Markets
Which Asian Economies Have the Most Sustainable Trade Policies?
Which Asian Economies Have the Most Sustainable Trade Policies?
To say that Asia has benefited from international trade is an understatement. By opening its economies to the rest of the world, the region has become a leading exporter in many of today’s most important industries.
Trade has also improved Asia’s quality of life, lifting over one billion people out of poverty since 1990. Without the proper controls, however, such rapid growth could have harmful effects on Asia’s environment and society.
In this infographic from The Hinrich Foundation, we break down the results of their 2020 Sustainable Trade Index (STI). Since 2016, this index has ranked 19 Asian economies and the U.S. across three categories of trade sustainability: economic, social, and environmental.
What Exactly is Sustainable Trade?
International trade is an important source of economic growth, enabling domestic businesses to expand, reach new customers, and gain exposure to foreign markets.
At the same time, countries that focus too heavily on exports put themselves at greater long-term risk. For example, an aggressive expansion into manufacturing is likely to impair the quality of a country’s air, while overdependence on a single product or sector can create an economy that is susceptible to demand shocks.
“The primary principle which underpins sustainable trade is balance. Trade cannot be pursued solely for economic gains, without considering environmental and social outcomes.”
– Merle A. Hinrich
Thus, sustainable trade supports not only economic growth, but also environmental protection and strengthened social capital. It involves finding a balance between short-term incentives and long-term resilience.
Measuring Sustainable Trade
The Sustainable Trade Index (STI) is based on three underlying pillars of trade sustainability. Every economy in the STI receives a score between 0 and 100 for each pillar.
Pillar | Number of Indicators | Examples of Indicators |
---|---|---|
Economic pillar | 21 |
|
Social pillar | 12 |
|
Environmental pillar | 14 |
|
The economic pillar measures a country’s ability to to grow its economy through trade, while the social pillar measures a population’s tolerance for trade expansion, given the costs and benefits of economic growth.
Last but not least, the environmental pillar measures a country’s proficiency at managing climate-related risks. Individual pillar scores are then aggregated to arrive at an overall ranking, which also has a maximum possible score of 100.
The Sustainable Trade Index 2020: Overall Rankings
For the first time in the STI’s history, Japan and South Korea have tied for first place. Both countries have placed in the top five previously, but 2020 marks the first time for either to take the top spot.
Rank | Economy | Overall Score |
---|---|---|
1 (tied) | 🇯🇵 Japan | 75.1 |
1 (tied) | 🇰🇷 South Korea | 75.1 |
3 | 🇸🇬 Singapore | 70.2 |
4 | 🇭🇰 Hong Kong | 68.3 |
5 | 🇹🇼 Taiwan | 67.0 |
6 | 🇺🇸 U.S. | 66.2 |
7 | 🇨🇳 China | 56.5 |
8 | 🇵🇭 Philippines | 55.9 |
🌏 Average | 55.1 | |
9 | 🇹🇭 Thailand | 50.5 |
10 | 🇱🇰 Sri Lanka | 50.4 |
11 | 🇲🇾 Malaysia | 49.5 |
12 | 🇧🇩 Bangladesh | 49.4 |
13 | 🇧🇳 Brunei | 48.5 |
14 | 🇰🇭 Cambodia | 47.8 |
15 (tied) | 🇮🇳 India | 46.9 |
15 (tied) | 🇻🇳 Vietnam | 46.9 |
17 | 🇮🇩 Indonesia | 46.3 |
18 | 🇱🇦 Laos | 46.1 |
19 | 🇵🇰 Pakistan | 43.9 |
20 | 🇲🇲 Myanmar | 40.3 |
Advanced economies like Singapore, Hong Kong, and Taiwan were also strong performers, each scoring in the high 60s. At the other end of the spectrum, developing countries such as India and Vietnam were tightly packed within the 40 to 50 range.
To learn more, here’s how each country performed in the three underlying pillars.
1. Economic Pillar Rankings
Hong Kong topped the economic pillar for the first time thanks to its low trade costs and well-developed financial sector. Financial services have increased their contribution to Hong Kong’s GDP from 13% in 2004 to 20% in 2018.
The region’s recently initiated national security law—which has resulted in greater political instability—may have a negative effect on future rankings.
