Integration of markets vs. integration by agreements

This paper provides an analysis of the two channels of regional integration: integration via markets and integration via agreements. Given that East Asia and Latin America are two fertile regions where both forms of integrations have taken place, the authors examine the experiences of these two areas. There are four related results. First, East Asia had been integrating via markets long before formal agreements were in vogue in the region. Latin America, by contrast, has primarily used formal regional trade treaties as the main channel of integration. Second, despite the relative lack of formal regional trade treaties until recently, East Asia is more integrated among itself than Latin America. Third, from a purely economic and trade standpoint, the proper sequence of integrations seems to be first integrating via markets and subsequently via formal regional trade agreements. Fourth, regional trade agreements often serve multiple constituents. The reason why integrating via markets first can be helpful is because this can give stronger political bargaining power to the outward-looking economic-oriented forces within the country.Trade Law,Free Trade,Trade and Regional Integration,Trade Policy,Emerging Markets

Foreign Direct Investment, Intra-Regional Trade and Production Sharing in East Asia

The aim of this paper is twofold. First, it examines the trend and nature of East Asian trade. The United Nations BEC classification is utilized to categorize total trade into trade in semi-finished goods, trade in components and parts, trade in capital goods as well as trade in final consumption goods. It shows that the increasing importance of East Asia as a trading region is due at least partially to the rising trade in components and parts. Next, it tries to find out if foreign direct investment plays a role in the import and export behavior of East Asian intra-regional trade. Using a gravity model, it evidences that in general FDI is important in explaining imports and exports of intra-East Asian trade. In particular, FDI is especially important in explaining trade in components and parts, followed by trade in capital goods. This helps confirm that FDI and trade associated with production fragmentation in East Asia are complementary.

Silicon Valley, France and China: a comparative study of innovation systems and policies

International audienc

Prospects for Closer Economic Cooperation in Northeast Asia

In contrast to developments in other world regions, efforts to institutionalize regional economic cooperation in East Asia have been weak. Though Southeast Asian economies have taken action toward trade liberalization (ASEAN Free Trade Area), the major economies of the region such as China, Japan, and Korea have not been part of any formal trade groupings until recently. However, given the slow pace of progress within AFTA and the importance of the Northeast Asian countries in terms of weight in the Asian economy, a de facto Northeast Asian economic cooperation is a necessary condition for East Asian integration. This paper investigates the substance of recent economic cooperation in Northeast Asia. The trilateral economic cooperation is analyzed through examination of trade and direct investment links for 1990-2004, and estimation of selected determinants of direct investment, in particular the relationship between trade and FDI. Estimation results suggest that the main driving forces for direct investment outflows from the source country have been the falling-off of exchange rate risk, the level of the nominal bilateral exchange rates, growth rate of the recipient country, and the per capita GDP gap between source and host countries. Bilateral trade has been shown to be statistically insignificant. Copyright (C) 2010 Blackwell Publishing Ltd.

The Euro and the Yuan: Some Political Economy Considerations

International audienc

Outward direct investment from East Asia : experiences of Hong Kong and Taiwan

This paper is prepared for presentation at the International Workshop on “Intra-Asian FDI flows: Magnitude, Trends, Prospects and Policy Implications”, sponsored by ICRIER, to be held in New Delhi, India, April 25-26, 2007Given that developing countries, in particular East Asian countries, are recently emerging as significant source of FDI, (World Investment report 2006), this paper investigates the trend, magnitude and rationale of outward direct investment from Hong Kong and Taiwan for the period 1999-2005. The position of Honk Kong and Taiwan in regional and international context is analyzed. The main characteristics of outward FDI from Hong Kong and Taiwan are studied, detailing the major recipient countries and the sectors benefiting from this investment. The main destination for such investment is China and, in a lesser extent, some other Asian countries. Finally, the rationale for these FDI outflows is considered, with a particular emphasis on the relationship between outward FDI and trade patterns, in the context of industrial restructuring. A new indicator is used to evaluate the outward direct investment intensity between Hong Kong, Taiwan and the main recipient countries

Outward direct investment from East Asia : experiences of Hong Kong and Taiwan

PowerPoint presentationThe presentation investigates the magnitude and the allocation of outward foreign direct investment (FDI) from the two principal investors, namely Hong Kong and Taiwan, and examines the drivers of FDI outflows (1999-2005). The bulk of Hong Kong’s overseas FDI is in services. The immediate destination for Taiwanese outward direct investment is China. Firms from Hong Kong and Taiwan were attracted by abundance of cheap labor and available land

The Political Economy of Exchange Rates: The Case of the Japanese Yen

This paper sets out a political economy model of strategic exchange rates, focusing in the importance of external lobbying. Applying it for the recent history of the Japanese yen, we show that pressure from the U.S. trade negotiators contributed to an appreciation of the Japanese yen, as well as to a reduction in import prices and profits of Japanese commercial banks.political economy model, lobbying, Japan, yen