Narrow Results

This paper focuses on the Association of Southeast Asian Nations (ASEAN)—a major final assembler in production—where studies and evidence on the role of the region in global value chains are limited. We seek to provide new evidence regarding the extent and patterns of international fragmentation in ASEAN. To do so, we derive the foreign value-added shares of final products for all global value chains of ASEAN. Using the Asian Development Bank’s multiregional input–output tables for 2000–2017, we document a series of stylized facts. The results show declining foreign value-added shares in ASEAN. Regional economic integration within ASEAN has increased, while value-added contributions vary widely across its members. We find evidence of increasing value-added contributions from emerging economies to ASEAN, whereas the contributions from advanced economies have declined.

This article investigates the impact of regional integration on intra-industry trade in manufactures between Thailand and other APEC countries. The study uses pooled cross-sectional and time-series data spanning the period 1980–1999 at a 3-digit Standard International Trade Classification (SITC) level. After accounting for trade imbalance and following Thailand's entry into APEC, intra-industry trade in manufactures between Thailand and countries in Oceania and America decreased, while trade with other Asian countries grew marginally. Results indicate that, in the post APEC era, trade openness stimulated increased intra-industry trade levels with countries in Northeast and Southeast Asia, but decreased trade with countries in America.

We develop indicators to measure the degree of economic integration and cooperation among East Asian economies and compare these with similar measures for other regions. Our indicators cover regional integration in trade, investment, financial assets, and people-to-people exchange. We also analyze measures of regional cooperation such as the density of free trade agreements and official policy dialogues. We find that in various Asian groupings, and especially in a group of 16 integrating Asian economies, interdependence in trade, direct investment, financial flows, and other forms of economic and social exchange has increased significantly over time, and now approaches that in the European Union. Nonetheless, Asia's official cooperation remains weak and formal regional institutions remain relatively underdeveloped. To provide insight into the causes of this discrepancy, we also develop quantitative measures of political and cultural similarity of nations, and find that Asian countries have relatively low levels of political and cultural proximity compared to regions such as Europe. The diversity of political interests and cultural values may have hindered more intense cooperation among Asian economies in the past. But if regional economic and social interactions continue to grow, requirements for joint decision-making are also likely to expand, leading to stronger frameworks of official cooperation.

This paper compares the economic integration processes of the European Union and the East Asian nations and comments on the possible reciprocal lessons, if any, that can be drawn to smooth the future paths of the two groups. The most relevant lessons on the EU side rely on strong institutionalization, structural policies, and the monetary union. Lessons from East Asia can be found in regional production networks, trade patterns, and the recent developments in financial cooperation. Both entities are presently facing difficult challenges to progress and growth.

In the comparative literature on regional (economic) integration processes, the ASEAN experience is often contrasted with the European (EU) integration process. More than any other integration process in the world, the ASEAN case is singled out as a counter-model for the EU. The ASEAN model is thereby associated with features such as: low levels of institutionalization, pragmatism, bottom-up or de facto regionalization, regional production platforms, and so on. The positive features of this ‘model’ are often emphasized; however, in recent years there have also been calls for deepening the institutionalization of ASEAN, including from the ADB.

The purpose of our paper is double: On the one hand, we present a long-term meta-analysis of available indicators in order to compare more accurately the ASEAN experience with other integration experiences worldwide, and complement (and test) the mostly qualitative approaches in the comparative literature. This should allow to better identify convergences and divergences between ASEAN and other integration processes. On the other hand, by comparing ASEAN with benchmark cases, we shed new light on the potential for further deepening the economic integration process in Southeast Asia. The latter comparison is complemented with gravity-type model estimations to assess the potential for further developing intra-ASEAN trade.

It is shown that ASEAN’s export space is expanding faster than the world average and that there is still space for ASEAN countries to further develop the role of its intra-regional trade. ASEAN can further improve the region’s competitiveness by reducing the non-tariff barriers and technical barriers, trade facilitation, strengthening regional value chains, facilitating factor mobility and enhancing regional cooperation.

