equity investment, but now a considerable portion of capital inflows is invested in local currency - denominated longerterm bonds – this change has made foreign capital flows much more stable. on the other hand, the development of fixed income markets in the region has also brought new difficulties. first, as foreign investors hold a greater share of bonds in the region, bond yields are greatly affected not only by domestic economic developments or monetary policy, but also by global economic conditions. in addition, there are increased concerns about financial and foreign exchange market unrest in the event of a sudden reversal of capital inflows to the regional bond markets. there have recently been dramatic changes in global economic environment, including the continuing monetary policy normalization by the u. s. federal reserve and the rising trade tensions between the u. s. and china. in fact, some emerging market economies with weaker fundamentals have experienced large - scale capital outflows, resulting in more volatile stock prices, exchange rates and interest rates. so far, we have seen that the development of the fixed income market in the asia - pacific region has greatly contributed to better market functioning and a better policy environment, while 1 / 2 bis central bankers'speeches creating no small difficulties. against this backdrop, allow me to suggest some policy tasks that countries in the region must first pursue to enhance financial and economic stability. to begin with, we must enhance the overall resilience of the regional economy so that sudden changes in capital flows triggered by external shocks do not lead to systemic risk. to this end, we must reinforce our capacities and policy space to properly respond to external risks. this may be done by improving current account balances, holding sufficient foreign reserves, and enhancing exchange rate flexibility. next, we must continue our international cooperation to reinforce financial safety nets. asiapacific countries have striven to establish regional financial safety nets and develop fixed income markets through the chiang mai initiative multilateralization ( cmim ), the asian bond markets initiative ( abmi ), and the asian bond fund ( abf ). we also need to continuously expand our cooperation not only within the region but also with international organizations such as the imf and bis to strengthen global financial safety nets. last but not least, we have to continue our policy efforts to strengthen fixed income market infrastructure and functioning, such as by seeking diverse investors, making corporate bond markets more vibrant, and improving the processes for bond issuance and trading. i believe that these efforts would expand both

agreed ( generally or with some provisions ) with the statement that " tariffs and import quotas reduce general economic welfare. " a typical view advocating trade liberalization is expressed by jagdish bhagwati, one of the most prominent trade theorists in the world, in bhagwati ( 2004 ). this example comes from weil ( 2005, p. 322 ) and is described more extensively in dollar and collier ( 2001 ). the literature on the effects of trade liberalization on growth and poverty is immense. see the surveys in temple ( 1999 ) ; bourguignon and others ( 2002 ) ; winters, mcculloch, and mckay ( 2004 ) ; and wolf ( 2004 ). earlier studies found that trade openness was associated with higher growth rates ( dollar, 1992 ; sachs and warner, 1995 ; and edwards, 1998 ). however, because the direction of causation from this evidence is difficult to establish, other researchers have used instrumental variable procedures to establish causality from trade liberalization to growth ( for example, frankel and romer, 1999 ). using a different approach to identify the direction of causation, lee, ricci, and rigobon ( 2004 ) also find that trade openness has a positive effect on growth. for example, harrison ( 1996 ) and especially rodriguez and rodrik ( 2000 ). japan ’ s experience shows what focusing on exporting can accomplish. in the immediate aftermath of world war ii, japan was a poor country. its economic infrastructure had been destroyed by the war. to convince americans and others to buy japanese products, japanese firms had to produce goods that were cheaper and better than their american - made counterparts. as a result, the export industries in japan became enormously productive and supercompetitive. productivity grew, and three decades after world war ii, japan became one of the richest countries in the world. south korea, one of the great asian success stories even with its crisis in the late 1990s, had very high barriers to trade until the 1990s, and its early development strategy did not include opening its domestic market to foreign goods. however, through its export sector, south korea has participated fully in global markets, and this participation has been a key to its success. south korea ’ s development strategy focused on promoting its export sector, and it is the export sector that led to high productivity and economic growth. indeed, all examples of successful growth stories in developing economies ( china, japan, south