhile,the proportion of carbon intensive imports in the regions total imports was 58%a

287、lso higher than the shares of EU+UK(41%)and North America(53%).Regional Cooperation for Transformative Economic Recovery9In the coming years,a deepening of regional cooperation on trade in environmental goods,reinforcing environmental and climate change chapters in free trade agreements,along with t

288、rade facilitation,are going to be pivotal in the regions efforts to decarbonize production and trade.Coming up with an acceptable definition of environmental services or criteria in determining their environmental nature is a crucial first step.Encouraging environmental goods trade likewise necessit

289、ates going beyond Asia-Pacific Economic Cooperations(APEC)list of 54 environmental goods that enjoy preferential treatment.Just as vital is the interoperability of certification systems that enable the use of mutual recognition agreements.A separate chapter on climate change mitigation policies in t

290、he regional trade agreements of developing Asia or increased utilization of green economy agreements will also be beneficial.At the domestic level,it is crucial to nurture the production of green goods,encourage green business,and put together the appropriate financial incentives.To this end,investm

291、ent policy frameworks can be made more in line with the climate change agenda.Having a trustworthy carbon pricing mechanism,which helps internalize the costs of pollution,is also key.This entails that policy makers have to keep up with carbon pricing instruments used in reducing emissions cost-effec

292、tively,depending on the economy context,and lay out the policies necessary to make them operable.Regional cooperation remains crucial for a seamless supply chain,enhanced digital trade,and sustainable tourism recovery.Regional cooperation is crucial in the regions efforts to chart a path for post-CO

293、VID-19 economic recovery while navigating geopolitical tensions.Climate change is fast emerging as a systemic challenge,and digital transformation is presenting both opportunities and threats.Addressing vulnerabilities in supply chains have become a key policy issue for Asian economies.Regional trad

294、e agreements(RTAs),as one of the forms of regional cooperation,have potential to mitigate the adverse impact of supply chain disruptions.RTAs between participating economies promote strategic relations,enabling the flow of goods even during periods of crisis.Hayakawa and Imai(2021)acknowledge that e

295、ven during the height of the export ban during COVID-19,exports of limited quantity of essential goods continued based on economies bilateral relations and demographic ties.Similarly,Basu-Das and Sen(2022)agree that the onset of the pandemic hurt exports of essential goods.But the damage was not as

296、great for economies engaged in RTAs,emphasizing the role of governments in committing to RTAs and implementing cooperation measures that lower trade barriers and create seamless logistics(Box 1.1).The ongoing trend toward deeper trade agreements is argued to promote trade and boost global value chai

297、n integration(Rocha and Ruta 2022).10 Implementation of trade facilitation measures,for instance,as committed to the World Trade Organization(WTO)Trade Facilitation figure 112:Carbon intensive and non-Carbon intensive foreign direct investment by host Region(%)01020304050607080901002008201620082016C

298、arbon intensiveindustriesNon-carbon intensiveindustriesAsia and the PacificEuropeNorth AmericaLatin AmericaOceaniaFDI=foreign direct investment.Notes:The figure shows share of FDI by geographic location of destination economy in 2008 and 2016.The graph does not include data from Africa and the Middl

299、e East.Sources:ADB calculations using data from Financial Times.fDI Markets;Groningen Growth and Development Centre.World Input-Output Database.https:/www.rug.nl/ggdc/valuechain/wiod/?lang=en(accessed November 2022);and methodology based on Timmer et al.(2015).10 Mattoo,Rocha,and Ruta(2020)define de

300、ep trade as“reciprocal agreements between countries that cover not just trade but additional policy areas,such as international flows of investment and labor,and the protection of intellectual property rights and the environment,among others.”10Asian Economic Integration Report 2023box 11:Regional t

301、rade agreements help to mitigate the adverse impact on trade flows during CrisisEnsuring that trade channels for essential commodities remain unhampered in times of crisis is critical to lessen the impact of economic shocks.However,as circumstances at the onset of the coronavirus disease(COVID-19)pa

302、ndemic showed,achieving such an objective requires more concerted and targeted cross-border multilateral policies.Basu-Das and Sen(2022)noted that Asian economies participation in the trade of COVID-19 essential medical goods tends to be influenced by their level of economic development.Low-income e

