Session 2 Eap Regional Strategy

Securing the Future: Supporting Shared and Sustainable Growth in the East Asian and Pacific Countries and Beyond

East Asia

PacificRegiona

lStrateg

y

April 2008

East Asia Rising

Vulnerabilities & Fragility

East Asia Rising• Fastest growth &

poverty reduction of any region in last 15 years

• One of the most rapidly improving investment climates in the developing world

• Growth accompanied by rapid urbanization

• Source of global growth, investment, knowledge, innovation and aid

Regional GDP Growth (annual %)

-10.0

-5.0

0.0

5.0

10.0

15.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

East Asia Pacific

Latin America & Caribbean

Europe & Central Asia

Population Living Below $2 Per Day (annual %, at 1993 PPP)

0

10

20

30

40

50

60

70

80

90

1981 1984 1987 1990 1993 1996 1999 2002 2004

East Asia Pacific

Latin America & Caribbean

Europe & Central Asia

East Asia Rising• Fastest growth and





ECA6%

MNA3%

LAC55%

SAR2%

AFR4%

EAP30%

ECA18%

MNA7%

LAC31% SAR

5%

AFR5%

EAP34%

% of FDI to Developing Economies by Region

1998-00 2004-06

Cost of Business Start Up Procedures(% of GNI per capita)

87

20

69

61

41

12

4841

-

10

20

30

40

50

60

70

80

90

100

EAP ECA LAC SAR

2003 2007

Time Required to Start a Business(in days)

77

44

77

4847

26

73

33

-

10

20

30

40

50

60

70

80

90

100

EAP ECA LAC SAR

2003 2007

Source: World Bank, 2008 GDF and WDI Central Database

Source: World Bank, 2008 GDF and WDI Central Database






Source: 2005 Population Database, United Nations Population Division

Urban Population (% of Total)

2529

63

71

29

42

64

78

0

10

20

30

40

50

60

70

80

90

SAR EAP ECA LAC

1990 20062 million people per month -- the largest rural to urban shift in history

Urban Population by Country(% of Total)

4048

63

3226

4449

60

69

77

4642

62 60

0

10

20

30

40

50

60

70

80

90

China Indonesia Philippines Thailand Vietnam East Asia World

2005 2030Region's urban population likely to increase by 500 million people






% Change in Number Patents Granted (from 1990-94 to 2000-04)

910

15

2123

6 6

0

5

10

15

20

25

30

Indonesia Philippines Malaysia Thailand China LatinAmerica

EmergingEurope


• Current economic volatility including impact on fuel & food prices & asset prices

• Rising inequality within countries, fueled in part by rapid urbanization

• 2nd largest Region of fragile states & sub-national regions after Africa

• Environmental damage & vulnerability to climate change

• Institutional capacity lags economic growth

GDP-weighted average of CHN, IDN, MYS, PHL, THA, KHM, LAO, MNG, and VNM monthly yoy inflation rates, using 2007 GDPin constant 2000 $ as weights.

GDP-weighted average of CHN, IDN, MYS, PHL, THA, and VNM monthly yoy inflation rates, using 2007 GDP in constant 2000 $ as weights.

EAP: GDP-Weighted Average Food Inflation

-5

0

5

10

15

20

25

Apr-1997

Jun-1998

Aug-1999

Oct-2000

Dec-2001

Feb-2003

Apr-2004

Jun-2005

Aug-2006

Oct-2007

EAP: GDP-Weighted Average CPI Inflation

-5

0

5

10

15

20

25

Jan-1990

Dec-1991

Nov-1993

Oct-1995

Sep-1997

Aug-1999

Jul-2001

Jun-2003

May-2005

Apr-2007


One-third of EAP city dwellers live in slums • Current economic volatility including impact on fuel & food prices & asset prices











Number of Fragile States/Situations, FY08

20

11

54

32

0

5

10

15

20

25

AFR EAP ECA MNA SAR LCR







Global ranks – highest CO2 Emitters (MTCO2)

Source:WB, 2007, based on IEA 2006

5957

5323

1696

1230

1166

844

424

361

359

284

156

80

0 1000 2000 3000 4000 5000 6000 7000

US (1st)

China (2nd)

Russia (3rd)

Japan (4th)

India (5th)

Germany(6th)

South Africa (12th)

Brazil (18th)

Indonesia (19th)

Thailand (24th)

Malaysia (28th)

Vietnam (42nd)


Selective 2006 Governance Indicators (Avg. Percentile Rank: 0-100)

0

10

20

30

40

50

60

70

80

EAP SAR LAC ECA

Control of Corruption Government Effectiveness Regulatory Quality

Composite Governance Indicator(percentile rank: 0-100)

0 10 20 30 40 50 60 70 80

Cambodia

China

Indonesia

Laos

Malaysia

Mongolia

PNG

Philippines

Thailand

Timor Leste

Vietnam

1998

2002

2006

Based on the average scores of three Worldwide Governance Indicators, namely, Government Effectiveness, Regulatory Quality, and Control of Corruption.






