Connect with us

Entrepreneurship

Asia’s Financial Connection with the World

Published

on

As economies in East Asia and the Pacific (EAP) have developed, they have also become important in international financial transactions, both as sources and destinations of cross-border bank lending, foreign direct investment (FDI), and portfolio investments. But, as we document in a new paper (Didier, Llovet, and Schmukler 2017), the composition of these financial connections has been changing in recent years on at least two fronts: (i) the partners with which EAP countries interact, and (ii) the type of financial transactions conducted.

Traditionally, economies in the North (the Group of 7 countries, excluding Japan, and 15 Western European economies) have been the most important counterparts of the EAP’s inter-regional financial transactions. Although economies in the North still capture the bulk of the region’s inward and outward investments, the EAP’s connectivity with the South (non-EAP and non-North economies) has grown relatively faster and has become more relevant for the EAP. For example, during 2003–2014, investments to and from the South grew at an annual average rate of 23% for portfolio investments, 30% for syndicated loans, 86% for mergers and acquisitions, and 9% for greenfield investments. In contrast, cross-border investments involving North economies grew at an annual average rate of 10% for portfolio investments, 14% for syndicated loans, and 17% for mergers and acquisitions; and decreased at a rate of 3% in the case of greenfield investments. The rising importance of the South for the EAP can be traced to expansions not only in the value of financial connections (the intensive margin) but also in the number of active connections (the extensive margin).

EAP countries also have strong connections among themselves. That is, EAP economies are important sources and destinations for intra-EAP cross-border financial investments. Although EAP economies are more financially integrated with global markets than with regional ones, intra-regional investments are actually larger than those with the South, and, in the case of FDI, they are as large as those with the North. Moreover, the EAP stands as the most regionally integrated region in both the intensive and extensive margins when compared to Latin America and the Caribbean, Europe and Central Asia, South Asia, Sub-Saharan Africa, and the Middle East and North Africa.

Another notable feature of the EAP’s international financial integration is the differences in how it connects with different types of countries. EAP economies are relatively more connected intra-regionally and with the South via FDI, whereas they are more connected with the North in arm’s length investments (portfolio investments and syndicated loans). These existing differences in financial integration patterns across investment types can be related to the relatively less developed financial markets in the EAP and the South vis-à-vis those in the North.

Differences in the degree of financial and economic development can also help explain the heterogeneous financial integration patterns across EAP economies. The more developed EAP economies (as measured by their gross domestic product per capita) integrate in a way that is similar to that of the North (having a larger role in the EAP’s arm’s length investments), whereas less developed EAP economies integrate similarly to economies in the South (having a larger participation in the EAP’s FDI financing). For example, during 2003–2014, developed EAP economies accounted on average for 92% of the EAP’s inter-regional syndicated loans, whereas this share was only 47% for greenfield investments. The rest was captured by the less developed EAP economies. Similarly, the more developed EAP economies accounted for 71% of the EAP’s intra-regional portfolio investments but only 49% of intra-regional greenfield investments.

The recent trends come with benefits but also possible risks. On the one hand, the EAP can benefit from greater financial diversification, which reduces the concentration and dependence on North economies. Moreover, as far as economies in the region are more familiar with the institutions and cultures of other EAP economies, greater regionalization can foster financial inclusion by serving smaller and less informationally transparent segments. On the other hand, the EAP could also bring imported volatility from the newly connected economies. In addition, increasing regionalization can imply a higher exposure of an economy to shocks originating within the region and a faster spread of foreign shocks once they hit an economy in the region.

Furthermore, to the extent that financial institutions in the South and the EAP are less tightly regulated than those in the North, the latest developments can negatively affect the stability of the overall financial system. Therefore, a call for more intensive cross-border cooperation would be desirable for global financial stability.

Differences across financial instruments suggest that as the EAP continues to grow and become richer, its patterns of financial integration will more closely resemble those of the North, with less relative emphasis on FDI and more on portfolio and bank investments. Although this type of arm’s length financing arises naturally in more developed countries and is a conduit for more sophisticated transactions, it can have an impact on financial stability as FDI is perceived to be more resilient when negative shocks occur.

___________________________________________

About the Author 

This article was written by , and  of Asian Pathways, blog of the Asian Development Bank Institute which was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in the Asia-Pacific region.

Callum Connects

Joelle Ung, Founder of Treasure Unity

Published

on

Joelle’s entrepreneurial journey has been an interesting one, leading her to the world of network marketing, enabling her to help other entrepreneurs succeed.

What’s your story?
The sense of wanting to make an impact, of needing to add value to ‘something,’ be it focused on business or peoples’ lives, has led me, through many failures, to where I am now, the food and beverage manufacturing industry. My entrepreneurial journey began as a wedding planner. Then, having tasted initial success, my desire to find meaningful business mentors brought me to the world of network marketing.
Having benefited from the teachings of my mentor, plus the time I spent growing up as the daughter of a great father, I realised that the urge to ‘pay it forward,’ by mentoring future entrepreneurs and helping my colleagues, other entrepreneurs to succeed, had become a personal mission.
The Honest Living Program, owned by my current company, Treasure Unity, is a realisation of that dream. The program opens up learning opportunities for women under duress, underprivileged women and single mothers. It provides a platform from which I am able to teach, imparting people skills and the art of presentation through the day-to-day program. It is absolutely free.

What excites you most about your industry?
To be able to keep adding values to others. On stage or off, it doesn’t matter. I enjoy every call I receive, every appointment that is set up, every individual I have met, and have yet to meet. There is only one agenda, and that is to add value to the person I am speaking to.

What’s your connection to Asia?
Having lived in Singapore and Malaysia for the past 39 years, my heart is impacting the people in Asia.

