Will income inequality cause a middle-income trap in Asia? Bruegel Working Paper 2013/06, 10 October 2013

The Asian economy is expected to realise favourable growth during the first half of this century, but there is no guarantee. There is a discussion about a ‘middle-income trap’, which refers to a country that has realised rapid growth to become a middle-income country but is unable to grow further. A middle-income trap could occur not only if there is a delay in shifting the economy toward a productivity-driven structure, but also if there is a worsening of income distribution.We consider this in line with the theories of development economics and through a quantitative analysis. The relationship between income inequality and the trap can be explained by the Kuznets hypothesis and the basic-needs approach. Our quantitative analysis supports the Kuznets hypothesis, and indicates that,although a low-income country can accelerate its economic growth with the worsening of income distribution as an engine, a middle income country would experience a decreasing growth rate if it fails to narrow the income gap between the top and bottom income groups. The results also show that the basic-needs approach is also applicable in practice, and imply that the improvement of access to secondary education is important. A sensitivity analysis for three Asian upper-middle-income countries(China, Malaysia and Thailand) also shows that the situation related to a middle-income trap is worse than average in China and Malaysia. These two countries, according to the result of the sensitivity analysis, should urgently improve access to secondary education and should implement income redistribution measures to develop high-tech industries, before their demographic dividends expire. Income redistribution includes the narrowing of rural urban income disparities, benefits to low-income individuals, direct income transfers, vouchers or free provision of education and health-care, and so on, but none of these are simple to implement.

Is the EU-Central Asia Strategy running out of steam? EUCAM Policy Brief No. 17, May 2011

The EU’s Central Asia Strategy approaches its fourth anniversary. In that time the EU has placed its relationship with Central Asia on a more structured footing. Although progress has been made in building dialogue and in furthering engagement, the strategy’s limitations are increasingly obvious. This brief argues that the driving force of the EU engagement should be based on a closer link between security and development. Engagement in this broad field should be underpinned by a values based approach that seeks to promote more explicitly reform on human rights, rule of law, governance and democracy. The momentous changes sweeping across the Middle East and North Africa have demonstrated that even the most apparently durable authoritarian regimes are vulnerable to sudden political shocks.

Involving Central Asia in Afghanistan’s future – what can Europe do? EUCAM Policy Brief No. 20, August 2011

The EU argues in its Central Asia policy that it wants to take greater account of Afghanistan. But what does this mean in practice? There is a case for engaging the Central Asian states beyond agreements over supply and material transport routes to Afghanistan. Central Asian states themselves have the most to gain from a stabilised Afghanistan. Cultural ties and the increasing economic linkages between Central Asia and Afghanistan need to be taken into consideration so that Central Asian states can be assisted in playing a positive role in Afghanistan together with Western actors.

The turn to the East. The flawed diversification of Russian foreign policy. OSW Point of View Number 44, November 2014

The ‘turn to the East’ proclaimed by Russia in 2010 has failed to bring about a fundamental breakthrough in her relations with Asian countries, nor has it produced impulses for the economic modernization of Russia’s Far Eastern territories. Although the energisation of Russian policy towards Asia which has taken place under this slogan has diversified Russian foreign policy somewhat, this diversification has two weak points: Firstly, it has occurred only in the political sphere. The share of Asian countries in Russia’s foreign economic relations has not risen significantly in comparison with the share of European and North American countries. Secondly, the ‘turn to the East’ has turned out primarily to be a turn towards China. In all spheres – diplomatic, economic, energy and military – it is Beijing that has become the most important Asian partner for Moscow. The result is that the policy that aimed to limit the excessive – in the Kremlin’s view – dependence of Russia on the West is likely to turn Russia into a ‘junior partner’ of the People’s Republic of China.

Keeping EU-Asia Re-engagement on track. EU Centre Singapore Policy Brief No. 8, January 2015

The relationship between the European Union (EU) and Asia is in flux. The EU intensified its economic ties to Asia and boosted its security cooperation in the region in 2011 and 2012. But new challenges, including the crises in Ukraine and the Middle East, have made it difficult to sustain this incipient momentum. There are a number of steps that EU and Asian governments can and should take to continue to strengthen their relations.

The Role of Europe in Enhancing Cooperative Security in Asia and the Pacific: A View from Japan. Egmont Security Policy Brief No. 50, October 2013

Asia is a prominent export market for Europe while in the East and South China Seas, tensions continue. Europe has searched for its political role in Asia. This policy brief presents an analysis and argues the role of Europe in enhancing cooperative security in Asia and the Pacific, which would promote stability and peace there.

The EU, China and Southeast Asia: Divergent Views of Dealing with Human Security. Jean Monnet/Robert Schuman Paper Series Vol. 14 No. 8, May 2014

