How close is Asia already to being a trade bloc?

FTA bilateral and regional negotiations in Asia have developed quickly in the past decade moving Asia ever closer to an economic union. This paper uses a fifteen-country global general equilibrium model with trade costs to numerically calculate Debreu distance measures between the present situation and potential full Asia integration in the form of a trade bloc. Our results reveal that these large Asia economies can be close to full integration if they act timely in agreements through negotiation. All Asia countries will gain from Asia trade bloc arrangements except when the Asia FTA can only eliminate tariffs. These countries’ gain will increase as bilateral non-tariff elimination deepens. Larger countries will gain more than small countries. Asia FTA, Asia Union and RCEP will benefit member countries more than ASEAN+3. Global free trade will benefit all countries the most.     

Are Asian technology gaps due to human capital quality differences?

This paper adopts the meta-frontier framework using DEAP software to analyse the technological gap and level of catch-up of the three regions in Asia (namely, Southern Asia, Eastern Asia and ASEAN5) with respect to the Asian technology as a whole for the period 1980–2006. Countries in Eastern Asia displayed a technology gap ratio of 1.000 which posits that this region defines the best practice frontier for Asia. Meanwhile, countries in Southern Asia region displayed an improvement in technical efficiency and productivity relative to the Asian frontier but lagged in terms of technological advancement. All three regions recorded a lag in technological advancement with respect to the best practice frontier. In order to progress technologically, these countries should be equipped with the necessary infrastructure and human capital to encourage foreign investment and growth. The countries in Eastern Asia and ASEAN5 recorded the strongest productivity growth performance as a group when compared to the countries in Southern Asia. In Southern Asia and ASEAN5 region, the technology gap ratio is below 1.000 subsequent to the 1997/98 financial crisis. On the contrary, East Asia kept up with the benchmark frontier during most of the sample period inclusive of the period after the financial crisis.     

China's membership in the World Trade Organization (WTO) and the exports of the developing economies of East Asia: a computable general equilibrium approach

There is a general perception particularly among the developing countries of East Asia that China's WTO membership would spell bad news for their exports. The ASEAN countries in particular are quite concerned about its likely negative impact on their export and growth potentials. In this light, the main objective of this paper is to empirically assess the trade implications of China's WTO membership for these countries. Only few studies, using a Computable General Equilibrium (CGE) approach, have addressed the issue of China's WTO membership trade implications. Further, these studies have not adequately addressed the issue from the perspective of the developing countries of East Asia, particularly the ASEAN countries. Using the latest version of the Global Trade Analysis Project (GTAP) model and based on the latest tariff reduction commitments by China, the results showed that, contrary to the current perception and previous studies, almost all of the developing countries of East Asia are likely to benefit from China's WTO membership overall, after allowing for anticipated price adjustments. Without the price adjustments, the Philippines and Singapore would have come out as net losers. These findings have confirmed the need for economic and export restructuring among the ASEAN countries and the importance of accelerating their economic integration. They have also highlighted the importance of promoting trade and investment cooperation between China and ASEAN countries.     

The emergence of extended metropolitan regions in ASEAN: towards the year 2000

"This article analyses the growth of large Extended Metropolitan Regions in the Association of South East Asian Nations (ASEAN) in the period since 1960. The analysis reveals two trends. First, urbanization levels in ASEAN countries are rapidly increasing. By the year 2000, almost 40 per cent of the population will be urban residents. Second, these accelerating processes are creating giant urban regions, called Extended Metropolitan Regions. Analysis of demographic patterns of the emergence of the major urban regions of ASEAN...reveals that these are major areas of economic growth, with industrialization, building development and leisure activities fuelling this process. However, this rapid growth is causing major problems of urban infrastructure provision, land use conflict and environmental deterioration."     

