Japanese economist says not all infra projects to help economy

MANILA, Philippines - The incoming dean of the think tank of the Asian Development Bank on Tuesday said not all infrastructure projects would benefit an impoverished area.

Naoyuki Yoshino, an economic professor at the Keio University in Tokyo and who will be the new Asian Development Bank Institute (ADBI) Dean, said in a lecture that government and policy-makers should include "social infrastructure" in deciding what type infrastructures to build and where to put them. Yoshino gave his lecture on "Abenomics and Lessons for Financial Market Reforms in Asia" at the ADB Headquarters in Manila on Tuesday.

He cited the case of three bridges in Shikoku in Japan that were constructed on the behest of three politicans in the area. Instead of helping the area, businesses in the region closed down as residents opted to shop on the main island.

Yoshino also said Japan's woes of stagnating economy could not be merely solved by adjusting its monetary policy.

"Japan has an aging population and it is not so successful in developing next generation technology," he said.

Add to that is the preference of the Japanese to put their money in savings instead of letting their financial asset earn more money for them.

Under the  administration of Shinzo Abe, Japan is seeking to boost its economy through an aggressive monetary policy, fiscal consolidation and  growth strategy.

Yoshino also cited six warning signs of an impending asset bubble. Policy makers hould watch out for loose monetary policy, increasing bank loans to real estate and housing sector,  five stages of an asset bubble, fast growth rate of bank loans and economic growth, housing affordability, increasing share of unsophisticated individuals investing in the stock market, and the increase in turn over of stock transactions.

Based on these criteria, Yoshino said he thinks the Chinese economy could be heading to a bubble.