mr latter gives an overview from hong kong of eight asian economies keynote address by mr tony latter, a deputy chief executive of the hong kong monetary authority, at the asian financial markets conference held in hong kong on 26 - 27 april 1999. thank you for inviting me to address your conference today. it is encouraging to see such a wide and distinguished representation here from the financial and commercial communities. indeed, when i looked down the advance attendance list, i quickly realised that there would be very little which i could tell you about market developments in hong kong that you didn ’ t know already. so, if you will allow me, i should like to spend some of my time standing back a little from specific market topics and looking instead of some of the macroeconomic forces which shape their development. i shall focus my analysis on eight asian economies [ see table ]. you will note that the list does not include japan, hong kong or singapore. that is because they can already be regarded as having relatively mature financial infrastructures and they are largely free of capital controls. thus, for reasons which will become apparent as i proceed, they do not fit into the story. the table shows the level of physical capital investment within each economy ( specifically, gross domestic fixed capital formation as a percentage of gross domestic product ) for the ten years to 1997. in most cases this was at a very respectable level ; all figures fall in the range 22 - 38 % of gdp on average for the period ; by way of comparison, 1997 figures for usa, japan and germany were 18 %, 26 % and 19 % respectively. also shown is the level of total domestic savings ; this is the sum of savings by the household, corporate and government sectors ( and may of course include dissaving by one or more of those ). for certain purposes i would have liked to show the household component of the total, but sufficient data are not available. the third column displays second minus the first - i. e. the excess of savings over investment on these measures. for all but two of the economies, domestic saving has outstripped fixed capital investment - in some cases by a substantial margin. but these figures tell us nothing about the intermediation process between saving and investment or about the role of financial institutions and markets. much of the investment may take place within the same economic unit as where the savings arise, or be directed by government, without any requirement for third - party intermediation. of course, if domestic saving is channel

and financial issues at universities, in central banks and in international institutions such as the imf and the bis. by debating and discussing and, yes, disagreeing, we can over time generate much more clarity about what path we need to follow in enhancing monetary and financial stability in asia and elsewhere. some may wonder why i include academic economists in that list. i do so for three important reasons. first, research undertaken in universities very frequently serves as a starting point for work undertaken in central banks. one of you may just have written a very good paper on the sensitivity of the new zealand economy to international business cycles or the determination of capital flows between thailand and the rest of the world. it may well be that this paper, unknown to the author, triggers research at the hong kong monetary authority on how sensitive our economy is to external factors or on the determination of capital flows in and out of hong kong. secondly, academic research undertaken in a free and open manner, and presented at conferences such as this, serves to improve the quality of research in central banks. there is a strong presumption in my mind that competition, no matter whether it be in the market for airline tickets or in econometric models of exchange rates, are beneficial to consumers - and central banks are large consumers of economic research. more directly, i know that some of the hkma ’ s research staff will present papers here, and i am sure that your comments on the papers will trigger ideas for how they could be improved. next time, they will be better. thirdly, universities are the source of staff for central banks. we do hire your students and sometimes we are even able to hire academic researchers. in sum, the asia - pacific region needs more co - operation and exchange of ideas in the monetary and financial sphere, and to achieve that it needs stronger links between economists working in this area in central banks, international institutions and universities. this is exactly what the australasian macroeconomics workshop is all about, and i am delighted that we could tempt you to come to hong kong for this year ’ s meeting. thank you and let the fun begin.