Asian Development Outlook 2004: Foreign Direct Investment in Developing Asia

Asian Development Bank (ADB) (2004)

The annual Asian Development Outlook provides a comprehensive economic analysis of 41 economies in developing Asia and the Pacific. On the basis of the Asian Development Bank's unique knowledge of the region, this 16th edition overviews aggregate trends and medium-term prospects by subregion–East Asia, Southeast Asia, South Asia, Central Asia, and the Pacific–in the context of global economic movements. The region's developing economies generally showed remarkable resilience in 2003. Despite the uncertainties generated by the Iraq conflict, high oil prices, the outbreak of the severe acute respiratory syndrome (SARS) epidemic, and a slow recovery in major industrial countries during the first half of the year, economic growth reached 6.3% in 2003, making it the most dynamic region in the world. Intraregional trade and strong consumer demand will define the outlook for developing Asia in 2004-2005. The stronger outlook for industrial countries over that period will provide a cushion against a possible slowing of surging exports to the People's Republic of China. It will also soften the impact of fiscal consolidation measures that need to be taken in some regional economies. The Asian Development Outlook 2004 includes a chapter on foreign direct investment (FDI) in developing Asia. It argues that, based on a study of a diverse group of developing Asian countries with large or rapidly rising inflows of FDI, the international benefits of FDI are, in fact, highly variable but not necessarily cost-free. The magnitude and productivity of capital flows are dependent on the establishment of an enabling, business-friendly commercial environment, consistent with national development objectives. In this context, a useful paradigm is the \"three i's\"–incentives, institutions, and infrastructure.

Annual Report