New Asian Regionalism: Evidence on the Impact Ofthe Asean +3 Free Trade Agreement on Its Member Countries

The emergence of new Asian regionalisms such as ASEAN+3 (10 ASEAN countries plus China, Korea and Japan) and other bilateral, plurilateral and multilateral free trade agreements in recent years requires research into these important developments and their underlying fundamental trade-growth causation. Popular existing methodologies such as the CGE/GTAP, gravity theory and panel regression (Dollar and Kraay, 2004) may be inappropriate due to their limited scope, heavily calibrated structure, cross-section data or non-simultaneity features (see also other criticisms in Productivity Commission Report, 2003). The paper extends the gravity theory to time-series data and applies a new flexible modelling approach to construct a simultaneous-equation model of trade and growth for the ASEAN and the East Asia 3. Using data from the World Bank national accounts and CHELEM regional and international trade over the period 1968–2000, the paper then estimates the model by both standard (OLS and 2SLS) and improved Stein-like (2SHI) estimation methods to provide superior MSE impact estimates. Implications of the findings for ASEAN+3’s economic integration, trade policy and prospects for trade and welfare improvement for this important regional FTA will also be discussed.

     

Regional Integration in East Asia: Achievements and Future Prospects

Economic integration in East Asia has been largely market driven. Attempts in the late 1980s to establish an East Asian regional economic grouping failed to materialize for a number of reasons. The financial crisis in 1997–1998 has strengthened the realization of regional countries that they need to have some self‐help mechanisms to overcome that crisis and to prevent future crises. This led to the development of several functional integration programs, including the network of bilateral swap arrangements known as the Chiang Mai Initiative. However, progress remains slow. The question that has arisen is how far these efforts need to be supported by institutional integration. Should the ASEAN Plus Three, the main regional cooperation process in East Asia involving the 10 South‐East Asian countries plus China, Japan, and South Korea, be deepened institutionally? Meanwhile, the region has seen the establishment of a new process, the East Asia Summit, involving the above 13 countries plus Australia, India, and New Zealand. How will these different arrangements contribute to East Asia's economic dynamism and prosperity as well as peace and political stability?     

最优货币区:对东亚国家的经验研究

This paper empirically examines the potential for forming an Optimal Currency Area (OCA) in selected Asian economies, including ASEAN countries, China, Japan and Korea, by testing Generalized Purchasing Power Parity (G-PPP) using Johansen’s cointegration approach. We investigate the long-term real exchange rate of six sub-groups of countries in order to find whether they share the common stochastic trend, as in an OCA, predicted by the G-PPP theory. The date set is monthly based between 1994 and 2003. We find that five sub-groups out of the six in total appear to have significant evidence of the existence of OCAs. This finding reflects the fact that those economies are actually highly integrated and interrelated to each other, and the current regional monetary arrangement (such as, the Chiang Mai Initiative (CMI)) is far lagging behind the real economic link in East Asia.     

The prospects of a monetary union in East Asia

This paper assesses the empirical desirability of the East Asian economies to form a monetary union. The Structural Vector Autoregression (VAR) method is employed to assess the nature of macroeconomic disturbances among the East Asian countries, as a preliminary guide in identifying potential candidates for forming an Optimum Currency Area (OCA). In comparison with European countries, East Asia has less symmetric underlying structural shocks but the speed of adjustment to shocks is much faster. The empirical results suggest that there exists a scope among some small sub-regions, comprising mainly of ASEAN countries, for potential monetary integration. The finding of an increased symmetry of shocks among countries after the Asian Financial crisis indicates that the regional policy-coordinating effort after the crisis has put the region on the right track if monetary union is a desired goal.     

India’s Economic and Strategic Perceptions of China’s Maritime Silk Road Initiative

The Maritime Silk Road Initiative (MSRI) is a part of China’s experiment in scaling up economic corridors across vast swathes of diverse economic geographies. China’s involvement in a large number of ongoing transport corridor projects has encouraged it to embark on the most ambitious of them all till date. The heterogeneity among the economic capacities and integrations of various regions constituting the MSRI, particularly in efficiency of infrastructure and ability to trade, is noticeable. This article underscores these variations as important determinants of competitiveness of the constituent regions and countries. India’s perceptions of the MSRI are significantly shaped by its lack of quality maritime infrastructure capacities that make it relatively uncompetitive vis-à-vis China, Europe and most of Southeast Asia; and the impression of the MSRI’s “China-centrality” emanating from lack of mention of non-China regional forums in the Chinese government’s vision statement; and absence of proactive measures from the Chinese leadership in establishing the MSRI’s multi-country character. The article argues that it is important for India to appreciate the geopolitical character of this unprecedented infrastructure initiative, which, while emphasizing Chinese interests, might not be inimical to India’s economic ambitions, provided India is able to address its domestic infrastructure imperatives.     