Rank | Economy | Economic Score |
---|---|---|
1 | 🇭🇰 Hong Kong | 69.6 |
2 | 🇸🇬 Singapore | 68.7 |
3 | 🇨🇳 China | 64.9 |
4 | 🇰🇷 South Korea | 63.3 |
5 (tied) | 🇲🇾 Malaysia | 61.2 |
5 (tied) | 🇺🇸 U.S. | 61.2 |
7 | 🇹🇼 Taiwan | 60.3 |
8 | 🇧🇳 Brunei | 59.3 |
9 (tied) | 🇯🇵 Japan | 58.6 |
9 (tied) | 🇵🇭 Philippines | 58.6 |
🌏 Average | 56.9 | |
11 | 🇧🇩 Bangladesh | 56.3 |
12 | 🇰🇭 Cambodia | 56 |
13 | 🇱🇰 Sri Lanka | 54.7 |
14 | 🇻🇳 Vietnam | 53.9 |
15 | 🇮🇩 Indonesia | 52.1 |
16 | 🇮🇳 India | 51.4 |
17 | 🇲🇲 Myanmar | 49.5 |
18 | 🇹🇭 Thailand | 47.4 |
19 | 🇵🇰 Pakistan | 46.9 |
20 | 🇱🇦 Laos | 44.0 |
China was also a strong performer, climbing to third for the first time. Asia’s largest economy benefits from a well-diversified group of trading partners, meaning it doesn’t rely too heavily on a single market.
The bottom five countries—India (16th), Myanmar (17th), Thailand (18th), Pakistan (19th) and Laos (20th)—suffered from issues such as payment risk, which is measured as the difficulty of getting money in and out of a country. This risk is especially damaging to trade because it discourages foreign direct investment.
2. Social Pillar Rankings
The social pillar features the highest average score, but also the largest gap from top to bottom. This gap has expanded over recent years, growing from 43.9 points in 2018 to 52.3 in 2020.
Rank | Economy | Social Score |
---|---|---|
1 | 🇹🇼 Taiwan | 88 |
2 | 🇯🇵 Japan | 87.3 |
3 | 🇰🇷 South Korea | 86.9 |
4 | 🇺🇸 U.S. | 83.1 |
5 | 🇸🇬 Singapore | 63.1 |
6 | 🇵🇭 Philippines | 62.4 |
7 | 🇹🇭 Thailand | 60.9 |
🌏 Average | 59.1 | |
8 | 🇭🇰 Hong Kong | 57.8 |
9 | 🇧🇩 Bangladesh | 55.8 |
10 | 🇲🇾 Malaysia | 53.6 |
11 | 🇱🇦 Laos | 53.0 |
12 | 🇮🇳 India | 52.5 |
13 | 🇮🇩 Indonesia | 52.4 |
14 | 🇧🇳 Brunei | 51.6 |
15 | 🇻🇳 Vietnam | 50.4 |
16 | 🇨🇳 China | 50.2 |
17 | 🇰🇭 Cambodia | 46.2 |
18 | 🇱🇰 Sri Lanka | 46.1 |
19 | 🇵🇰 Pakistan | 45.6 |
20 | 🇲🇲 Myanmar | 35.7 |
Taiwan claimed the top spot for the second time, solidifying its reputation as Asia’s leader in human capital development. It performed well in the educational attainment indicator, with 93.6% of its population receiving a tertiary education.
China, despite its success in other pillars, only managed 16th. This was partly due to the effects of its now defunct one-child policy, which has been responsible for creating gender imbalances and a shrinking population.
3. Environmental Pillar Rankings
The environmental pillar has the lowest average score of the three. Japan, Singapore, Hong Kong, and South Korea were the only countries to score above 75.
Rank | Economy | Environmental Score |
---|---|---|
1 | 🇯🇵 Japan | 80.0 |
2 | 🇸🇬 Singapore | 78.7 |
3 | 🇭🇰 Hong Kong | 77.4 |
4 | 🇰🇷 South Korea | 75.2 |
5 | 🇨🇳 China | 54.5 |
6 | 🇺🇸 U.S. | 54.3 |
7 | 🇹🇼 Taiwan | 52.8 |
8 | 🇱🇰 Sri Lanka | 50.4 |
🌏 Average | 49.1 | |
9 | 🇵🇭 Philippines | 46.6 |
10 | 🇹🇭 Thailand | 43.2 |
11 | 🇰🇭 Cambodia | 41.2 |
12 | 🇱🇦 Laos | 41.1 |
13 | 🇵🇰 Pakistan | 39.3 |
14 | 🇮🇳 India | 36.7 |
15 | 🇻🇳 Vietnam | 36.3 |
16 | 🇧🇩 Bangladesh | 36.0 |
17 | 🇲🇲 Myanmar | 35.6 |
18 | 🇧🇳 Brunei | 34.6 |
19 | 🇮🇩 Indonesia | 34.3 |
20 | 🇲🇾 Malaysia | 33.8 |
The top four performed well in areas such as air quality and water pollution, and with the exception of Hong Kong, have all introduced carbon pricing schemes in the past decade. This doesn’t mean these countries are without their flaws, however.
