to support APEC as an institution to help its members pursue policy reforms, to the extent that they so desire. Consequently, this Report focuses on structural reforms, where the consequences of inattention are increasingly costly. Summary of Analytical Conclusions: The body of this Report provides analysis – analysis of research, of case studies and of data – for a sole purpose: to help policymakers in APEC economies better deal with the complicated challenges of the New Economy productivity paradigm which is causing shifts in relative comparative advantage in the region. This Summary provides a quick look at specific implications of the research for each of four policy domains.
The overarching conclusion is much more that the sum of those findings however. Overall, the Report finds that structural policy reform leads to transformation of firms and individuals, and markets too. This transformation, meaning significant changes in the activities of firms, governments, and individuals leads to greater economic productivity. Productivity is the source of prosperity, which implies that a shortfall of structural policy reforms can stunt the process of transformation, stymie productivity growth, and limit prosperity.
The research concludes that the differential in propensity to undertake such reforms can easily exacerbate the developmental divides already observed among APEC members today. In light of this chain of relationships, the Report concludes that while understandable given the hype over high technology manufacturing in recent years, the strategy of focusing of technology indicators, instead of policy indicators, as guideposts to the New Economy is misleading and possibly dangerous. Numerous examples, especially in the case studies, serve to demonstrate the consequences of over-reliance on technology goals to the exclusion of understanding the causal role of structural policy reform.
Yet, despite the larger and overarching conclusion about the role of transformation, no analysis can offer an exact conclusion for each economy on how much reform might be necessary to achieve some notion of “sufficient” because sovereign factors are relevant. Because the APEC members differ along many dimensions—development, culture, economic orientation-- there can be no “one-size-fits all” strategy for progress towards the desired goal. That said, the analysis in this Report points to a framework of four policy domains crucial to underpinning the New Economy environment of transformation, higher productivity growth, and economic well-being. These are:
Fiscal policy and the fiscal activities of government; Banking and financial market policy; Trade and cross-border investment policies; and - 4-