Financing Productivity- and Innovation-Led Growth in Developing Asia: International Lessons and Policy Issues

Ajai Chopra ()
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Ajai Chopra: Peterson Institute for International Economics

No WP15-6, Working Paper Series from Peterson Institute for International Economics

Abstract: Growth in developing Asia will need to rely more on improvements in productivity growth and less on capital deepening. Although there is no single reform path to spur productivity growth, financial system deepening is central to a more efficient allocation of capital across sectors and can facilitate innovation and technology transfer. But malfunctioning financial systems can also result in the misallocation of resources, making it important that policymakers focus less on increasing the size of the financial sector and more on improving its intermediation function. The paper discusses the general policy priorities for further financial development in Asia based on financial sector realities in the region and the level of country income. Steps to mobilize Asia's ample private savings for long-term financing, especially to tackle the region's infrastructure deficit and improve access to financing for small and medium enterprises, can help raise productivity. Further, as many countries in Asia shift from a development model based on technology absorption to one that promotes innovation, specialized finance and investors can play a critical role in allowing innovative firms to conduct research, adopt technologies necessary for inventions, and ultimately commercialize innovations.

Keywords: Asia; financial sector; productivity (search for similar items in EconPapers)
JEL-codes: G21 G23 G24 G28 O30 O40 O53 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-eff, nep-sbm and nep-sea
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Citations: View citations in EconPapers (1)

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