The coronavirus disease (COVID-19) pandemic disrupted both supply and demand sides of an interconnected world economy during 2020. Asia and the Pacific was not immune. Lockdowns and travel and trade restrictions affected nearly all aspects of cross-border economic activity. Trade was hit hard as demand fell. Global supply chains were forced to adapt. Foreign direct investment slowed. Financial vulnerabilities were heightened. Overseas migration and worker remittances were severely disrupted. And tourism, important to many of the region’s economies, was particularly hard hit.

The Asian Economic Integration Report (AEIR) 2021 examines the initial impact on trade, investment, finance, and people’s mobility across the region as the pandemic struck. The report looks at how regional economies individually or collectively respond to the crisis by, for example, leveraging rapid technological progress, digitalization, and increasing services trade to reconnect and recover. Although the pandemic is not over yet, the Asia and Pacific region has demonstrated a great deal of resilience, due in part to authorities’ swift policy responses and regional cooperation efforts. And it suggests how better managing globalization and regional integration could help seize the potential opportunities as economies gradually recover in a post-COVID-19 environment.

The report also uses ADB’s Asia-Pacific Regional Cooperation and Integration Index (ARCII) to help explain the state of regional cooperation and integration in Asia, across subregions, and in comparison to other regions in the world. Reflecting the growing importance of the digital economy and environmental sustainability for the region’s cooperation efforts, this year’s ARCII adds two new dimensions to the index: (i) technology and digital connectivity, and (ii) environmental cooperation and regional public goods. It also analyzes how a country’s geographic position influences its level of regional integration.

This year’s AEIR theme chapter is on digital platforms and how they can accelerate digital transformation across the region. Digital platforms continue to transform the way we work, socialize, and create economic value. While digital transformation shows great speed and adaptability during the pandemic, new risks and challenges such as digital divide and cybersecurity issues come to light. This underscores the importance and urgency for policies and regulations that can manage the disruptions and maximize gains from the digital economy. These range from widening access to promoting digital inclusion, e-health, and online learning, to ensuring data privacy and security, fighting cybercrime, and preventing cyberattacks, among others. While coordination among national agencies is critical, regional cooperation needs will only grow in importance on critical issues such as data transfer, taxation, and the financing needed to boost support for sustainable and inclusive digital development.