Favourite city in Asia for business and why?
Singapore, Malaysia and Indonesia. Because of the people who live there, and because there are no barriers to communication for me.

What’s the best piece of advice you ever received?
Don’t make any decision out of confusion, disappointment or anger. Decisions should always be made with a restful heart.

Who inspires you?
Walt Disney: “If you can dream it, you can do it.”
My husband is an ‘overcomer’ who had a near fatal stroke 18 years ago. He lost the ability to practice his dream career as a medical doctor, yet he chose to be a prisoner of hope rather than be a prisoner within his body, and he has never indulged in self-pity.

What have you just learnt recently that blew you away?
Lately, I have learned to be still when an opponent strikes at me. It works! You do not need to immediately rebut an opponent. He, or she, will most probably be waiting for a reaction. When they don’t get one, when you remain still and unmoved, you become unpredictable. They do not know your next move.

If you had your time again, what would you do differently?
I would have sought advice from more wise counsellors before making major decisions, especially if finance or investments were involved.

How do you unwind?
Sometimes I like to take a short getaway or, on a daily basis, I read bible verses that I find uplifting.

Favourite Asian destination for relaxation? Why?
Penang. It is close to home and you can get a premium service at an affordable cost. Also, I can pack light, and it is easy to find anything and everything there.

Everyone in business should read this book:
Like a Virgin, by Richard Branson

Shameless plug for your business:
Become an irresistible woman with substance! We will bring out your natural leadership skills through the Honest Living Program.

How can people connect with you?
They can connect with me by email [email protected], through WhatsApp 92300071, or they can call me on my mobile.

Twitter handle?
My twitter account is inactive. @ungjoelle @treasureunity

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

Continue Reading

Entrepreneurship

Women on Top in Tech – Dr. Vivienne Ming, Co-Founder and Executive Chair at Socos Labs

Published

on

(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dr. Vivienne Ming is a theoretical neuroscientist, entrepreneur, technologist, and an author. She co-founded Socos, her fourth company, where she combines machine learning, cognitive neuroscience, and economics to maximize life outcomes in education and the workplace. Vivienne is also a visiting scholar at UC Berkeley’s Center for Theoretical Neuroscience, where she pursues her research in neuroprosthetics. In her free time, Vivienne has developed a predictive model of diabetes to better manage the glucose levels of her diabetic son and systems to predict manic episodes in bipolar suffers. In 2013, she was named one of 10 Women to Watch in Tech by Inc. Magazine.

What makes you do what you do?
I grew up reading far too much science fiction. It always seemed not like an escape, but like a guide to a better world that we could build. When I ran into challenges later in my life and learned how easy it is for a high potential life to slip through the cracks, it was that love of science fiction that kept me thinking that something better was possible. I found a purpose in that failure that drove me to earn my PhD in neuroscience and machine learning so that I could build the worlds that I used to read about.

How did you rise in the industry you are in?
I have worked in several different industries. As an academic, I had a rather shocking amount of success as a graduate student with papers published in top journals and I went on to appointments at Stanford and Berkeley. Then, I started all over again when I founded an education company. When the company rose to prominence and I was giving keynotes at major education conferences, I left that behind to develop technologies for talent acquisition, healthcare, and anything and everything that made better people. My path to success was always forged by me solving problems, with a lot help from simple dumb luck.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
After founding a number of technology companies, I decided I wanted to take what I learned and share it with as many people as possible. I wanted to have an impact on global policy. Based on advice from colleagues and friends, I founded Socos Labs, a think tank that uses machine learning, economics, and behavior research to explore human potential. Socos Labs experiments with whole new visions of work, education, innovation and inclusive economies to inform more human-centered policy.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
I’ve been influenced and supported by a great many people in my life, but I cannot say that I’ve ever had a mentor or even a hero that acted as a guide for my career. I’m not belittling the value of great mentorships (my own research argues for its impact), but rather it’s equally important to recognize that a career isn’t a formulaic movie plot with predefined roles.

Now as a leader how do you spot, develop, keep, grow and support your talent?
My work is about making better people and helping people grow. It has always been very important to me to give people a chance who might not otherwise have the same opportunity elsewhere. I have built companies where people who don’t have traditional credentials can come and work on projects that make a difference in people’s lives. The only component I’m really looking for is potential.

Do you consciously or unconsciously support diversity and why?
Supporting diversity is both a mission of Socos Labs and a key part of nearly every company with which I am involved. I sit on the board of companies that foster diversity and I’ve founded companies to find strategies to reduce bias in the hiring process. Creative diversity is crucial to run any high performance organization. My research show that companies should build teams in which everyone brings different, complementary strengths to the table, and diverse life experience is one of the greatest sources of those strengths.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
I suspect there are many ways to be a great leader. My personal approach is perhaps naively simple: do good work and share it with the world. I am sure there are more sophisticated and effective ways to gain attention and build high-performance organizations, but my approach (which I heartily advocate for anyone else) is to focus fanatically on what you’re trying to achieve, your purpose, and find or simply create the means for your work to reach other people.

Advice for others?
Seek out problems that are so messy other people have given up on them.

That is exactly where I want to be and what my new think tank, Socos Labs, aims to explore. We partner with companies and NGOs that share in our mission and help advance a new understanding about education, workforce, health, innovation, inclusion, and so much more. Along the way I’ve learned enough to write a couple of books, How to Robot-Proof Your Kids and The Tax on Being Different, which will be out later this year. In both I discuss how we can begin to untangle many of these big messy global problems.


If you’d like to get in touch with Dr. Vivienne Ming, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/vivienneming/

To learn more about Socos Labs, please click here.

Continue Reading

Trending