Introduction. This chapter takes a closer look at the European Union (EU), China, and the Association of Southeast Asian Nations (ASEAN)’s respective approaches to dealing with non-traditional security (NTS) challenges by investigating their policies toward Burma/Myanmar—a source country of numerous such challenges. It argues that, although all, as members of the ASEAN Regional Forum (ARF), see the need for multilateral solutions to fight organized crime, provide disaster relief, combat terrorism, prevent drug trafficking, etc., they differ with respect to the steps to be taken to protect human security in Asia-Pacific. China, initially hesitant to join the ARF for fear that other members might try to contain it, has come to value the principal forum for NTS challenges in the Asia-Pacific region since, like many ASEAN countries, it is a big proponent of non-interventionism, non-use of force, consensus decision-making, that is, the confidence-building mechanisms commonly referred to as the ‘ASEAN way’.2 The EU, as a strong proponent of human rights and the rule of law, repeatedly, has criticized ARF members for allowing sovereignty-related norms to get in the way of the protection of human rights, but it has refrained from assuming the role of norm exporter. As will be seen in the case of Burma/Myanmar, the EU does make its opinions heard and, when necessary, will take unilateral steps not supported by the ASEAN members of the ARF but, cognizant of the history of the region, for the most part, settles for supporting economic development and aiding in capacity-building, understanding that it would be counter-productive to exert pressure on reluctant ARF members to modify the non-interference norm. The chapter then speculates about the ‘ASEAN way’s’ longevity, arguing that, increasingly, there are internal and external dynamics that seem to indicate that the ‘ASEAN way,’ at least in its current form, may not be here to stay. The conclusion looks at what might be in store for Burma/Myanmar in the years to come.

Don’t Go Protectionist! Trade and Investment Relations between the EU and China. Asia Policy Brief 2012/1, June 2012

The European Parliament has proposed the creation of a body to monitor foreign – in particular Chinese – investment in the EU. The initiative, driven by fears of unfair competition and a hidden political agenda behind Chinese investments, should be rejected. There are better ways to promote openness and transparency in Sino-European economic relations.

Japan and China: Bitter Rivals and Close Partners. Asia Policy Brief 2013/03, June 2013

Japan and China trade a lot between each other. Unfortunately, however, they also argue a lot with each other. Since Tokyo’s purchase of three uninhabited Japanese-controlled islets in the East China Sea from their private owner in September 2012, the main subject of dispute has been that of sovereignty over maritime territories. While bilateral trade amounted to an impressive $333 billion in 2012 (slightly less than in 2011, when bilateral trade reached $345 billion), a bilateral territorial dispute over control and sovereignty of what Tokyo calls Senkaku and Beijing calls the Diaoyu Islands will most probably continue to remain at the very top of the agenda of Sino-Japanese relations in the months ahead.

Between nuclear armament and economic pragmatism: Is North Korea facing change? Asia Policy Brief 2013/04, September 2013

The balance a year and a half after the meanwhile second hereditary power transfer to Kim Jong-Un (Kim Chŏng-ŭn), grandson of the founder of the state, is undecided. The breakdown of the system, predicted by many analysts, has not happened yet. Neither have the reforms that were expected from the young man who has supposedly been educated in Switzerland. The country is not in stagnation however – quite the opposite. What has happened in North Korea in the last two years? What development trends are there and how can other countries approach them? These questions are discussed in the light of the tense security-political and humanitarian environment and the corresponding risks in this Asia Policy Brief.

Economic Consequences of a Transatlantic Free-Trade Agreement for Asia. Asia Policy Brief 2013/05, November 2013

Negotiations between the US and the European Union (EU) on a joint free-trade agreement began in July 2013. The economies involved are hoping for more intense trade activities, stronger economic growth and higher employment rates. A current study of the ifo Institut commissioned by the Bertelsmann Stiftung shows that these expectations would be met. For most other countries in the world, however, this would result in welfare loss. In the following we sketch some of the possible economic consequences of a comprehensive transatlantic free-trade agreement for the Asian region.

On the Road to Democracy? Political Liberalization in Myanmar. Asia Policy Brief 2014/01, January 2014

Myanmar’s liberalizing reforms initiated by President Thein Sein after taking office in March 2011 are raising high hopes of peace and democracy in the country. Progress, after nearly three years, has however been uneven: there have been positive developments in the area of press freedom, with regard to political prisoners and in dealing with the political opposition. At the same time the dialogue with ethnic groups has stagnated and ethnic and religious violence has escalated. This Asia Policy Brief critically assesses the reform policy and weighs up the chances of democratization of the long-time military regime.

Jokowi's Victory: The End of the New Order in Indonesia? Asia Policy Brief 2014/05, August 2014

Indonesia is the world’s largest Muslim-majority country. It is of immense importance for the security situation and economic integration in Pacific Asia. Political events in Indonesia have a profound impact on the whole region of Southeast Asia. Nevertheless, the 2014 parliamentary and presidential elections were hardly reported in the foreign media. The presidential elections in particular turned out to be a hard test for the young democracy.

Asian Middle Classes - Drivers of Political Change? Asia Policy Brief 2014/06, November 2014

Asia watchers have been kept exceptionally busy by recent political developments in the region. An unprecedented landslide victory in India’s general elections, pro-democracy protests in Hong Kong, close elections in Indonesia, a coup in Thailand – the list goes on. As unrelated as these events appear, analysts may find a missing link among a social group that is currently exploding in numbers: Asia’s middle classes. Often discussed simply in terms of its economic potential, Asia’s middle-income population is also flexing its political muscle. A closer look at its influence throughout the region in recent months seems to confirm for the field of politics what economists have known for some time: The rise of the Asian middle classes constitutes one of the most fundamental transformations of our time. The consequences remain to be seen.

The Coup One Year on: Thailand's "Ugly German" Constitution. Asia Policy Brief 2015/02, May 2015

A year after becoming a military dictatorship once more, Thailand’s new constitution – the 20th since 1932 – is taking shape. In it, the arch-conservative charter drafters stipulate that future elections will be conducted using a variant of Germany’s mixed-member proportional representation system. Their hope is that the resulting coalition governments will prevent future administrations from turning into populist one-man shows. The drafters may be hoping in vain.