CAREC Corridor Performance Measurement and Monitoring: Annual Report 2019

Mongolia’s Economic Prospects: Resource-Rich and Landlocked Between Two Giants

The Economic Impact of the COVID-19 Outbreak on Developing Asia

Attraction or Repulsion? Testing Conglomeration of Innovation Between Firm and University

Integrated Livelihoods Improvement and Sustainable Tourism in Khuvskul Lake National Park

The project aims to protect the environment and create sustainable tourism for communities in Mongolia’s Khuvskul Lake National Park.

Toward High Quality Development in the People’s Republic of China

Hainan Free Trade Port Development

Global Value Chains and Missing Exports of the US

Yuqing Xing, Professor, National Graduate Institute for Policy Studies, Japan, discusses how US trade numbers with PRC and Japan will change if value-added of intellectual property embedded in goods—in contrast to conventional customs data—is accounted for.

Blue Skies and Green Steppe: Developing Sustainable Tourism in Mongolia

Tourism is an important source of economic diversification for Mongolia.

Scaling up ecotourism in Mongolia requires a multi-sector approach that carefully balances conservation and development.

Mongolia’s stunning landscapes and nomadic culture form the basis for a small but rapidly growing tourism industry. Ecotourism—defined by the International Ecotourism Society as “responsible travel to natural areas that conserves the environment, sustains the well-being of local people, and involves interpretation and education”—can provide income for remote communities and revenue for protected areas.

These potential benefits are especially significant for Mongolia. Over 17% (27 million hectares) of the country is designated as parks and reserves – a vast and wild expanse of deserts, steppe, and snow-capped mountains across which herding traditions remain largely unchanged for thousands of years.

Mongolia’s development policies identify tourism as a new and important source of economic diversification and emphasize the need to support ecotourism within and around protected areas. Furthermore, Mongolia is a member of the Central Asia Regional Economic Cooperation (CAREC) Program, which has also prioritized tourism as a key tool for economic benefits.

Yet without planning, tourism can result in environmental and cultural impacts and yield few benefits for local communities. To achieve sustainable tourism development in Mongolia will require a focus on at least four key areas.

First, institutional policies and planning for development and conservation need to be integrated. Similar to many countries, Mongolia’s parks support people as well as nature.

To be effective, park management plans and local development plans must have complementary objectives and targets developed through stakeholder consensus, projections of population and tourism growth, urban and rural planning, and conservation science.

In addition to biodiversity conservation, park regulations and zoning should consider existing settlements, traditional herding lands, and other livelihoods. Facilitating such dialogue is complex but necessary and requires the participation of government, civil society, and the private sector.

At the level of individual parks and reserves, establishing tourism councils can give civil society a voice in tourism and park management. Such councils include village representatives, civil society groups and local government, and aim to foster information exchange and trust between stakeholders.

With time and training, tourism councils can evolve to become “destination management organizations” responsible for managing a park’s tourism, and free up park administrations to focus on conservation.

Tourism concession manuals are another important institutional tool. They establish procedures and environmental and social standards that tour operators are required to abide by, such as minimum standards for waste management, and prioritizing local value chains and employment of residents (e.g. for food supply or guiding).

Improved clarity in the conditions for license application and renewal also provides operators a more stable business framework in which to invest and plan responsibly. UNDP offers detailed guidelines for tourism concession management in Mongolia’s protected areas.

Mongolia sustainable tourism development must focus on 4 key areas

Second, public infrastructure for park management and tourism needs to be established or upgraded. Once clear management objectives for conservation, livelihoods, and tourism are embedded in park and development plans, carefully planned works may include:

  • Access roads, power supply, and small recreational facilities (to sites zoned for tourism development).
  • Barrier gates, car parks and signs (to regulate visitor access).
  • Park headquarters and visitor centers (to serve as focal points for park and tourism management).

Collectively, such infrastructure supports park managers and improves the visitor experience through improved management of visitor access, traffic flows, and protection of core zones. Visitor centers provide tourists a sense of “arrival” and the opportunity to inform tourists of park regulations and local goods and services.

Third, waste management needs to be improved. Most parks in Mongolia lack organized systems for waste collection and disposal. As visitor numbers increase, litter and untreated sewage pollute soil and water resources, impact wilderness values, and reduce visitor satisfaction.

Solutions tailored to Mongolia’s arid landscape and the remoteness of many parks require a combination of approaches, such as:

  • Low-cost, non-flushing toilet systems for tour camps, campsites, and car parks.
  • Small, de-centralized wastewater treatment plants.
  • Upgrading existing landfill sites.
  • Mobilizing community waste management teams to operate and maintain public toilets and campsites.

Finally, park management needs more support. Protected area managers are often faced with limited funds, equipment, and incomplete management plans, yet are tasked with patrolling huge areas (on average, a single ranger in Mongolia is responsible for over 86,000 hectares) and addressing tourism, waste, and dialogue with multiple stakeholders.

These tasks require resources and diverse skillsets ranging from conservation science to stakeholder consultation. Measures include:

  • Preparing comprehensive park management plans, which address tourism, livelihoods, and waste management as well as conservation.
  • Training of park personnel, to empower staff to engage effectively with communities, tour operators, and other stakeholders.
  • Providing field equipment (e.g. vehicles).
    Basic infrastructure such as fee collection or ranger stations.

Developing tourism while conserving Mongolia’s beautiful wild places and timeless traditions will clearly be challenging. The issues introduced here illustrate the need for a multi-sector approach, in which diverse fields are brought together to balance conservation and development.

