Trade Intensity and Business Cycle Synchronization: The Case of East Asia

This paper examines whether increasing trade intensity among East Asian countries has led to a synchronization of business cycles. It extends the work of Shin and Wang (2004) in two ways: by (i) improving the specification of their business cycle correlation equation, and (ii) extending the sample to cover the period after the Asian financial crisis. The study finds that intra-industry trade, rather than inter-industry trade, is the major factor explaining business cycle co-movements in East Asia, with important implications for the prospects for a single currency in the region.economic integration; trade intensity; intra-industry trade; business cycle synchronization; East Asia

Economic Integration in East Asia: Trends, Prospects, and a Possible Roadmap

This paper, which is a revised version of the ADB Working Paper on Regional Economic Integration No. 2, reviews trends in East Asian regionalism in the areas of trade and investment, money and finance, and infrastructure. It finds that trade and, to a lesser extent, financial integration is starting to increase in the region. It also finds that business cycles are starting to be more synchronized, enhancing the case for further monetary integration among these countries. The paper also outlines a roadmap for East Asian integration.

Economic Integration in East Asia: Trends, Prospects, and a Possible Roadmap

This paper reviews trends in East Asian regionalism in the areas of trade and investment, money and finance, and infrastructure. It presents various measures of trade and financial integration. An important finding of the paper is that increasing trade and financial integration in the region is now starting to lead to a synchronization of business cycles in a selected group of countries, further enhancing the case for monetary integration among these countries. The paper also outlines a roadmap for East Asian integration.ASEAN/East Asian economic cooperation and integration; business cycle synchronization; free trade agreements; policy coordination

Linking South Asia with East Asia: Trends, Potential, and Policies

Recently, there has been growing interest in the evolving economic relationships between South Asia and East Asia. What could be the implications of the re-emergence of the two giant economies or hegemons – India and China - on the region and globally? Could these relationships be the second phase of Pan-Asian integration? Will Asia be as well-integrated as it was during the pre-colonial period? This paper finds that the level of economic integration between South Asia and East Asia, although increasing since 1990, started to surge after 2000, albeit from a low base, mainly because of growing interdependence between India and China. The level of integration is, however, low in relative terms. By calculating the usual indices, the paper finds that, although there are overlaps, there are also significant amounts of complementarities between the two regions on goods and service trade. The level of economic integration between the two regions is, therefore, bound to increase. The paper concludes by identifying a set of measures to enhance policy-led integration between the two regions including those seeking to reduce transportation costs.

The evolving multi-layered global financial safety net : role of Asia

This paper argues that in the aftermath of the global economic crisis, the relatively centralised international monetary architecture set up at the Bretton Woods conference is evolving towards a more decentralised multi-layered global financial safety net (GFSN) comprising (i) the G20 at the apex as an overarching instituiton (ii) multilateral financial safety nets (MFSNs) established under the auspices of the IMF (iii) bilateral financial safety nets (BFSNs) among central banks, (iv) regional fianancial safety nets (RFSNs) established in various regions of the world, and (v) national financial safety nets (NFSNs) or reserve accumulation by individual countries. The most significant factor explaining this evolution is the increased incidence of capital account crisis subsequent to the deepening of financial globalisation. The paper argues that the evolving GFSN has increased the flexibility of the international monetary architecture and enhanced the voice (weight and influence) of emerging markets on global economic governance to some extent. However, more needs to be done. Also there is the need for institutional and other reforms to prevent and manage a systemic crisis in the future to protect innocent bystanders. What is the role of Asia and what can Asia do

Monetary integration in ASEAN+3 : the next steps

The ASEAN+3 has taken a number of significant steps recently to further deepen monetary integration. The next steps should be to introduce a regional weighted currency basket and expand membership