HKUST Business Review

"We are focusing on supporting digital transformation because it is so important for driving productivity growth," Park said, adding that the ADB is particularly focused on ensuring this transformation is inclusive. “It is important to avoid digital divides while maximizing how digital technologies can overcome barriers of remoteness." He also emphasized that the role of artificial intelligence (AI) and other emerging technologies in creating positive change cannot be overstated. "With AI on top of digitalization, there is a huge amount of investment occurring," Park said. The implications of all this for productivity and employment remain uncertain, but one thing is clear: it is crucial for emerging economies to adopt and embrace the latest technologies if they are to maintain their competitive edge in industrial output and other key areas. Regarding this, Professor Park believes that a pragmatic approach to economic policy is the way forward for these emerging markets. "Most countries in Asia want to focus on having good relations with all countries, and to focus on their own development objectives," he said. Staying non-aligned allows them to navigate complex geopolitical landscapes while maintaining economic momentum. Whenever necessary, the ADB is also ready to provide financial supporting or technical assistance on practical steps needed to effect transformation. "We do quite a lot of work on promoting trade facilitation, especially for small and medium-sized enterprises," Park said. This includes providing trade finance, supporting regional economic forums, and helping countries understand and leverage existing trade agreements. There are also forward-looking initiatives to invest in infrastructure for future growth and to develop human capital, factors which remain critical for all developing economies in the Asia region. This requires taking a holistic approach to economic development, which goes well beyond simple financial metrics. Progress in Regional Integration - Asia and the Pacific has surpassed other regions in most dimensions of the new Regional Integration Index of ADB Good Reason for Optimism Looking ahead, he remains optimistic about the general outlook for the region, despite the undeniable headwinds that are currently causing concern. "Asia continues to be the most dynamic region in the world," he said. "We are projecting about 5% growth, reflecting the hard work of millions of people and sound economic stewardship by many governments." In his view, Asia has long possessed a unique combination of innovation, adaptability and strategic economic planning that sets it apart. This gives rise to a characteristic dynamism which, backed by rapid advances in technology and pragmatic policies, will bring new opportunities and should inspire optimism. Indeed, countries like Vietnam, Singapore, and India are actively reshaping economic paradigms and creating models and standards from which others can learn. "Regional economic integration is deepening," Park said, noted that this is a critical advantage. Today, the majority of trade and foreign direct investment in Asia comes from within the region itself. Being able to rely on this “internal” economic ecosystem creates a strong buffer against any global uncertainties, and makes it possible to maintain growth momentum even if at a slightly reduced pace. 1 Overview 1 Trends in Regional Integration in Asia and the Pacific Asia and the Pacific has made significant progres in regional integration, surpassing other regions in most dimensions of the new Regional Integration Index of the Asian Developm nt Bank (ADB). Over the past 2 decades, Asia has significantly tightened its regional economic integration, surpassing other regions in foreign direct investment (FDI) and the Figure 1�1: Regional Integration Index by Dimension—Asia and the Pacific Versus Other Regions (a) (b) . . . . . FDI Finance Trade Africa Asia and the Pacific EU UK Latin America . . . . . FDI Finance Movement of People Movement of People Trade Africa Asia and the Pacific EU UK Latin America EU = European Union (27 members), FDI = foreign direct investment, UK = United Kingdom. Notes: Based on ADB’s Regional Integration Index estimates, the values for each dimension represent the ratio of the number of strong intraregional connections at the bilateral level relative to the sum of strong intraregional and extraregional connections. For the detailed methodology, indicators used per dimension, and data sources, see Box 1.1. Source: ADB calculations using data from ADB. Bilateral Economic Integration Index Database. 1 Asia refers to the 49 members of the Asian Development Bank (ADB) in Asia and the Pacific, which include Australia, Japan, and New Zealand in addition to 46 developing economies. “movement of people” (Figure 1.1). 1 For trade in goods and services, Asia led in 2005 but came in a close second to the European Union (EU) plus he United Kingdom (UK) in 2023. While the EU+UK continued to lead in fi ancial integration, Asia is a close second. Latin America has advanced but still remains behind in financial integration. Despite improvements, Africa remains the least integrated in terms of trade, FDI, and movement of people. The methodology and data used to measure regional integration is based on ADB’s Bilateral Economic Integration Index framework (Box 1.1). EU=European Union (27 members), FDI=foreign direct investment, UK=United Kingdom. Notes: Based on ADB's Regional Integration Index estimates, the values f r ea h dimension represent the ratio of the number of strong intraregional connections at the bilateral level relative to the sum of strong intraregional and extraregional connections. Source: ADB calculations using data from ADB, Bilateral Economic Integration Index Database HKUST Business Review 28