Minding the Gaps to Deliver Prosperity for Asia

IMF News, April 10, 2018

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Speech by Christine Lagarde, IMF Managing Director, at Boao Forum, Hainan, China, April 10, 2018.
Opening claim: "Sixty-six percent of 3.9, times two equals Asia." Asia is said to contribute two thirds of global growth, forecast at 3.9 percent, "this year and next."
Theme: Close specific gaps to support China's openness strategy, foster inclusiveness, and sustain Asia's contribution to global growth.

Key observation: "The digital gap in Asia is smaller than almost anywhere else in the world."
Policy-relevant finding: The digital gap can be closed further, including through policies that enable more women to access digital financial services.
IMF analysis cited: "If the gap between the least financially inclusive country in Asia and the median country was narrowed, national GDP per capita could be increased by a full percentage point."

Key observation: Asia is experiencing a "blossoming of fintech industries."
Risk identified: The rise of fintech is "revealing regulatory gaps which, if not closed both domestically and on a cross-border basis, can lead to systemic risks."
Recommendation: "Transform safely, and be more inclusive!" — implying the need for updated domestic and cross-border regulatory frameworks to manage fintech-related risks while expanding access.

IMF research highlights: Trade contributes to growth and "identifies how trade facilitates the sharing of technology across borders, especially in emerging markets."
Structural shift noted: "Until recently much of the creation of new technology was concentrated in a small number of advanced economies. But that is changing."
Statistic: "Two thirds of the world’s industrial robots are to be found in this region, predominantly in Japan, South Korea, and China."
Strategic recommendation: Use trade to continue sharing innovation so Asia can evolve "from being an importer of innovation to also being an exporter of innovation."
Institutional policy point: "IPR protection for all—Chinese and foreign companies alike—can help ensure that this progress will come through."

Support further opening of sectors (banking, insurance, automotive), removal of caps and barriers, and a more business-friendly environment to encourage innovation and inclusiveness.
Prioritize closing three gaps to sustain and enhance Asia's role in global growth:
- Close the digital gap in financial inclusion, with attention to women's access to digital financial services.
- Close regulatory gaps around fintech domestically and across borders to prevent systemic risks while enabling transformation.
- Close the innovation gap by leveraging trade and strengthening IPR protection to foster technology diffusion and domestic innovation capacity.

Speech: "Minding the Gaps to Deliver Prosperity for Asia" — Christine Lagarde, IMF Managing Director; Boao Forum, Hainan, China; April 10, 2018.