THE DEVELOPMENT OF REGIONAL INTEGRATION IN EAST ASIA: FROM THE VIEWPOINT OF SPATIAL ECONOMICS

This paper examines the recent evolution of regional integration in East Asia, and discusses the prospects and tasks of further integration. After an overview of the globalization and regional integration trend in EU, NAFTA and East Asia during the past half-century, we introduce the basic framework of spatial economics, often called the new economic geography. In terms of globalization and regional integration, it is important to examine the general effects of decreasing transport costs (broadly defined) on spatial distribution of economic activities. Given this theoretical framework, we examine the changing economic interdependency within East Asia, as well as that between East Asia and the rest of the world over the last three decades. Next, we focus on regional diversity and disparity in East Asia. Finally, we compare the regional integration in EU with that of East Asia, and examine the tasks and prospects of further promotion of East Asian integration.     

Transport development and the evolution of economic geography

In this paper, based on the recent advances in the new economic geography (e.g., Fujita et al. [12]), we analyze impacts of transport costs on the spatial patterns of economic agglomeration. We first identify prototypes from the existing models, and explain the mechanism of how transport costs influence the balance between economic forces of agglomeration and dispersion. We then investigate the transformation of the agglomeration/dispersion patterns given gradually decreasing transport costs for different goods.Received: Received: July 2004 / Accepted: January 2005, Accepted: Received: July 2004 / Accepted: January 2005, JEL Classification: R12Tomoya Mori: Correspondence toThe authors are grateful to David Bernstein, Tatsuo Hatta, Komei Sasaki, Tony E. Smith, and two anonymous referees for their valuable comments. This research is partly supported by The Grant in Aid for Research 08403001 of Ministry of Education, Science and Culture in Japan, the Murata Science Foundation, and WESCO Civil Engineering Technology Foundation.     

On the Endogeneous Formation of Secondary Employment Centers in a City

A new approach is proposed to explain the formation of secondary employment centers in a monocentric city. Specifically, a large firm considers locating a new plant in a city where none of the existing businesses has a significative share of the labor force, so that its location can be viewed as a secondary employment center. The choice of this location results from the interplay between the process of competition on both the labor and land markets and the technological externalities generated by the proximity of the city center where other firms are located.     

BRAND AGRICULTURE AND ECONOMIC GEOGRAPHY: WHEN ARE HIGHLY DIFFERENTIATED PRODUCTS SUSTAINABLE IN THE REMOTE PERIPHERY?

This paper presents a general equilibrium model of new economic geography, incorporating brand agriculture that produces differentiated agricultural products. Focusing on the core‐periphery space, we show that highly differentiated brand agriculture can be sustained in the periphery even when access to the core market is not particularly good. This result supports the promotion of innovative products in rural areas in order to avoid direct price competition in generic commodities markets under unfavorable conditions.     

THE IMPORTANCE OF THE RETENTION RATIO IN A KALECKIAN MODEL WITH DEBT ACCUMULATION

By using a Kaleckian model with debt accumulation, Hein (2007; Metroeconomica, 56 (2), pp. 310–39) found that the long‐run equilibrium value of the debt–capital ratio is positive and stable only if interest rates are extremely high and if the short‐run equilibrium exhibits the ‘debt‐led’ growth regime. However, this conclusion crucially depends on the assumption that the retention ratio of firms is equal to unity. By relaxing this assumption, we show that there exists a positive and stable long‐run equilibrium even under the ‘debt‐burdened’ regime without any constraint on the nominal interest rate.     

International Competition and Distributive Class Conflict in an Open Economy Kaleckian Model

This paper constructs an open economy Kaleckian model in which international competition affects the bargaining process between firms and workers, and investigates the effects of such bargaining on the macroeconomy. We show that the effects of a change in the bargaining power on aggregate demand depends not only on the demand regimes but also on which agents bears more of the burden arising from the international price competition. Moreover, if the real exchange rate has a small impact on the trade balance, the economy is stable, whereas if it has a larger impact on the trade balance, the economy is unstable.     

A Note on the Joint Distribution of α, β-Percentiles and Its Application to the Option Pricing

In this paper, using Laplace transform, we will calculate the joint density of twopercentiles of stock prices in the Black–Sholes model and make the price of exchange options of such twopercentiles.     

