Closer Economic Relations with East Asia?

This paper examines Australia's economic links with East Asia and the policy implications of these links. The main issue is whether Australia should join the regional trading arrangements with East Asian countries that have been proposed. It examines the factors which determine the share of East Asia in Australian exports. One of these, the country bias factor, is threatened by proposed regional trading arrangements which might exclude Australia. After considering the costs of exclusion, the paper concludes that Australia should consider developing new bilateral or regional trade arrangements with countries in East Asia.     

Binding constraint on economic growth under export-oriented industrialization and globalization

The two-gap model of economic growth implies that different constraints on economic growth, namely the savings and the foreign exchange availability, are binding at different times. This article estimates these varying binding constraints in 16 countries in East and Southeast Asia and Latin America, and explores their differences across countries, regions and periods. I show that the East and Southeast Asian countries, which are recognized to be successful in export-oriented industrialization, are less constrained by the foreign exchange availability with reinforced export capacity than the Latin American countries, which had carried some inertia of import substituting industrialization policy until the 1980s. In addition, the economic growth turns out to be more constrained by the domestic savings in recent years, which can be a reflection of capital account liberalization policies typically implemented in the late 1980s and 1990s, and/or a diminishing return to export-led growth. In either case, this might be a factor underlining the recent reconsideration of export-oriented development strategy to balance past excessive dependence on the external demand in several countries in East and Southeast Asia.     

东亚货币合作的制约因素与政策建议

根据建立货币区的相关衡量标准,目前东亚地区还存在着经济趋同障碍、政治障碍、第N种货币问题以及缺乏区域性的超国家货币管理机构等制约因素.因此,现阶段尚无法建立东亚货币合作区.目前较为现实的选择是分阶段渐进推进东亚货币一体化进程,包括加强区域内的多边汇率政策协调、建立次区域货币区、最终建立东亚共同货币区.     

Bordering Borderscapes: Australia’s Use of Humanitarian Aid and Border Security Support to Immobilise Asylum Seekers

This article documents Australia’s use of border security support and humanitarian aid as border externalisations immobilising asylum seekers as far from Australia as possible. The Australian Government frames border securitisation through regionalism, as an effort to achieve a “regional solution” to asylum seeking irregular migration. Correspondingly, scholars have documented Australia’s externalisations in Southeast Asia and the Pacific. However, Australia’s efforts are not regionally circumscribed and this article analyses the spatial and temporal flexibility of Australia’s border externalisations; Australia’s strategy of targeting borderscapes of asylum seeking as they emerge and change. In doing so, the article examines how the Australian Government has assembled externalisations in South Asia, the Middle East, and North Africa. Australia’s use of humanitarian aid to make places housing asylum seekers more hospitable, yet confining, to the displaced is detailed. Also analysed is Australia’s border security support to source countries and countries of first asylum to immobilise asylum seekers. The article demonstrates that Australia has sought to manifest not only a territorial buffer zone in Southeast Asia, but use border externalisations in the Middle East, South Asia, and North Africa to secure places and displaced populations. This is argued to be a preventative strategy of risk management designed to preempt future asylum geographies and forge extraterritorial migration control.     

Business Cycle Co‐movement between Australia and East Asia

This article analyses business cycle co‐movement between Australia and 10 major economies in the East‐Asian region by using two measures: concordance indices and correlation coefficients. The results from the concordance index suggest that Australia's business cycle is becoming increasingly synchronised with those in East Asia, particularly with China and Japan. The correlation coefficients of gross domestic product (GDP) growth and the deviation of real GDP from its trend between Australia and its East‐Asian neighbours are also significantly higher since 2000, relative to the correlation coefficients found for the 1990s. The growing importance of East Asia in Australia's economic future implies that the risks facing the economy have changed and Australia needs to engage in more macroeconomic policy dialogues with its neighbouring economies to improve their policy responses.     

Business cycles synchronization in East Asian economy: Evidences from time-varying coherence study

This paper analyzes the feasibility of a monetary union in East Asia focusing on business cycles synchronization. Considering the critical role of trade integration in the East Asian integration process, we study whether East Asian countries are characterized by business cycle synchronization. The related empirical literature dedicated to business cycles synchronization in East Asia does not lead to firm conclusion. In this paper, we suggest a different empirical approach allowing, contrary to the previous studies, to detect endogenously structural changes in the comovement process between outputs. We apply a new measure based on the time-varying coherence function. Such a measure not only detects comovement dynamics but it distinguishes also this dynamics between short- and long-term. We compute also cohesion statistics to test if countries tend to be more synchronized or not. The main finding of this paper is that the increase in bilateral trade inside the East Asian region significantly improves long-run business cycle synchronization. The short-run influence of bilateral trade shows mixed results. Indeed, short-run cycles remain significantly influenced both by shocks hitting each country and by economic policy responses. As a consequence, more bilateral trade and convergence in economic policy constitute two complementary processes to promote business cycle synchronization.     