303、conomies are largely dependent on imports,whereas selected middle-and high-income economies are part of two-way trade and engaged in the low end of the vaccine value chain(such as vaccine packaging materials and protective gears).The authors,who examined bilateral trade data for selected medical ite

304、ms that were clustered into seven categories,further point out the following:(i)The decline in global trade interdependence in selected categories of essential medical goods from 2019 to 2020 suggests that governments prioritized their own populations over others as infection rates grew.(ii)The Peop

305、les Republic of China and Japan were two economies whose overall trade interdependency in these goods dropped in 2020 from 2019.(iii)Trade interdependencies are higher for Asian economies in personal protective equipment and the lower end of the vaccine value chaina segment dominated by developed ec

306、onomies in Europe and North America.In such conditions,the authors argue and empirically demonstrate that regional trade agreements(RTAs)are significant trade facilitation enablers that helped economies access essential medical goods when COVID-19 infection rates were rising and governments were foc

307、used on prioritizing their own populations.As shown in the box table,economies in RTAs appear more likely to engage in trade in essential medical goods,and this mitigates the impact of the pandemic on the vaccine and test kits supply chain in these economies.As bilateral trade costs are reduced,part

308、icipation in RTAs or commitment to trade facilitation initiatives arguably provides a channel to access these essential medical goods like a form of insurance.Being part of an RTA also tends to strengthen participation in global vaccine value chains.The authors opine that RTAs can be further utilize

309、d to identify different source economies for imports of essential goods and enhance investment in domestic production of these goods to diversify risks;lower or eliminate trade barriers;simplify border procedures;and enhance hard and soft infrastructure to improve access to essential medical goods b

310、etween economies.effect of Regional trade agreements on essential medical goods trade accounting for Covid-19 Casesvariablesppetest Kitsvaccinesingredientsvaccineprimary packagingvaccine storageand distributionvaccineadministrationExportpartnerCOVID-19-0.116*-0.015-0.006-0.047*-0.047*-0 046*-0.0090.

311、0170.0170.0340.0150.0110.0150.010RTA0.133*0.043*0.101*0.090*0.082*0.060*0.0100.0250.0230.0510.0230.0230.0230.022Import partnerCOVID-190.050*0.019-0.0200.008-0.039*-0.019-0.042*0.0100.0160.0350.0080.0070.0110.014RTA-0.0150.016-0.030-0.0330.067*0.070*0.11*0.0220.0240.0510.030.020.0220.025Log pseudolik

312、elihood-3.24E+11-2.31E+11-1.88E+10-3.71E+10-1.92E+10-1.90E+10-3.82E+10Pseudo R20.50950.60470.72450.42340.61340.45950.6370Observations115,47357,32714,06486,40028,80086,40028,800COVID-19=coronavirus disease,PPE=personal protective equipment,RTA=regional trade agreement.Notes:Estimation results shown b

313、y the Poisson pseudo-maximum likelihood method.*,*,and*denote 1%,5%,and 10%levels of statistical significance,respectively.The standard errors reported in square brackets are those clustered by pairs of economies.In all specifications,we control for economy-pair fixed effects and trade flow-year fix

314、ed effects following Yotov et al.(2016)that proxies for multilateral resistance terms in the structural gravity equation first suggested by Anderson and van Wincoop(2003).COVID-19 indicates the number of confirmed cases.Source:Basu-Das and Sen(2022).Source:ADB staff based on Basu-Das and Sen(2022).R

315、egional Cooperation for Transformative Economic Recovery11Agreement and the United Nations Economic and Social Commission for Asia and the Pacific(UNESCAP)digital trade,remains crucial.Addressing other challenges,such as export restrictions,narrow source market,and weaknesses in the human component,

316、transport network,information technology systems,assumes priority given the macroeconomic impact of inflationary pressure due to supply chain disruptions(UNESCAP and ADB 2021).In addition,not many developing economies have specific provisions to govern trade policy in crisis situations(Alisjahbana 2

317、020).While RTAs generally include clauses to permit exceptions in time of emergencies,they do not feature provisions to effectively deal with trade disruptions in emergency situations for the most part.Shirotori et al.(2021)posit that it is relevant to have dedicated provisions in the trade agreemen

