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Day 2 of the Economic Freedom Network (EFN) Asia 2013
Conference started with a presentation by Fred McMahon of Fraser Institute in
Canada, of the results of the Economic Freedom of the World (EFW) 2013 Report. Before presenting the numbers, he reiterated
the definition of “economic freedom” as fundamental rights. Without these basic
rights, no political or civil freedom can prosper.
The results of the latest EFW report showed once again,
that more freedom means, more growth, less poverty. It also means less
corruption, higher life satisfaction, life expectancy, more prosperity. For
Asia, Economic freedom has been following global average or trend.
The full EFW Report can be accessed at http://www.freetheworld.com , http://fraserinstitute.org .
FNF Regional Director for SouthEast and East Asia, Rainer Adam discussed the work of FNF in Asia, then explained that they invited some Thai incumbent government officials, they all declined, so they invited the opposition, former Thai Prime Minister Abhisit Vejajiva. (Photo from left: Rainer, Abhisit, Fred.)
FNF Regional Director for SouthEast and East Asia, Rainer Adam discussed the work of FNF in Asia, then explained that they invited some Thai incumbent government officials, they all declined, so they invited the opposition, former Thai Prime Minister Abhisit Vejajiva. (Photo from left: Rainer, Abhisit, Fred.)
Hon. Vejajiva said that Thailand’s high growth in past
decades was due to dynamic private sector subject to competition. Government’s
monetary policy helped without compromising inflationary pressure. The
administration is buying Thai farmers’ rice at 50 percent higher than market rice.
The farmers are richer but public finance suffered, also global rice prices rose.
He added that low wages, natural resources extraction can
not sustain growth. Needed are more innovations to escape middle income trap.
It is not how small or how big the government is, but to properly identify the
sectors that government should come and support, and which sectors the
government should get out. When markets are distorted, corruption goes up.
Economic freedom can be improved, Abhisit added, by
identifying sectors where government can engage and solve inequality. Populist
policies and authoritarian government feed each other, but .they can be tackled
with democratic and good Governance. Thailand is successful In attracting
various car producers and has no national car. An economy improves its competitiveness
by gradual opening up.
Discussions in Panel 4 followed with 6 speakers from 6
countries, to talk about different experiences in dealing with middle income
trap. Adinda Muchtar from the Indonesian Institute moderated the panel. Photo below, from left: Adinda (Indonesia), Wan saiful (Malaysia), Xingyuan (China), Set (Myanmar), Nguyen (Vietnam), Barun (India), and Hiroshi (Japan).
Set Aung of the Central Bank of Myanmar said that nations must focus on innovation, infrastructure and productivity to avoid the middle income trap. In the case of Myanmar, it must attain middle income level first, and still far away from reaching a middle income trap.
Dr. Nguyen Quang of the Association of Commerce and Industry
in Hanoi, said that Vietnam’s per capita GDP in 1990 was only $98. By 2012 rose
to $1,596. Economic freedom means economic development and fast growth. The
main contributors to Vietnam’s GDP growth were capital, labor and total factor
productivity (TFP), but wrong econ policies were adopted in the last decade. State
owned enterprises (SOEs) contribute significantly to GDP growth but reforms are
needed, along with reforms in land policy, banking and politics.
Hiroshi Yoshida of the Institute for Public Sector
Accounting (IPSA) and the JTR in Tokyo
gave an informative and entertaining presentation. He emphasized that
government should never shift the deficit and debt to our children, and taxes
should not go to wasteful people in government. The Japanese taxpayers' freedom
day is set at May 26th this year. Japan’s future is disappearing, birthrate is
declining and many people think that their individual rights are not infringed
yet.
Barun Mitra: of Liberty Institute in Delhi asked about political
muddle in the middle, is it an income trap or an opportunity for political
entrepreneurs? Democratic politics and competition is subject to similar market
competition. Barun added that his view of politics has changed over the past
five years. He now believes that competitive democracy has the ability to mobilize people, that political competition
need not result to players coming to blows. Like Pepsi and Coke in fierce
competition with each other but not coming to blows.
Barun emphasized that what poor people really need is
recognition of their dignity and freedom, not endless subsidy and their dependence
on it. Political entrepreneurship has the ability to identify issues that
people can associate themselves with and strengthen their belief of themselves.
Feng Xingyuan of Cathay Institute for Public Affairs
(CIPA) said that the pronouncement of China President is ‘prosperity and rejuvenation”
of the country, but socialist policies prevail in many issues. In an earlier
panel, he mentioned that political democracy and competition mentioned by Barun
benefits even a one party government like China as it allows factions within
the single party to compete for public support.
