According to an APEC report on structural reform in the Asia-Pacific region, APEC member economies face many sustainability problems. There is an urgent need to start green structural reforms to deal with these problems and help the economy recover from the COVID-19 pandemic.

The 2022 APEC Economic Report was released while APEC officials were meeting in Bangkok, Thailand, ahead of this week's APEC Annual Ministerial Meeting and APEC Economic Leaders' Meeting. It uses examples from APEC member economies that have made structural changes to improve long-term results. It finds that the proportion of fiscal stimulus spending on green initiatives is lower and that most stimulus packages are spent on business-as-usual activities.

It says that the way governments react to economic shocks can give them the motivation and tools to promote a green recovery that helps both the economy grow and the environment.

“Fiscal stimulus spending on green initiatives is economically advantageous compared with traditional fiscal stimulus initiatives,” the report notes. “Continuous, consistent, and predictable policies are needed for effective structural green reforms.”

Dr James Ding, Chair of the APEC Economic Committee, the group that produced the report alongside the APEC Policy Support Unit, said:

"Structural reforms refer to measures to improve market efficiencies, such as improvements to regulatory systems, competition frameworks, and governance structures."

Because tariffs, quotas, and other trade barriers at the border have decreased dramatically over the previous three decades, the focus of APEC should be on addressing structural and regulatory constraints, or "beyond the border" barriers, that impede cross-border trade and improved corporate performance.

“If economies increase their efficiency, flexibility, and resilience through structural reform, the region will become stronger and more resilient,” Dr Ding further explained. "The current social and economic crisis has only shown us structural flaws that need to be fixed with fundamental changes. This gives us a chance to lead a steady, green recovery."

He said that it is important to fight the COVID-19 pandemic while also taking care of environmental issues.

Since its foundation in 1989, the APEC region has been hit by 36% of all global natural disasters. APEC disaster-related losses, the majority of which were weather-related, totalled an annual average of USD 111 billion.

The area is especially vulnerable to the effects of climate change because of its location and the different types of land it has.

The APEC region also has a significant role in climate change. Between 1990 and 2018, the region's greenhouse gas emissions increased at a rate of 1.9 per cent annually, higher than the global average of 1.1 per cent.

Also, the World Bank predicts that APEC will lose 7.3% of its GDP by 2100. Most of these losses will happen in emerging economies near the equator because of flooding along the coast.

Carlos Kuriyama, a senior analyst with the Policy Support Unit, said:

"Until recently, it has been argued that there is a trade-off between growth and environmental sustainability. This report will show that this assumption is increasingly open to challenge and that structural reforms to promote sustainable outcomes will also deliver higher rates of growth.”

The report suggests that member economies build their skills and share what they know about activities in areas where more work needs to be done to move to a green economy. For example, developing pricing schemes, figuring out how to implement green regulatory measures, strengthening collaboration between institutions within and across economies, forming more partnerships with the private sector, and getting money for green investments are all examples of areas where more work needs to be done.

Source: APEC

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Read the APEC Economic Policy Report 2022 fact sheet