318、ts that distinctly define an“emergency situation”and list essential goods and services that ought not to be subjected to tight restrictions to avoid severe shortage.They also note the importance of establishing special government procurement arrangements and emergency mutual recognition of technical

319、 regulations.As the fourth industrial revolution deepens,the importance of digitalization of trade becomes more pronounced.Digital services,digital payment,and digitally enabled trade have grown rapidly along with new technologies.Simultaneously,restrictions in digital space have increased in recent

320、 years,limiting the potential of digital trade for benefits of small and medium-scale enterprises and the marginalized population.Data from the OECD show that in general,digital trade restrictiveness globally has marginally risen since 2014(Figure 1.13).In Asia,the policies are relatively more stabl

321、e,although the region remains more restrictive than the rest of the world based on the median indexes.Addressing the challenges require coordination among economies to establish and modernize digital rules(e.g.,privacy laws,cybersecurity act,data flow,etc.),and harmonize digital policies.The Compreh

322、ensive and Progressive Trans-Pacific Partnership(CPTPP),Digital Economy Partnership Agreement,and the SingaporeAustralia Digital figure 113:digital services trade Restrictiveness World and asia and the pacific(median)0.000.020.040.060.080.100.120.140.160.180.2020142015201620172018201920202021WorldAs

323、ia and the PacificNotes:The index takes the value from 0(completely open)to 1(completely closed).There are 77 economies in the sample,18 of which are in Asia.The Asian economies included in the database are Australia;Brunei Darussalam;Cambodia;Hong Kong,China;India;Indonesia;Japan;the Lao Peoples De

324、mocratic Republic;Malaysia;Nepal;New Zealand;Pakistan;the Peoples Republic of China;the Republic of Korea;Singapore;Thailand;Vanuatu;and Viet Nam.Source:ADB calculations using data from Organisation for Economic Co-operation and Development.OECDStat:Digital Services Trade Restrictiveness Index.https

325、:/stats.oecd.org/?datasetcode=STRI_DIGITAL(accessed October 2022).Economy Agreement are three agreements involving Asian economies that hold promise to address digital policy fragmentation.According to the World Economic Forum(WEF 2020),while the scope and coverage of the three agreements vary,they

326、share common objectives:reducing trade barriers to the digital economy;building compatible standards and creating greater regulatory harmonization to facilitate interoperability and trust;and facilitating cooperation and capacity-building mechanisms,among others.A comparison of the features of the t

327、rade agreements suggests that SingaporeAustralia Digital Economy Agreement has more extensive provisions on digital issues than the other two(Table 1.1).The set of provisions include commitments to promote digital trade,pushing for paperless trading and electronic invoicing,online consumer protectio

328、n,open government data,dispute settlement,and commonality in standards and protocols,among others.The CPTPP,on the other hand,has the least number of provisions,although it also covers a number of pertinent concerns.12Asian Economic Integration Report 2023The Digital Standards Initiative,under the a

329、uspices of the Asian Development Bank(ADB),the Singapore government,and the International Chamber of Commerce,is another highly relevant undertaking in that it aims to bridge gaps in digital standards and practices such as the use of digital ledgers and QR codes(ADB 2022c).The initiative mainly seek

330、s to forge an agreement among exporters,shippers,ports,customs,warehousing/logistics,and importers concerning the standards and protocols to underpin digitalization.To this end,a proposed advisory board will bring stakeholders together“to promote and explain the measures that are needed,such as a mo

331、del digitalization law designed by the United Nations.”As the tourism sector is on its path to recovery,building a sustainable one,leveraging on digitalization and addressing challenges of climate change concerns is important.Prior to the pandemic,digitally enabled tourism services have been growing

332、 rapidly in line with the deepening of digitalization.It is estimated that the global revenue of online travel platforms alone is already over$1 trillion in 2019(Villafuerte,Narayanan,and Abell 2021),which is only lower than the e-commerce industry.The Asian region accounts for over 37%of the global

333、 revenue pie,which is roughly the same as the combined total of the US(20%)and the euro area(17%),largely driven by the PRC.The appeal of digitalized services arguably hinges on the ease in scanning options and in conducting the transactions.According to the United Nations World Tourism Organization(UNWTO)the use of technologies has made tourism more efficient,inclusive,and economically and enviro