None of us make our own running shoes, fix our own teeth, or build our own cars. We gain from living in societies where people specialise in what they do best, and work together to produce complex goods and services. So too it makes sense for the relations between countries that the free flow of goods and services has made people around the world healthier, wealthier, and wiser. From 2 May, in Incheon, the Board of Governors at the Asian Development Bank’s 56th Annual Meeting are discussing these issues around “economic openness”. This year’s theme is ‘Rebounding Asia’, and member countries will be looking for the best way forward to rebound from the global economic downturn.
For Australia, the rebound will require us to focus on building resilience and dynamism into our economy. We choose openness, engagement, and regional partnerships to achieve this goal. The COVID-19 pandemic was good for isolationists and xenophobes, and bad for globalisers and internationalists. International engagement is important in that it helps to alleviate poverty and extend the buying power of low-income families. For this, Australia and the ROK should continue to work together to maintain strong and sustainable regional trade, investment, and migration.
The Asian Development Bank’s Annual Meeting takes place at a challenging time. The world faces strong economic headwinds. Global growth is projected to decelerate sharply this year, and there are major forces contributing to economic uncertainty. Climate change especially has caused natural disasters to become more common and more severe. Global instability has been also heightened by Russia’s invasion of Ukraine. It remains unclear whether the world’s central banks can bring inflation under control without causing unemployment to surge.
Add to that a few immediate challenges – bank failures on both sides of the Atlantic, the impact of interest rate rises on government budgets, and a looming fight over raising the US debt ceiling – and it is easy to see how the global economy could slow even further. In that environment, policymakers need to avoid splintering the world into geopolitical blocs. We need collective action to ensure the World Trade Organization’s dispute settlement mechanism can function more effectively. And we need to avoid protectionist measures – particularly those that would harm the food security of low-income countries. For medium-sized economies such as the ROK and Australia, economic openness has been vital to our past success, and will continue to be critical to our future prosperity.