Responses to COVID-19 in Southeast Asia: Diverse Paths and Ongoing Challenges

Due to geographical proximity and trade links with China, Southeast Asian countries were among the first to be exposed to and affected by COVID-19. However, despite shared challenges including protecting population health and economic security, policy responses by national governments have been varied and remain so a year into the pandemic. This article critically reviews Southeast Asian countries' approaches to COVID-19 with reference to individual country experiences and Association of Southeast Asian Nations. We discuss key policy responses: leadership, public risk communications, health system preparedness and resilience, economic support and social protection, aid and global health diplomacy, digital technologies, and the region's multilateral response.     

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?     

Educational Production in East Asia: The Impact of Family Background and Schooling Policies on Student Performance

Abstract. East Asian students regularly take top positions in international league tables of educational performance. Using internationally comparable student-level data, I estimate how family background and schooling policies affect student performance in five high-performing East Asian economies. Family background is a strong predictor of student performance in Korea and Singapore, while Hong Kong and Thailand achieve more equalized outcomes. There is no evidence that smaller classes improve student performance in East Asia. But other schooling policies such as school autonomy over salaries and regular homework assignments are related to higher student performance in several of the considered countries.     

Is East Asia an optimum currency area?

This paper assesses the empirical desirability of the East Asian economies to an alternative exchange rate arrangement (a monetary union) that can potentially enhance the exchange rate stability and credibility in the region. Specifically, the symmetry in macroeconomic disturbances of the East Asian economies is examined as satisfying one of the preconditions for forming an Optimum Currency Area (OCA). We extend the existing literature by improving the methodology of assessing the symmetry shocks in evaluating the suitability of a common currency area in the East Asian economies employing the Bayesian State-Space Based approach. We consider a model of an economy in which the output is influenced by global, regional and country-specific shocks. The importance of a common regional shock would provide a case for a regional common currency. This model allows us to examine regional and country-specific cycles simultaneously with the world business cycle. The importance of the shocks decomposition is that studying a subset of countries can lead one to believe that observed co-movement is particular to that subset of countries when it in fact is common to a much larger group of countries. In addition, the understanding of the sources of international economic fluctuations is important for making policy decisions. The falling share of country specific factor and the rising role of region factor indicate that East Asia has become increasingly favorable for a monetary union. However, the share of country-specific factor that is still significant implies that it could be costly to renounce individual currencies to advance into a monetary union in East Asia.     

Australia and the Pacific Economy*

The industrialization and growth of East Asian countries has shifted the centre of world trade and economic activity towards the Pacific. There has already been a huge redirection of Australia's trade and external economic interests towards the region, based importantly on the emergence of Japan as a major economic power. Australia's future economic prospects will be significantly determined by how it manages its trade policy interests in the context of continuing East Asian industrialization. The most promising Australian trade policy approach is one which allies Australia's trading interests to those of East Asian countries in seeking to maintain an open non-discriminatory trade regime, supportive of the transformation of trade specialization necessary to the industrialization of resource-deficient countries, and which marries that objective to the liberalization of her own and Pacific country markets.     

An analysis of East Asian currency area: Bayesian dynamic factor model approach

There has recently been an increasing interest in the establishment of a common currency area in East Asia in the aftermath of the East Asian financial crisis. In this article I examine the desirability and feasibility of forming a currency area in the region by checking the symmetry of shocks as an important criterion of the theory of Optimum Currency Area. I employ a dynamic factor model to decompose aggregate output into world, regional and country‐specific components and estimate the model using a Gibbs sampling simulation. Persistent properties of those components are examined and variance decomposition analysis is performed to investigate the role of each component in output variance. The European Monetary Union, with the successful launch of the euro, is the natural benchmark for comparison. Based on variance analysis, it is found that East Asian countries, on average, are less plausible candidates for a currency area than European counterparts. However, a subgroup of countries in East Asia is as qualified as those in Europe. Given the ongoing integration in East Asia, it is not premature to prepare for such a currency area in this region.     

