Asian Development Outlook 2013 Update: Governance and Public Service Delivery

The prospective tapering of United States' quantitative easing has destabilized financial markets in emerging economies, including developing Asia. However, fears of a crisis recalling the 1997 Asian financial crisis are unwarranted. The region is in a much stronger position to weather the storm with many economies running current account surpluses and holding large foreign reserve stockpiles. The reforms instituted since 1997 strengthened macroeconomic management, financial regulation, and corporate governance.

Nevertheless, developing Asia is still faced with the twin challenge of maintaining financial stability and sustaining growth. The recent financial turmoil has all the more emphasized the need for structural reforms to support growth.

The region has seen little closing of the governance gap with advanced economies despite its phenomenal economic growth. Good governance is needed to sustain development momentum and ensure the benefits of growth are widely shared. Improving public service delivery is an effective entry point toward wider governance reform.