The review of international evidence in Section 2 and the results presented in Section 3 suggest that, in order to promote regional economic integration and productivity growth, it is appropriate that APEC promotes sound microeconomic structural policies, in addition to its traditional focus on trade and investment policies and its somewhat more recent focus on macroeconomic and financial policies.

The linkages between the three mutually reinforcing elements of trade and investment policies, structural policies, and macroeconomic and financial policies are depicted in Figure 3. This figure represents the mandates of APEC’s three main policy committees: the APEC Committee on Trade and Investment (CTI), the Economic Committee (EC), and the Finance Ministers’ Process (FMP). The greater emphasis that APEC is now placing on structural policies, coordinated and led by the Economic Committee, provides it with a more coherent economic policy agenda.

APEC provides Australia, New Zealand and other member economies with a forum to pursue measures promoting a stronger, more integrated and flexible regional economy. From the perspective of Australia and New Zealand, APEC has the additional advantage of including a number of economies that are economically important to them.

There are a number of other international and regional organisations that promote structural policy change, such as the Organisation for Economic Cooperation and Development (OECD) and the World Bank. APEC aims to draw on the work of these other organisations, but it also ‘adds value’ in a number of ways.^[15] APEC’s cooperative, voluntary and informal manner of operations means that it is a good place to discuss economic policy challenges facing the Asia-Pacific region in an informal and non-adversarial environment. APEC promotes structural reform by providing a forum for senior officials across the region to discuss economic policy challenges, share experiences, build capability, and discuss good practices.

As mentioned previously, one of the interesting features of APEC is that it is a grouping of economies with quite different characteristics, and at different stages of development. While this raises some challenges, it also means that there is considerable scope for the sharing and learning from each others’ experiences. Since cooperation which leads to mutual benefit does not require negotiation, APEC can contribute to improvements in members’ domestic policies by fostering meaningful dialogue on structural policy issues. APEC also has a unique linkage to perspectives from the business community through the APEC Business Advisory Council (ABAC).

While the benefits of structural policy change are becoming increasingly clear, reforms often involve quite fundamental changes to how markets operate, and so can face resistance from groups that have a vested interest in the status quo. Reform can also involve transitional dislocations. Hence there are potentially significant social and political tensions and challenges involved in undertaking structural reform. APEC’s approach to promoting structural policy reform has three main dimensions: policy dialogue, capacity building and awareness raising. These are each explained in turn below.

Structural policy reforms can be supported by discussing and drawing on examples of good practices from other economies. APEC facilitates the discussion and sharing of experiences through holding policy discussions, workshops and seminars, and developing good practice guidance in areas such as regulation, competition policy and corporate governance. For example, in February 2008 APEC held the first ever high-level one-day policy dialogue amongst APEC senior officials on structural reform. The EC also holds regular information-sharing discussions at its meetings styled on OECD roundtable discussions; recent examples include discussions on how to balance accountability and innovation in the public sector, and the attributes of a robust regulatory reform framework.

Economies need the financial resources and technical expertise to drive structural change. There are several ways this can be achieved. For example, the World Development Report (World Bank 2005) suggests that economies may wish to start strengthening capacity by improving the expertise of the civil service and the quality of information available to guide and administer reforms. It also highlights the importance of economies improving processes for ongoing learning from within economies and from the experiences of other economies. APEC provides a forum for economies to learn from each others’ experiences, and holds regular workshops and training courses to build capacity to support structural reform; recent examples include workshops held by the EC in 2008 on e-governance, and government performance and results management.

For reforms to be successful, it is important that the costs and benefits of policy approaches are well communicated and understood by key stakeholders. Practical steps suggested by the World Development Report (World Bank 2005) to improve communications include raising public awareness about structural reform, mobilising a broader range of support, and maintaining momentum by, for example, establishing institutions to sustain the reform progress. APEC helps communicate the costs and benefits of policy approaches and keep structural reform issues at the fore. One way it does this is through its annual publication to APEC Leaders, the APEC Economic Policy Report.^[16]