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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

contents
Contents
  • 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

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

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

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

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

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

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

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

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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