Export oriented growth of output and employment in Taiwan and Korea, 1973/74—1983/84

Zusammenfassung Exportorientiertes Wachstum von Produktion und Besch?ftigung in Taiwan und Korea von 1973/74 bis 1983/84. — Die exportorientierte Industrialisierung in Taiwan und Korea begann in den sechziger Jahren. Jedoch gab es in den siebziger Jahren externe Schocks, welche für diese beiden dynamischen Volkswirtschaften eine Bedrohung darstellten. Die beiden untersuchten L?nder reagierten auf die externen Schocks in unterschiedlicher Weise. Korea begann in der zweiten H?lfte der siebziger Jahre, die Schwerindustrie auszubauen, w?hrend Taiwan die internationale Wettbewerbsf?higkeit seiner kleinen und mittleren Unternehmen zu verst?rken suchte. Die Autoren dieses Aufsatzes benutzen ein Input/Output-Modell, um die unterschiedlichen Wirkungen auf Wachstum und Besch?ftigung zu zeigen, die sich aus diesen verschiedenen Reaktionen in der Zeit von 1974 bis 1984 ergaben. Im ganzen scheint das Vorgehen Taiwans erfolgreicher gewesen zu sein, um Exporte, Besch?ftigung und Strukturwandel zu f?rdern.

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Résumé L’accroissement de l’output orienté vers l’exportation et l’emploi au Taiwan et en Corée, 1973/74—1983/84. — L’industrialisation qui est orientée vers l’exportation au Taiwan et en Corée a commencé dans les années 1960. Cependant, dans les années 1970 des chocs extérieurs ont menacé ces deux économies dynamiques. Ces deux pays ont réagit sur ces chocs d’une manière différente. La Corée a initié une stratégie de l’industrialisation concentrée sur l’industrie lourde dans la deuxième moitié des années 1970. Le Taiwan a mis l’accent sur l’augmentation de la compétitivité internationale de ses entreprises de taille petite et moyenne. Dans l’étude présente on utilise un modèle ?input-output? pour montrer les effets des actions différentes sur l’accroissement de la production et de l’emploi pendant les années 1974 à 1984. En général, il semble que la stratégie économique de Taiwan a eu plus de succès à stimuler l’exportation, l’emploi et le changement structurel.

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Resumen El crecimiento del producto y del empleo orientado hacia las exportaciones en Taiwan y Corea 1973/74—1983/84. — La industrialización orientada hacia las exportaciones comenzó en Taiwán y Corea en la década de los sesenta. En los afios setenta, empero, shocks externos significaron una amenaza para estas economías dinámicas. Las respuestas de ambos divergieron durante la década de shocks externos. Corea inició una estrategia de industrialización pesada en la segunda mitad de los a?os setenta. Taiwán enfatizó la creciente competitividad de sus empresas de escala peque?a y mediana. En este trabajo se utiliza un modelo insumo-producto para mostrar las diferencias en los efectos de crecimiento y empleo de estas diferentes respuestas durante el período 1974–1984. En general, el enfoque de Taiwan parece haber sido el mejor en promover las exportaciones, el empleo y el cambio estructural.

     

Small and medium-sized transnational corporations: Trends and patterns of foreign direct investment

This paper provides an analysis of small and medium-sized transnational corporations (TNCs). Statistical evidence is provided on trends and patterns of foreign direct investment (FDI) by small and medium-sized enterprises (SMEs). There are virtually no countries for which consistent and systematic FDI data are available by firm size, but data complied by or made available to the author for the UNCTAD Programme on Transnational Corporations allow an analysis of broad characteristics, trends and patterns.FDI by SMEs is more concentrated in developed countries than that by large TNCs. However, small and medium-sized TNCs, especially those from Japan, are increasingly investing in developing countries. Although absolute size of FDI is still small, SMEs account for a large share in terms of the number of investment cases and the number of parent firms. South and East Asia became the primary host region of small and medium-sized TNCs during the 1980s and early 1990s. The industrial distribution of FDI by SMEs in developing countries is quite wide, but concentrated in electrical goods, chemicals, textiles and some services industries. SMEs also engage in non-equity investments.Transnational Corporations Affairs Officer United Nations Conference on Trade and Development Geneva, SwitzerlandThe author is grateful for advice and comments by Hafiz Mirza     

On the evolution of the spatial economy with multi-unit · multi-plant firms: the impact of IT development

This paper examines how the decline of communication costs between management and production facilities within firms and the decrease in trade costs of manufactured goods affect the spatial organization of a two-region economy with multi-unit·multi-plant firms. The development of information technology decreases the costs of communication and trade costs. Thus, the fragmentation of firms is promoted. Our result indicates that, with decreasing communication costs, firms producing low trade-cost goods (such as electronics products) tend to concentrate their manufacturing plants in low wage countries. In contrast, firms producing high trade-cost products (such as automobiles) tend to have multiple plants serving to segmented markets, even in the absence of wage differentials.Received: November 2004, Accepted: March 2005, JEL Classification: F12, L13, R13Masahisa Fujita: Correspondence toWe are very grateful to J. Vernon Henderson, J. Pedro Pontes and Koumei Sasaki for helpful comments.