East Asia: A Decade After the Financial Crisis
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East Asia: A Decade After the Financial Crisis need for closer investment cooperation to increase competitiveness & sustain growth. Rafaelita M. Aldaba Philippine Institute for Development Studies. East Asian high economic growth led by China.

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Rafaelita M. Aldaba Philippine Institute for Development Studies

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Rafaelita m aldaba philippine institute for development studies

East Asia: A Decade After the Financial Crisisneed for closer investment cooperation to increase competitiveness & sustain growth

Rafaelita M. Aldaba

Philippine Institute for Development Studies


East asian high economic growth led by china

East Asian high economic growth led by China

  • Strongest growth in the last 10 years after crisis: 8.1%

  • Developing countries: 9.5%

  • China: 10.7% has led the continued strong growth of the East Asian region

Source: World Bank [2007] “East Asia & Pacific Update”


East asian region richer as its per capita gdp continues to rise

East Asian Region richer as its per capita GDP continues to rise

  • Per capita income has continued to increase relative to incomes in OECD countries increasing from 14% in 1996 to 20% in 2006

  • After the 1997-98 Asian financial crisis, the East Asian region is far richer

Source: World Bank [2007] “East Asia & Pacific Update”


High per capita gdp growth largely due to china

High per capita GDP growth largely due to China

  • OECD average per capita income growth was 1.8%

  • Indonesia 3.5%, Malaysia 3.5%, Philippines 2.9%, & Thailand 4.6%

  • China: 8.9% has contributed substantially to strong performance of the East Asian region

Source: World Bank [2007] “East Asia & Pacific Update”


Growing trade integration between the region the rest of the world

Growing trade integration between the region & the rest of the world

  • Export to GDP ratios increased in all major economies between 1995 & 2005

  • Average exports increased from 34% of GDP in 1995 to 42% in 2005

  • East Asian economies have continued to become more exposed to international trade over the last decade

Source: World Bank [2007] “East Asia & Pacific Update”


Rising east asian exports as of world exports

Rising East Asian exports as % of world exports

  • East Asia’s average share of world exports rose from 15.5% in 1995 to 17.9% in 2005

  • A very large portion of the increase came from China & Hong Kong: 4.5% to 7.7%

  • World trade shares of Taiwan, Singapore, Thailand, Malaysia & Indonesia fell; Korea & Philippines increased slightly over the last decade

Source: World Bank [2007] “East Asia & Pacific Update”


Export shares of east asia to the us computers peripherals semiconductors cps market

Export shares of East Asia to the US computers, peripherals & semiconductors (CPS) market

  • The CPS is the largest sector of the US-East Asian trade

  • NIEs lost their market shares

  • ASEAN4 rose till 2001 but fell in 2001-2005

  • China’s market share increased especially in 2001-2005

  • Post crisis period 2001-2005: competitive pressure from China rose sharply

Source: World Bank [2007] “East Asia & Pacific Update”


China s rapid growth provided a locomotive for trade in the region

China’s rapid growth provided a locomotive for trade in the region

  • In 2004, China’s imports from Korea & Philippines increased by more than 40%

  • Imports from Taiwan & Thailand increased by slightly more than 30% & 25% in Indonesia

  • Positive changes in China’s imports from these countries continued in 2005 & 2006

Source: World Bank [2007] “East Asia & Pacific Update”


Rising intra regional trade between china hk and the major east asian economies

Rising intra-regional trade between China & HK and the major East Asian economies

  • The share of the major East Asian economies exports to China & HK increased from 13.3% in 1995 to 21.3% in 2005

  • This surge reflects the rising intra-regional trade of China & HK & rest of East Asia

  • Exports of components & other inputs

Source: World Bank [2007] “East Asia & Pacific Update”


Fdi regional production networks

FDI & regional production networks

  • This intra-industry trade has been closely associated with FDI flows & the establishment of regional production networks

  • Both FDI flows & production networks are at the heart of the rapid increase in intra-regional trade in the region over the last decade since the crisis


Fdi trends

FDI trends

  • The East Asian countries continue to receive strong FDI inflows

  • FDI outflows also continue to grow quickly in the last 2-3 years as East Asian corporations implement their own cross-border investment & production strategies

  • These trends should alleviate concerns that the large volumes of FDI inflows to China would preclude significant flows to other parts of East Asia

Source: Central Bank of the Philippines


Philippine electronics exports growing importance of china hong kong

Philippine Electronics Exports: growing importance of China & Hong Kong

Source: National Statistics Office


Balance of trade philippines

Balance of Trade: Philippines

Source: Central Bank of the Philippines


Net fdi inflows to philippines million us

Net FDI Inflows to Philippines (million US$)

Source: Central Bank of the Philippines


Broad conclusions

Broad Conclusions

  • emergence of China as an international trading power

  • expansion and structural changes in international trade

    → China as a major competitor

    → China as a new & dynamic market for these economies

  • New division of labor with production networks: China as a final integrator of products for exports & rapid rise in intra-regional trade in production inputs

  • FDI flows are closely associated with intraregional trade & production networks

  • The growing FDI flows from China & Asian NIEs offer an additional avenue for countries to link up to global markets & production systems

  • Intraregional flows can help increase market access, natural resources, foreign capital, & technology that are essential for increasing competitiveness esp. SMEs

  • Investment cooperation is crucial in order to maximize intraregional investment flows


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