A New Partnership Strategy for EAP Pillar 1: Partnering with middle income and

emerging middle income countries to sustain and share gains in growth and prosperity

Pillar 2: Supporting the developmental underpinnings for peace, renewed growth and poverty reduction in the poorest and most fragile states & sub-national regions

Pillar 3: Strengthening support to global public goods and regional cooperation

Pillar 4: Acting as a platform for knowledge exchange within the region and with the rest of the world and support the growing global role of East Asia and Pacific Institutions

Supports five of the six Bank-wide strategic themes

Pillar 1: Partnering with MICs & Emerging MICs

What We Will DoAreas to scale up:• Manage fast growth

Environmental commons Rural-urban nexus Infrastructure bottlenecks Social protection

• Build platform for high income status Tertiary education Competitiveness Financial sector

development Governance

Pillar 1: Partnering with MICs & Emerging MICs

How We Will Do It

• Building the capacity of country systems

• Just in time policy notes• Reducing preparation time

and costs• New financial &

operational instruments• Joint work with IFC & MIGA

on public-private partnerships in energy & urban infra., financial sector development, sub-national investment climate

Pillar 2: The Poorest & Most Fragile States & Sub-national

Regions What We Will DoAreas to scale-up:• Building the capacity and

accountability of institutions Public financial management Natural resource management Investments in basic health,

education, rural development, infrastructure, CDD

• Supporting developmental underpinnings of peace Integrated recovery plans Rapid assistance for social &

economic activities Increased percentage of IFC

projects in fragile & poorest countries

Pillar 2: The Poorest & Most Fragile States & Sub-national

Regions How We Will Do It• Increasing staff presence,

including IFC investment staff• Making more use of non-

traditional products, e.g., SWAPs and MDTFs

• Facilitating government-owned donor coordination mechanisms

• Partnership with peace-building & humanitarian organizations

• Joint work with IFC & MIGA on natural resource & infrastructure investments, private sector regulatory environment, access to finance (including microfinance)

Pillar 3: Global Public Goods and Regional CooperationWhat We Will Do

Areas to scale-up:• Supporting climate change

mitigation and adaptation Technical exchange to help

with low carbon growth strategies

Programmatic approaches to clean tech., energy efficiency & geothermal investments

Avoided deforestation with focus on governance

Building financial sector capacity to finance energy efficiency

Pillar 3: Global Public Goods and Regional Cooperation

What We Will DoAreas to scale-up:• Supporting regional trade

initiatives ASEAN trade targets

• Regional programs: Greater Mekong Strategy Pooled programs in Pacific

• Strengthening financial markets & integration

• Continuing partnership on communicable diseases

Pillar 3: Global Public Goods and Regional Cooperation

How We Will Do It• Supporting regional institutions

& governments to lead global & regional efforts on GPGs

• Improved skills, capacity on climate change mitigation & adaptation, including greater field presence

• New financial products and bundling of IBRD/IDA, IFC & MIGA products

• Partnership with IFC & MIGA on energy investment, forestry governance, financial integration & south-south investments

Pillar 4: Knowledge Exchange & the Global Role of EAP

InstitutionsWhat We Will Do

Areas to scale-up:• Knowledge exchange

Expand knowledge exchange by supporting south-south and south-north exchanges

• Support growing global role for East Asia & Pacific Support policy-making on

global initiatives Partner with China, Korea,

Thailand on overseas development assistance programs

Pillar 4: Knowledge Exchange & the Global Role of EAP

InstitutionsHow We Will Do It

• Incorporate successful policy and program innovations from other regions, including OECD

• Expand use of Global Distance Learning Network

• Seminars & conferences to showcase Region’s successful development experience & exchange lessons learned with other regions

In Conclusion• EAP demonstrates the principal global dynamics,

opportunities & risks of the 21st Century Rising incomes versus environmental damage & economic

uncertainty Hugely successful poverty reduction versus growing

inequality & pockets of fragility Changing global governance dynamics

• The Bank’s program needs to adapt Prioritizing the type of support to MICs that will sustain a

transition to high income status & address social & environmental spillovers of fast growth

Investing in support to fragile situations where progress is needed to ensure the region’s collective stability and prosperity

Scaling up work on global public goods, in particular related to climate change

Recognizing the role of the region as a source of knowledge & indispensable stakeholder in global stability, prosperity & good governance