Globalization,Inequality, and Local‐level Dynamics: Indonesia and the Philippines*

Subnational disparities and center–region relations are increasingly important issues in both the development economics literature and East Asian policy circles. Almost all developing countries in East Asia are actively decentralizing power and resources from the center. Analytically, there is growing interest in spatial economics, arising out of the fusion of economics and geography. This paper examines these issues with reference to Indonesia and the Philippines. Both countries are well suited to such a study: they are the two largest archipelagic nations in the world, they both feature great subnational diversity, and they have both adopted major decentralization programs, in similar circumstances. We conclude that, in aggregate, there have been no major changes in regional inequality in either country, although this conclusion is sensitive to the selection of economic indicators. In general, the regions that are the best connected to the global economy have grown more rapidly.     

The Dynamism of Trans-Boundarisation: From the Perspective of Critical Regionalism

East Asia currently faces mounting issues (including a wide range of political, military, and security conflicts), and the ever-intensifying crisis in the region unfolds in sharp contrast with ever-growing economic cooperation and cultural exchange. The term ‘Asia Paradox’ is loaded with such overtones, and it is directly related to East Asian regionalism. Since the 1990s East Asian regionalism has been widely developed in various spheres, but the reality in East Asia today shows that rich experiences of economic and cultural cooperation are powerless to ease current conflicts in the region. Where then can we discover possible ways of overcoming the Asian paradox? This article attempts to find a clue in the perspective of East Asian critical regionalism, focusing on its dynamism of trans-boundarisation as a coexistence of re-boundarisation and de-boundarisation. To that end, this work will first examine the characteristics of boundaries, globalisation, regionalism and critical regionalism theoretically, using trans-boundarisation as a key word. Second, it will examine the possibility that East Asian critical regionalism can show a way forward toward the resolution of conflicts in East Asia, or for the solution of the Asian paradox, using East Asian border disputes as the empirical case.     

Fiscal Policy in Australia and Southeast Asia: An Overview

Ian M. McDonald introduces a Policy Forum on Fiscal Policy in Australia and Southeast Asia . In this Policy Forum two papers focus on the fiscal policy of the Howard Government. A third paper considers the role of fiscal policy in the currency crisis in Southeast 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.     

亚洲金融区域主义的政治逻辑

本文探讨了"合法性"与"权力"在金融区域主义方面的因果效应。当前以G7为主导的全球体制中合法性的明显缺失和国家间权力格局的变化影响了东亚的政策决策。东亚国家寻求"抗衡性"的战略,也即在保持着与以G7为中心的全球金融体制合作关系的情况下,通过发展自身的区域性制度(或其他潜在方案)以避免对前者的过度依赖。上述观察意味着,除非现存全球金融体制解决了合法性问题,并且当前(有利于东亚的)权力转移发生逆转,亚洲新兴经济体不会将应对国际金融问题的全部希望寄于全球性的解决方案。     

The big push,industrialization and international trade: The role of exports

This paper analyzes the “late” industrializations of South Korea and Taiwan, and how they can be produced by an export promotion policy. The paper adopts an open economy version of the well-known big push model. Thus, it recovers neoclassical accounts of industrialization through exports, complementing previous literature, which tends to show the existence of the big push, but is scarce on trade mechanisms to produce it. The model fits well with some stylized facts of the industrializations in East and Southeast Asia. I also apply it to a comparison of the education policies of East Asia and Latin America.     

Role of government in trade and investment boom: lessons from East Asia

This paper extends the empirical analysis on Rodrik’s (1995a) domestic investment‐led export growth model for East Asia to nine East Asian countries for a longer time period, 1960 through 2004, and tests whether openness Granger‐caused investment or vice versa. Our results suggest that there can be no single conclusion about the role of investment in East Asia. Causality has also changed for some countries in different time periods. We question the exogeneity of the investment boom in East Asia, a key assumption made by Rodrik. Government’s incentives encouraged investment in export industries through different channels.     

Different Impacts of Scientific and Technological Knowledge on Economic Growth: Contrasting Science and Technology Policy in East Asia and Latin America

This paper conducts country‐panel econometric analysis with a focus on the different roles of scientific and technological knowledge on economic growth and on the knowledge production functions. It finds that it is not scientific knowledge (academic articles) but technological knowledge (patents) that matters for economic growth, and that generating scientific knowledge does not automatically lead to the generation of technological knowledge. We find that technological knowledge is primarily determined by corporate research and development efforts, which used to be more lacking in Latin American countries, compared with East Asia. This finding sheds new light on the question of why Latin American and East Asian countries have shown such divergent economic performances.