Wan Saiful Wan Jan of the Institute for Democracy and
Economic Affairs (IDEAS) discussed the special case of Malaysia that is about
to move to high income economy and is trapped at middle income level. Government
intervention has increased, even in retail marketing of garments. There is need
to convince the public and politicians to appreciate economic freedom, rule of
law, among others, to escape the trap.
Panel 5 was a discussion how to overcome middle income
trap. Prof. Ken Schooland of Hawaii Pacific moderated the forum. Photo below, from left: Tom (USA), Sethaput (Thailand), Razeen (Europe), Peter (Hong Kong).
Tom Palmer of the Atlas Economic Research Foundation,
USA, said that countries and economies don't compete. Companies and people do. Some
US states now require hundreds of work licenses, even a license for selling
flowers. Such restrictions should be eliminated. Countries with rule of law,
more economic freedom rank high in the
EFW index ranking. Middle income trap is a trap caused by lack of rule of law,
lack of pub understanding of the value of economic freedom and too many
regulations. There is a need to reduce or eliminate many government restrictions,
allow people to have new, higher skills and move upward. Investment in human
capital will help.
Razeen Sally of the European Center for International
Political Economy said that there is a need to remove many restrictions, allow more
economic freedom, for economies to develop. Resource rich country but with
heavy government can lead to underdevelopment. Within middle income, there are
low-middle and high-middle income brackets. It is important to get the basics
right, have free trade, invest in education and infrastructures. Abenomics is
about loose monetary policy, cheap money to create short term boom. Japan is
not getting the basics right.
There is need to liberalize markets for land, labor and capital;
have institutional reforms that protect property and instill fiscal
responsibility and discipline. One problem, that further economic prosperity
leads to more inequality, makes reforms harder to advance due to more
opposition. People should realize that is is not about industrial policy, government
t financing of science parks, that matter most. Rather, they should focus on
institutional reforms, get the basics right.
Peter Wong: of the Lion Rock Institute (LRI) in Hong Kong
said that Hong Kong’s per capita GDP is not very high compared to
Japan and European countries, but people have wide options to purchase many
things. There is a need to Limit taxes, encourage entrepreneurship and avoid
raising minim wage too high. Some entrepreneurs become successful politicians,
but hard to see politicians or bureaucrats become successful businessmen/women.
Low taxes, less regulations, property protection have
enabled Hong Kong 50 years of uninterrupted growth, despite change in many
leaders.
Sethaput Suthiwart-Narueput of Thailand Future Foundation
emphasized the important role of innovation and research and development in
helping economies to move upwards economically. One solution to bad governance
is to have lesser and smaller government, move to privatization of certain
government corporations and functions.
After the panel, there was a world café introduced by FNF
Regional Director for South Asia, Siegfred Herzog. Participants discuss for
about 15 minutes a specific topic, then they move to another table for 15
minutes for another topic; there were four tables with their respective
facilitator and rapporteur. The theme was ASEAN Economic Community and the
middle income trap. It was a fast paced activity. The four rapporteurs reported
on stage the result of the discussions in each table.
A closing message was given by Prof Wantanee Wasikasin,
Dean at Thammasat University. She expressed gratitude for the participation of
local and international delegates and tackle the issues of middle income trap
and economic freedom.
Rainer Adam came up stage for the second time and
announced that he is leaving the region soon as he is moving to Eastern Europe
to be the Regional Director there by middle of next year. Thus, this is his
last EFN conference. He gave a spontaneous but somehow emotional speech. A few
participants were teary eyed listening to him.
Siegfried Herzog acknowledged that he will take the place
of Rainer Adam next year and gave a short closing message.
A first time participant to the EFN conference, Prof. Roman
Dannug of De La Salle University in the Philippines was greatly impressed by
the two-days event, said that aside from the knowledge imparted, the conference
has strengthened persona, professional, and institutional linkages of free
marketeers that may result in more sustained efforts to influence the content
and conduct of free market societies and democratic governance in Asia.
Kudos to the hard working staff of FNF regional office
for pulling that important and biggest annual event of free marketers in Asia.
See also:
EFN Asia 28: Program of the 2013 Conference in Bangkok, October 17, 2013
EFN Asia 29: Speakers in Day 1, Conference 2013 in Bangkok, October 21, 2013
EFN Asia 30: Conference 2013, Day 1, October 23, 2013
EFN Asia 31. Friends in the Asian Free Market Movement, November 07, 2013
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