Land-constrained Singapore, for instance, ranked 16th in the deforestation indicator. The city-state is one of the densest population centers in the world, and has cut down forests to clear space for further settlement and urbanization.
Building Back Better From COVID-19
Despite the damage that COVID-19 has caused, there are some silver linings. This includes the environmental benefits experienced by China, where lockdowns reduced carbon emissions by 200 million tonnes in a single month. It’s been estimated that after two months, China’s reduced pollution levels saved the lives of 77,000 people.
These temporary improvements are an explicit reminder of the environmental and social costs associated with economic growth. In response, governments in Asia are taking steps to ensure the long-term sustainability of their nations. Japan and South Korea both announced their commitments to achieving carbon neutrality by 2050, while China set a similar goal for 2060.
Markets
3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Valuations are much lower than they were during the dot-com bubble, but what else sets the current AI enthusiasm apart?

3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Artificial intelligence, like the internet during the dot-com bubble, is getting a lot of attention these days. In the second quarter of 2023, 177 S&P 500 companies mentioned “AI” during their earnings call, nearly triple the five-year average.
Not only that, companies that mentioned “AI” saw their stock price rise 13.3% from December 2022 to September 2023, compared to 1.5% for those that didn’t.
In this graphic from New York Life Investments, we look at current market conditions to find out if AI could be the next dot-com bubble.
Comparing the Dot-Com Bubble to Today
In the late 1990s, frenzied optimism for internet-related stocks led to a rapid rise in valuations and an eventual market crash in the early 2000s. By the time the market hit rock bottom, the tech-heavy Nasdaq 100 Index had dropped 82% from its peak.
The growing enthusiasm for AI has some concerned that it could be the next dot-com bubble. But here are three reasons that the current environment is different.
1. Valuations Are Lower
Stock valuations are much lower than they were at the peak of the dot-com bubble. For example, the forward price-to-earnings ratio of the Nasdaq 100 is significantly lower than it was in 2000.
Date | Forward P/E Ratio |
---|---|
March 2000 | 60.1x |
November 2023 | 26.4x |
Lower valuations are an indication that investors are putting more emphasis on earnings and stocks are less at risk of being overvalued.
2. Investors Are More Hesitant
During the dot-com bubble, flows to equity funds increased by 76% from 1999 to 2000.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
1997 | $231B |
1998 | $163B |
1999 | $200B |
2000 | $352B |
2001 | $63B |
2002 | $14B |
Source: Investment Company Institute
In contrast, equity fund flows have been negative in 2022 and 2023.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
2021 | $295B |
2022 | -$54B |
2023* | -$137B |
Source: Investment Company Institute
*2023 data is from January to September.
Based on fund flows, investors appear hesitant of stocks, rather than overly exuberant.
3. Companies Are More Established
Leading up to the internet bubble, the number of technology IPOs increased substantially.
Year | Number of Technology IPOs | Median Age |
---|---|---|
1997 | 174 | 8 |
1998 | 113 | 7 |
1999 | 370 | 4 |
2000 | 261 | 5 |
2001 | 24 | 9 |
2002 | 20 | 9 |
Many of these companies were relatively new and, at the peak of the bubble in 2000, only 14% of them were profitable.
In recent years, there have been far fewer tech IPOs as companies wait for more positive market conditions. And those that have gone public, the median age is much higher.
Year | Number of Technology IPOs | Median Age |
---|---|---|
2020 | 48 | 12 |
2021 | 126 | 12 |
2022 | 6 | 15 |
Ultimately, many of the companies benefitting from AI are established companies that are already publicly traded. New, unproven companies are much less common in public markets.
Navigating Modern Tech Amid Dot-Com Bubble Worries
Valuations, equity flows, and the shortage of tech IPOs all suggest that AI isn’t shaping up to be the next dot-com bubble.
However, risk is still present in the market. For instance, only 33% of tech companies that went public in 2022 were profitable. Investors can help manage their risk by keeping a diversified portfolio rather than choosing individual stocks.

Explore more insights from New York Life Investments.

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