Southeast Asian economic sentiments toward China tend to dither between competitive and cooperative instincts. Initial warmth among the Association of Southeast Asian Nations (ASEAN) members toward the China-led Belt and Road Initiative (BRI) is slowly giving way to project-related concerns as well as fears that “China is buying the world”. This paper examines Chinese outward foreign direct investment (OFDI) in global and ASEAN contexts shortly after the start of the country’s “going out” strategy. The analysis draws on country- and firm-level investment data. It shows that a handful of ASEAN economies have become more important to Chinese investors as their motivations, capabilities and needs evolve. Nonetheless, with the exception of three (Cambodia, Laos and Myanmar), ASEAN economies have not become “reliant” on Chinese investment post-BRI launch, once one considers the increased weight China carries as a foreign investor in the developing world. This is either because these countries generally do not rely on FDI, or because traditional foreign investors from industrialized economies and more advanced ASEAN member states are far more entrenched than Chinese investors in the host economies.

ASEAN is currently reviewing its competition laws with “the difficult task of operationalizing the term effectiveness.” But the review seems more concerned with achieving international best practice rather than promoting effective economic outcomes that are based on local economic and institutional conditions and Asian business practices. There has been minimal input from ASEAN economists in the development and administration of ASEAN competition laws. Instead, ASEAN competition laws are mainly shaped and administered by lawyers who are more concerned with international comparisons of administrable laws, system administration and procedures and not so much with either local economic conditions or the ability of local competition regulators to achieve good economic outcomes. There is an extensive business school literature that shows that Asian business operates differently from those in the West. But these differences are not recognized in the design and operation of ASEAN competition laws.

This paper first, reviews how economics can contribute to both the design and implementation of effective ASEAN competition laws that take into account differences in business practices, economic conditions and institutional capacities. Second, because competition laws are mainly designed and run by lawyers, the paper also examines how lawyers perceive and research the transfer of legal rules from one country to another. This provides a guide to economists interested in research on the law and economics of competition law within ASEAN. The authors hope that it will stimulate both economists (and lawyers interested in economics) to undertake practical empirical research that will enhance the effectiveness of ASEAN competition laws and their possible convergence.

In order to explore the roots of contemporary Sinophobia in Central Asia, this article combines historical analysis with ethnographically informed interviews. It shows that Sinophobia is widely spread through conspiracy theories especially in Kyrgyzstan and Tajikistan. Based on the territorial acquisitions made by China in the immediate post-Soviet period, conspiracy theories suggest that China is planning to “take over” Central Asia. However, a diachronic view of relations between China and Central Asian states demonstrates that these acquisitions were part of an attempt to resolve colonial disputes dating back to the late 19th century, and that China has already significantly reduced its territorial claims. Fears of contemporary Chinese territorial expansion are therefore greatly exaggerated. This article concludes by endorsing a proactive stance on tackling Sinophobia in Central Asia, both for the Chinese government and for regional states. Other than the many economic initiatives it funds in Central Asia, China must put more efforts to enhance its soft power so as to assuage the century-long Sinophobia in the region.

This paper uses bilateral flow data on multiple dimensions of economic integration to construct a composite index of regional integration outcomes covering 19 regions in various parts of the world. As a first step, the multidimensional indicator is used to rank regions according to their current degree of regional integration, which allows for a direct comparison of Asia's regional integration performance with those of other regions of the world. As a second step, the constructed indicator of regional integration outcomes is used as the output variable in a data envelopment analysis to estimate Asia's untapped regional integration potential.

The East African Community’s (EAC) economic integration has gained momentum recently, with the EAC countries aiming to adopt a single currency in 2015. This article evaluates empirically the readiness of the EAC countries for monetary union. First, structural similarity in terms of similarity of production and exports of the EAC countries is measured. Second, the symmetry of shocks is examined with structural vector auto-regression analysis (SVAR). The lack of macroeconomic convergence gives evidence against a hurried transition to a monetary union. Given the divergent macroeconomic outcomes, structural reforms, including closing infrastructure gaps and harmonizing macroeconomic policies that would raise synchronization of business cycles, need to be in place before moving to monetary union.