The impact of the ACFTA on ASEAN–PRC trade: estimates based on an extended gravity model for component trade

This article uses an extended gravity model to examine the impact of the free trade agreement between the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China (PRC) on their trade flows and patterns. New determinants are utilized to capture the growing importance of global production sharing and intraregional trade in parts and components in East Asia. We show that the free trade agreement leads to substantially higher and more pronounced bilateral trade flows between ASEAN and the PRC than what a conventional gravity model predicts and the increase is concentrated in ASEAN countries that have stronger industrial linkages with the PRC.     

建立中国-东盟自由贸易区的贸易效应分析

在当今世界经济的发展中,区域经济一体化是战后世界经济发展的重要特征,也是当前世界经济发展的客观必然趋势。按照《中国-东盟全面经济合作框架协议》时间框架,中国-东盟自由贸易区于2010年1月1日全面建成。本文首先介绍了中国-东盟自由贸易区的发展状况;然后采用定性分析法,通过对建立中国-东盟自由贸易区的贸易效应分析,可以看出中国东盟的经济还有很大的发展空间,只要将贸易区内存在的问题处理妥当,中国一东盟自由贸易区在建成后将能发挥更大的潜力。     

On the nature,function and composition of technological systems

This paper suggests that the economic growth of countries reflects their developmental potential which, in turn, is a function of the technological systems in which various economic agents participate. The boundaries of technological systems may or may not coincide with national borders and may vary from one techno-industrial area to another. The central features of technological systems are economic competence (the ability to develop and exploit new business opportunities), clustering of resources, and institutional infrastructure. A technological system is defined as a dynamic network of agents interacting in a specific economic/industrial area under a particular institutional infrastructure and involved in the generation, diffusion, and utilization of technology. Technological systems are defined in terms of knowledge/competence flows rather than flows of ordinary goods and services. In the presence of an entrepreneur and sufficient critical mass, such networks can be transformed into development blocks, i.e. synergistic clusters of firms and technologies which give rise to new business opportunities.     

Free Trade Agreements and the Prospects for Regional Integration in East Asia

Trade policy in East Asia has switched from non-discriminatory unilateral liberalization, reinforced by General Agreements on Tariffs and Trade/World Trade Organization (GATT/WTO) commitments, to discriminatory free trade agreements (FTA). The paper surveys the FTA activity of the major regional players: China, the ASEAN countries, Japan, and South Korea. It concludes that emerging FTAs are weak and partial. A hub-and-spoke pattern of dirty FTAs will not drive regional economic integration or further integration with the global economy. Rather, it could be a force of regional economic disintegration – especially if the multilateral trading system weakens further. At the same time, FTA activity is distracting attention from the WTO, and, more fundamentally, from unilateral liberalization and domestic structural reforms. Hence, East Asian trade policies need to be rebalanced, with better-quality FTAs and more focus on the WTO. However, more important than the WTO and FTAs is a fresh spurt of unilateral liberalization and structural reform outside trade negotiations.     

Convergence and catching up in ASEAN: a comparative analysis

The increasing diversity of average growth rates and income levels across countries has generated a large literature on testing the income convergence hypothesis. Most countries in South-East Asia, particularly the five founding ASEAN member countries (ASEAN-5), have experienced substantial economic growth, with the pace of growth having varied substantially across countries. Recent empirical studies have found evidence of several convergence clubs, in which per capita incomes have converged for selected groupings of countries and regions. This paper applies different time series tests of convergence to determine if there is a convergence club for ASEAN-5, as well as ASEAN-5 and the USA. The catching up hypothesis states that the lagging country, with low initial income and productivity levels, will tend to grow more rapidly by copying the technology of the leader country, without having to bear the associated costs of research and development. Given the important effects of technological change on growth, this paper also examines whether ASEAN-5 is catching up technologically with the USA.     

参与一体化进程中东盟的外商直接投资流入及其影响因素分析

从自由贸易区计划启动到老成员建立自由贸易区,东盟成员的FDI流入基本上呈下降趋势,东盟自由贸易区建立对东盟成员的FDI流入没有显著的促进作用.影响东盟五国FDI流入的主要因素是人均国内生产总值、关税水平以及东道国投资环境.     

