Interdependence of Income between China and ASEAN-5 Countries

This paper examines the interdependence of income between China and ASEAN-5 countries by resorting to the time series econometrics analysis from 1960 to 2000 of the real Gross Domestic Product (GDP). Empirical results are found to support the strong interdependence of income between China and ASEAN-5 countries. With the increasing interest of economic integration around the globe especially the proposed China-ASEAN Free Trade Area (CAFTA), the interdependence and synchronization movements of income between member countries is an important characteristic for suitability toward the regional common currency goal.

Economic Integration between ASEAN+5 Countries: Comparison of GDP

This study aims to investigate the causality direction of economic integration among ASEAN countries together with five other neighboring countries, namely Australia, China, Japan, New Zealand and South Korea. The analysis is based on the economic integration of GDP covering the sample period from 1967 to 2007. Empirical results from the Toda and Yamomoto (1995) Granger non-causality tests depicted the existence of bi-directional causality relationships between the GDP of ASEAN and China; GDP of ASEAN and Japan; GDP ASEAN and South Korea, and also GDP of ASEAN and New Zealand. This indicates that there is a great potential for ASEAN countries moving towards higher degree of economic integration via strengthening the relationship with those countries within the region.Toda and Yamomoto; Economic Integration; ASEAN+5

Income Disparity between Japan and ASEAN-5 Economies: Converge, Catching Up or Diverge?

The objective of this study is to empirically examine the income disparity between Japan and each of the five major economies of South East Asia (ASEAN-5) during the period of 1960 to 1997, utilizing the popular augmented Dickey-Fuller (ADF) unit root test. The results provide evidence of income divergence between Japan and each of the ASEAN-5 economies. To avoid the problem associated with structural break, this study proceeds with the jointly crash and changes in trend model proposed by Zivot and Andrews (1992), and is able to obtain evidence of long run income convergence between the Japanese and Singaporean economies. As for the rest of the four ASEAN countries- Indonesia, Malaysia, the Philippines and Thailand, the earlier results of income divergence remain valid and hence suggest that it would be a more realistic and urgent goal to narrow the income gap among these five core economies of ASEAN.

A Panel Data Analysis of FDI, Trade Openness, and Liberalization on Economic Growth of the ASEAN-5

Foreign Direct Investment (FDI) has contributed heavily to development of the Association of South East Asian Nations (ASEAN). In this study, the concentration is on five ASEAN countries: namely Malaysia, Singapore, Thailand, Indonesia, and the Philippines. FDI inflows into the ASEAN-5 multiplied spectacularly from 1980 to 1997, but the trend has reversed since the Asian financial crisis in 1997. This paper seeks to examine the contributions of FDI, trade openness, and liberalization to economic growth and development in the ASEAN-5

New Asian Regionalism: Evidence of ASEAN+3 Free Trade Agreement From Extended Gravity Theory and New Modelling Approach

The emergence of new Asian regionalisms such as ASEAN+3 (China, Korea and Japan) and the proposed ASEAN+5 (ASEAN+3 plus Australia and New Zealand) 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. 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 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 FTA will also be discussed.New Asian Regionalism, Free Trade Agreement, Economic Integration, ASEAN, ASEAN+3, Trade and Growth, Gravity Theory, Causality, Economic Modelling, Estimation Methods, Economic and Trade Policy

Trade costs and facilitation in APEC and ASEAN: Delivering the goods?

This paper uses a new methodology to provide some first evidence on the overall level of trade costs in APEC and ASEAN. On average, APEC member economies have met the Shanghai target of a 5% reduction in trade costs over five years, but only just. Performance of individual member economies varies substantially, and in some cases is far below the Shanghai target. ASEAN member countries have also experienced some declines in trade costs, but generally to a lesser extent than in APEC. In both groups, tariff reductions have played an important role in reducing overall trade costs. Progress on non-tariff trade costs has been much more limited. Moving forward, APEC and ASEAN should refocus their trade facilitation efforts on non-tariff trade costs. They also need to develop clearer metrics against which progress can be assessed, and move towards a focus on outputs (lower trade costs), rather than inputs (administrative and policy changes).International Trade; Regional Integration; APEC; ASEAN; Trade Costs; Trade Facilitation