Many of these tools are being implemented with support from ADB under the Integrated Livelihoods Improvement and Sustainable Tourism in Khuvsgul Lake National Park project, a 4-year grant funded by the Japan Fund for Poverty Reduction, and new proposed Sustainable Tourism Development project for the country. As Mongolia moves forward with developing ecotourism, there will also be opportunities to learn from and contribute to regional experiences for tourism planning tailored to the cold yet fragile environments of the CAREC region.

Mark R. Bezuijen

Mark R. Bezuijen

Senior Environment Specialist, East Asia Regional Department, ADB

This blog is reproduced from Asian Development Blog.

How a Spike in Trade with the PRC Has Reduced Income Inequality in Viet Nam

The PRC and Viet Nam have become inseparable trade partners.

Viet Nam is a particularly good case to measure the impact on income inequality of rising trade with the People’s Republic of China.

The sudden rise in trade between the People’s Republic of China (PRC) and the US following the PRC’s 2001 admission to the World Trade Organization and its impact on the US labor market over the next decade has been the subject of numerous empirical studies. Although it has more recently been reversed by the ongoing PRC-US trade tensions, many economies in developing Asia have experienced dramatic upswings in trading volumes from the PRC.

The impact of this on labor markets and other socio-economic outcomes is still largely unknown. We contribute to filling this knowledge gap by studying the case of income inequality in Viet Nam.

We study the impact of higher trade volumes from the PRC on income inequality between 2002 and 2014 using household level data. Applying a quantile regression approach, we uncover that increased trade with the PRC resulted typically in income growth of the lowest income quantiles, whereas the higher income groups saw theirs decline.

Increased trade with the PRC thus led to an alleviation of income inequality in Viet Nam.

Trade opening helps foster economic growth and promote development. International competition leads to an adjustment of factor markets as well as prices, and this affects producers and consumers. But while some groups enjoy net benefits from open trade, others might lose.

Overall, the gains from trade should be sufficient to improve welfare, and thus offer the possibility to compensate those suffering adverse effects. However, the redistribution of benefits might not always happen.

PRC and Viet Nam have become inseparable trade partners

The empirical trade literature shows that trade opening can, therefore, be pro-poor or pro-rich. Similarly, the impact on income inequality can go both ways. In a recent paper, Pinelopi Koujianou Goldberg (the World Bank’s Chief Economist) and Nina Pavcnik argue that in developing countries the shift in demand for skilled workers would lead to a widening wage gap.

In a new ADB Institute working paper, we test how the intensifying trade relations between Viet Nam and the PRC have affected income inequality in Viet Nam. Viet Nam and PRC share a 1,281-kilometer border, and trade relations have been marked by a continuous and rapid growth.

For Viet Nam, the PRC has become by far the largest trading partner in terms of imports. Viet Nam sourced around 13% of its total imports from the PRC in 2000, and the percentage increased to 40% in 2014 (see Figure 1). The dominance is particularly strong for final goods of which over 50% were sourced in the PRC in 2014.

From the perspective of the PRC, Viet Nam has become its biggest trading partner among ASEAN countries. It has been widely argued that the PRC and Viet Nam have become inseparable trade partners.

Our latest research examines the impact of increased imports from the PRC on income inequality in Viet Nam at the provincial level from 2002 to 2014. Import competition from the PRC had the potential to affect the economy of Viet Nam mainly through two channels:

  • Product markets. Increased imports from the PRC affected households by offering additional varieties at often lower prices.
  • Factors markets. Increased trade with the PRC had an impact on wages and job opportunities. Depending on the sector, the increased imports from the PRC could have created or reduced employment opportunities. Furthermore, it could have resulted in an increase or fall in wages of unskilled or of skilled labor.

In Viet Nam, lower income groups gained most from more PRC trade

Our estimation results show that import competition from the PRC has helped reduce income inequality in Viet Nam. When looking separately at imports of intermediate goods and final goods, we find that both had a positive effect on income inequality.

As an additional step, we apply a quantile regression approach to have a fuller picture on the effects of import competition from the PRC on different household income groups. The results show that at the beginning of our time period, all income quantiles seemed to have suffered from increased imports from the PRC. The negative effect increased with income, suggesting a degressive income effect.

However, during 2006 and 2010 no income group suffered a significant effect, except the highest income groups. The income effect completely changed in the two last periods (2012 and 2014). The two lowest income quantiles enjoyed a positive effect on their income, with the poorest group benefiting the most.

Overall, the results indicate that income inequality decreased in Viet Nam because the lower income groups experienced a relatively lower decline of income at the beginning of our time period and an increase in income at the end. At the same time, trade exposure to the PRC led to a decline or stagnation of income for the two highest income quintiles.

Our latest research thus sheds new light on the question on how increased trade with the PRC has affected household income and inequality in a developing country. The case of Viet Nam provides a particularly good case to measure the impact of rising trade with the PRC. The effect was degressive, with lower income groups benefiting more than higher income groups.

More research is needed to test whether this result also holds in other developing countries. We also need to better understand what drives income inequality in these countries beyond trade. Our study nicely illustrates that in the case of Viet Nam increased trade has not only delivered in terms of stimulating growth, but also in lowering income inequality.

Matthias Helble

Matthias Helble

Economist, Economic Research and Regional Cooperation Department, ADB

Trang Thu Le

Trang Thu Le

Research Associate, ADB Institute

Trinh Q. Long

Trinh Q. Long

Project Consultant, ADB Institute

This blog is reproduced from Asian Development Blog.

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