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Pacific Asian Countries in International Trade. Young Jo Lee Graduate School of Pan-Pacific International Studies May 13, 2004. Contents. Avid traders Shift toward manufactured exports Open domestic markets Upgrading of products Region-wide sequential catch-up No regional PTA

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Pacific asian countries in international trade

Pacific Asian Countries in International Trade

Young Jo Lee

Graduate School of Pan-Pacific International Studies

May 13, 2004



  • Avid traders

  • Shift toward manufactured exports

  • Open domestic markets

  • Upgrading of products

  • Region-wide sequential catch-up

  • No regional PTA

  • Mushrooming bilateral FTAs

Young Jo Lee

Feature 1 avid traders

Feature 1Avid Traders

Young Jo Lee

Trade ratios of asian la countries

Trade Ratios of Asian & LA Countries

Young Jo Lee

Eli trade

ELI & Trade

  • ELI  High trade dependence

    • Not only exports but also imports

  • Two Factors that favored ELI strategy

    • Poor natural endowments

    • Small domestic markets

Young Jo Lee

Feature 2 shift toward manufactured exports

Feature 2Shift toward Manufactured Exports

Young Jo Lee

Manufactured exports as of total exports

Manufactured Exports as % of Total Exports

Young Jo Lee

Rca of asian countries 1995

RCA of Asian Countries, 1995

Young Jo Lee

Feature 3 open domestic markets

Feature 3Open Domestic Markets

Young Jo Lee

Eli no modern mercantilism

ELI, No Modern Mercantilism

  • Tariffs and NTBs shrinking rapidly

Young Jo Lee

Feature 4 upgrading of products

Feature 4Upgrading of Products

  • Moving into new growing markets

  • Shift toward more technology intensive industries

Young Jo Lee

Growth intensity index gi

Growth Intensity Index (GI)

  • Weighted average of a country’s export growth rates relative to world demands (=exports=imports=markets) in different industries

  • GI larger than 1 indicates a county’s exports are concentrated in industries with a rapid growth in world demand

Young Jo Lee

Gi for 1 st tier asian nics

GI for 1st Tier Asian NICs

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Gi for 2 nd tier asian nics

GI for 2nd Tier Asian NICs

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Gi for indonesia china

GI for Indonesia & China

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Demand growth knowledge intensity

Demand Growth & Knowledge Intensity

  • Growth in world import demand correlates strongly with product innovation and knowledge intensity

    • The more knowledge intensive an industry is, the more rapidly it grows (Exception: aerospace industry)

  • Asian countries’ penetration into rapidly growing market means that they succeeded in industrial upgrading

Young Jo Lee

Cases korea singapore

Cases: Korea & Singapore

  • Korea

    • ELI chosen around 1963 after a decade of ISI

    • Heavy-chemical industrialization in the 70s

    • Electronics in the 1980s

  • Singapore

    • Gave up ISI for ELI when unification w Malaysia failed

    • “2nd Industrial Revolution” (1979) in favor of capital-intensive industries

    • New Economic Policy (1986), Strategic Economic Plan (1991), and Singapore 2000 (1996)

Young Jo Lee

Feature 5 region wide sequential catch up

Feature 5Region-Wide Sequential Catch-up

Young Jo Lee

Flying geese pattern of dev

Flying Geese Pattern of Dev

Young Jo Lee

Source intra regional fdi

Source: Intra-Regional FDI

  • Intra-regional FDI  regional production networks

  • Japan as a model & source of capital & technology for 1st tier NICs

  • Japan & 1st tier NICs as models & sources of capital & technology for 2nd tier NICs

  • Plaza Accord of 1985

Young Jo Lee

Private capital flows of gdp

Private Capital Flows (% of GDP)

Young Jo Lee

Feature 6 no regional pta

Feature 6No Regional PTA

Young Jo Lee

No region wide pta

No Region-Wide PTA

  • Dense invisible linkages

    • Regional production networks

    • Ethnic Chinese networks

    • Subregional economic zones

  • But no regional PTA

  • Even bilateral PTA is rare in the region

    • At end of 2001, China, Hong Kong, Japan, Korea, Taiwan & Mongolia were the only countries that were not parties to any PTA

Young Jo Lee

Why no region wide pta

Why No Region-Wide PTA?

  • Wide divergence among Asian economies

  • Lack of leadership

    • Japan: burden of history

    • China: Not ready yet, Japan wary

  • External opposition

    • USA against any PTA that includes Japan but excludes USA

    • APEC in place of EAEC

Young Jo Lee

Feature 7 mushrooming bilateral ftas

Feature 7Mushrooming Bilateral FTAs

Young Jo Lee

Bilateral ftas in pacific asia

Bilateral FTAs in Pacific Asia

  • 30+ bilateral FTAs in the last 4 years

  • Why?

    • Increasing awareness of weakness of existing arrangements (APEC, ASEAN, ASEM), esp. after Asian crisis

    • Demonstration effects from regional blocs elsewhere

    • Changing configuration of domestic eco interests

  • Uneven distribution

    • Led by more developed countries

    • More inter-regional than intra-regional

Young Jo Lee

Pacific asian countries in pta

Pacific Asian Countries in PTA

Young Jo Lee

Economic effects

Economic Effects?

  • Most are politically safe FTAs

    • That is why partners outside the region are preferred

  • Economic effects will not be large

    • FTAs with relatively insignificant partners (Exception: USA-Singapore FTA)

    • Mostly between complimentary, not competing, economies

    • Sensitive industries are excluded

Young Jo Lee

Share of fta partners in countries total exports 2000

Share of FTA Partners in Countries’ Total Exports (2000)

Young Jo Lee

Will the pattern continue

Will the pattern continue?

  • Challenges

    • Technological catch-up in face of narrowing technological gap

    • China’s rise & scattering geese

  • Tasks

    • Technological capabilities (skills, education, R&D)

    • Channels of technology transfer

    • Incentive structures

    • More authentic FTAs

    • Greater insertion into & utilization of WTO regime

Young Jo Lee

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