Volatility Co-movement of ASEAN-5 Equity Markets

Purpose – Economic cross-linkages and the increased co-movement of asset prices across international markets are important outcomes as the result of globalization. Hereby, the nature of international stock markets and the extent to which the 1997-1998 East Asian turmoil had affected the market relationship of five countries of Association of Southeast Asian Nations (ASEAN-5) remain as probing questions. Design/methodology/approach – We resort to the standard time series econometrics analysis. These include the unit root, cointegration and the Granger causality tests. Hereby, further empirical analyzes is conducted upon two sub-periods of interest: (1) pre-crisis period from 1987:1 to 1997:7 and (2) post-crisis period from 1997:8 to 2007:12. This is to allow for possible transitional motion leading to and departing from the crisis. Findings – Using an array of econometrics analysis upon the stock price volatility series, we found partial market integration for the pre-crisis; whereas in the post-crisis, complete integration prevails. Hence, the financial meltdown in 1997 is said to be a contagion led crisis as markets integrate well off after the crisis than prior to it. Nonetheless, long run portfolio asset diversification benefits across the ASEAN-5 basin are reduced as markets are integrated in both the pre- and post-crisis. Originality/value – The paper is of value by showing to uncover the issue of interdependence of stock market integration focusing on the ASEAN-5 economies. The formation of the ASEAN Investment Area (AIA- 1998) parallel with the establishment of a developed ASEAN Index-Financial Times Stock Exchange (FTSE) regional index is viable to foster deeper regional market convergence.ASEAN-5, Portfolio Diversification, Volatility co-movement

Real And Monetary Convergence Of ASEAN-5 Plus Three

Asia consists of numerous countries that vary in population, culture, land area and economic resources. However, within the disparity and diversity of the Asian economies, there are some common grounds that have sparked off regional co-operation. The purpose of this thesis is to evaluate the level of economic convergence of the combinations of ASEAN-5 (namely, Indonesia, Malaysia, the Philippines, Singapore and Thailand), Japan, China and Korea economies, a fundamental source of regional co-operation. The empirical findings suggest that GDP, CPI and interest rates of ASEAN-5, Japan, China and Korea are all cointegrated, signifying synchronisation and initial convergence within the region, a positive indication for closer economic co-operation with lesser adverse impact on any individual economy. Subsequently, three possible economic alliances are identified as ASEAN-5, ASEAN-5, Japan, China and Korea, as well as ASEAN-5, Japan and China. The tests on dynamic properties of GDP of ASEAN-5, GDP of ASEAN-5, Japan and China, CPI of ASEAN-5, Japan China and Korea, and interest rates of ASEAN-5, demonstrate significant macroeconomic linkages among these economies, validating a possible economic co-operation. Apparently, managing the interest rates is a policy tool to keep in check the economy’s price level, the CPI. Since managing CPI would be the concern of most economy to contain inflation, the convergence of CPI among ASEAN-5 + 3 through government intervention, is expected. Furthermore, a relatively short impulse response of ASEAN-5’s interest rates implies monetary co-ordination within the region. Since GDP represents overall macroeconomic activities within an economy, it provides a relatively good implication on the readiness of economies to be integrated. Hence, based on these empirical findings, the first phase of a serious economic integration would be ASEAN-5, to be ready in approximately 4 to 5 years’ time. The second phase should include other economies like Japan, China and perhaps in a later stage, to also include Korea. Besides, the time varying analysis validates these suggestions by revealing gradual convergence for all economies under study. Nonetheless, in order to form a union, ASEAN-5 has to revamp its current financial systems as well as to formulate reasonable and workable economic integration guidelines. Setting clear, consistent and simplified trade procedures and regulations, as well as extending mutual trade collaboration are necessary. Moreover, the underlying incentive structure behind the process of integration should also be made known to all ASEAN economies and not be wiped out with some other trade and non-trade barriers. As for newer ASEAN members like Vietnam, Laos, Myanmar and Cambodia, ASEAN-5 could draft special preferential trade guidelines to boost trade among ASEAN members in preparation to include all ASEAN members into AFTA. However, the realisation of a serious integration may take longer than expected due to the lack of political commitment, economic stability, unpredictable natural disasters and its aftermath, as well as the inevitable spread of deadly diseases

Interdependence of Income between China and ASEAN-5 Countries

This paper examines the interdependence of income between China and ASEAN-5 countries by resorting to the time series econometrics analysis from 1960 to 2000 of the real Gross Domestic Product (GDP). Empirical results are found to support the strong interdependence of income between China and ASEAN-5 countries. With the increasing interest of economic integration around the globe especially the proposed China-ASEAN Free Trade Area (CAFTA), the interdependence and synchronization movements of income between member countries is an important characteristic for suitability toward the regional common currency goal.interdependence; cointegration; China; ASEAN-5