中国-东盟合作新平台及广东“排头兵”角色

作为中国改革开放“排头兵”，广东早就谋划第二个十年的发展蓝图，亮点之一就是乘中国-东盟自由贸易区如期建成的强劲东风，加快与东盟各国的经贸互利合作。东盟十国都是中国的近邻，构成中国周边环境的重要组成部分。东盟十国又都是发展中国家，无论历史遭遇、现实国情以及发展目标等都与中国相似。发展与东盟的互利合作，寻求与东盟关系长期稳定发展，不仅符合中国和东盟的利益，而且顺应时代潮流，有利于发展中国家的团结。广东有着与东盟十国大力拓展货物贸易、服务贸易和相互投资的实力、潜力、优势和巨大空间。广东完全有能力也有责任继续充分发挥“排头兵”角色，与其他兄弟省、市、区一道，为把中国-东盟“面向和平与繁荣的战略伙伴关系”推向新高度作出更大贡献。     

Growth miracles and failures in a Markov switching classification model of growth

In this paper economic growth is interpreted as a sequence of transitions between distinct growth regimes that countries visit with different frequencies. Countries featuring similar growth dynamics are endogenously grouped into three different clusters. The first cluster comprises successful countries that are characterized by lengthy periods of high or very high growth. Moderately successful countries in the second cluster experience both periods of reasonable growth and periods of stagnation, whereas failing countries in the third cluster suffer from highly volatile growth rates with frequent episodes of crisis. Successful countries are characterized by better initial conditions, policies and institutions compared to the other countries. Neither initial conditions nor institutions distinguish moderately successful from failing countries; what makes them different is policy in the form of investments into infrastructure and human capital, trade liberalization and limited policy volatility.     

Infrastructure: What Is Needed and How Do We Pay for It?

Claims of an infrastructure crisis lack definition, and fail to provide evidence that investment projects that would generate an economic return, including both private and social benefits, are not being funded. This paper shows how setting economic prices for energy, water, transport and communications will provide a better guide to the optimal amount of future infrastructure investment than the likely responses by proponents of an alleged infrastructure crisis.     

Co-movement of ASEAN stock markets: New evidence from wavelet and VMD-based copula tests

This paper aims to study the co-movement and the volatility fluctuation between stock markets in the Association of Southeast Asian Nations (ASEAN) countries from a new perspective. The analyses also delve more deeply into the effect of ASEAN trading link establishment on the short-term interdependency. By applying three-dimensional continuous wavelet transform (CWT) on daily returns of stock markets for the period 2009 to 2016, the interdependence level and lag-lead relationship among ASEAN trading link participants are estimated. The degree of interdependence in ASEAN stock markets is found to be stronger in the short term, especially following particular external shocks. A Variational Modes Decomposition (VMD)-based copula estimation shows that the effect of economic shock – in our case, ASEAN trading link establishment – on the stock markets’ level of comovement is only temporary and will progressively diminish within approximately two years. Only Indonesia and Malaysia display strong fundamental linkages between each other. Both the CWT and Copula methods consistently show that Vietnam (Indonesia) has the lowest (highest) interdependence with the rest of ASEAN trading link participants, as opposed to previous empirical evidence obtained from conventional methods. Investors who want to construct optimal portfolios and policymakers who aim to make effective macroeconomic policies should take these findings into account.     

Spectrum allocation in Latin America: An economic analysis

As elsewhere, wireless markets play a crucial role in Latin American economic growth. Mobile telephone networks increasingly provide the communications infrastructure that has largely been lacking throughout the region. Yet, governments have generally made only modest allocations of bandwidth available to Latin American wireless operators, either absolutely (in terms of spectrum each country could allocate at modest opportunity cost) or relative to countries in North America, Asia and the European Union. Using an empirical model estimated on mobile phone data for international markets, we show that very large social benefits are available to countries that make more spectrum available for mobile phone markets. We conduct simulations using our calibrated model to provide lower bounds for country-by-country gains from larger allocations. We also discuss the impact of alternative regulatory regimes on the feasibility to achieve those social gains.