Using recent Organization for Economic Co-operation and Development (OECD) data on bilateral exports of services and International Monetary Fund (IMF) data on bilateral exports of goods, this paper compares goods and services as regards export proportions and relative export affinity for 20 OECD countries in 2007. It finds great diversity in bilateral exports of both goods and services and between countries. Whereas the 20 countries as a region have significant relative affinity in both types of exports, most countries have strong relations with only particular partners in the region, and even export aversion with others. If minimal diffusion is used as an indicator of regional integration, there is little such internal integration in the European OECD countries in exports of goods and less of services.

This paper assesses the welfare effects of integration in Latin America. It estimates trade creation and diversion of: 1) integration of the four Mercosur countries (Brazil, Argentina, Paraguay and Uruguay) and 2) amalgamation of Mercosur with the Andean group (Bolivia, Colombia, Ecuador and Peru). The method used to proxy trade creation is the change in total imports of a country from before to after integration, while trade diversion is proxied by the change in the country’s external imports between the two periods. A “control country” approach is used to hold constant the effects on imports of factors other than integration, such as income and price changes. With some exceptions Latin American integration was found beneficial to welfare in that trade creation exceeded trade diversion.

Since the post war period, the EU Common Commercial Policy (CCP) has moved in two directions mainly through Preferential Trade agreements (PTAs): a "deeper" (internal) trade integration process intended to reinforce trade relations among European countries (i.e. Custom Union, Single Market, European Monetary Union, Enlargement Process), and a "wider" (external) integration process intended to reinforce trade relations with third countries.

Surprisingly, there are very few empirical studies in the literature which specifically quantify the effects of the overall EU PTAs on the European countries’ trade flows. This paper seeks to fill this gap by conducting an empirical investigation on whether and how the CCP had a significant impact on European countries' imports. It adopts an extended version of the gravity model. In line with recent studies, it uses a Hausman Taylor estimator, controls for heterogeneity and includes a set of variables to proxy for the "multilateral trade resistance index"

According to our results, the EU "free trade area" has been a successful experiment in trade liberalisation. However, the positive and significant coefficient of PTAs signed by the EU with third countries may somehow have limited the occurrence of trade diversion effects. Indeed, the coefficient of the trade diversion dummy is significant but relatively small.

The literature that uses data envelopment analysis (DEA) for policy analysis is thriving and has expanded from studies evaluating efficiency at the micro level to macroeconomic applications of DEA, assessing efficiency across different domains at the country, regional, and global levels. This chapter reviews recent trends in this body of literature, focusing on applications of DEA in the contexts of national resource mobilization and regional economic integration. These applications have been particularly influential in informing policymakers in the international development community, as several recent World Bank reports involving insights obtained from DEA demonstrate. In addition, this literature has developed a new approach to not only compare achieved absolute levels of outcomes but also to track relative performance by accounting for each country’s and region’s individual economic structure and associated capacity. Despite recent progress on some of the methodological issues facing the application of DEA, several challenges remain. The chapter discusses possible avenues for future research to address these challenges, including refinements on existing techniques for DEA and exploring new ways of combining DEA with other methods, such as artificial intelligence and machine learning techniques.

Southeast Asian economic sentiments toward China tend to dither between competitive and cooperative instincts. Initial warmth among the Association of Southeast Asian Nations (ASEAN) members toward the China-led Belt and Road Initiative (BRI) is slowly giving way to project-related concerns as well as fears that “China is buying the world”. This paper examines Chinese outward foreign direct investment (OFDI) in global and ASEAN contexts shortly after the start of the country’s “going out” strategy. The analysis draws on country- and firm-level investment data. It shows that a handful of ASEAN economies have become more important to Chinese investors as their motivations, capabilities and needs evolve. Nonetheless, with the exception of three (Cambodia, Laos and Myanmar), ASEAN economies have not become “reliant” on Chinese investment post-BRI launch, once one considers the increased weight China carries as a foreign investor in the developing world. This is either because these countries generally do not rely on FDI, or because traditional foreign investors from industrialized economies and more advanced ASEAN member states are far more entrenched than Chinese investors in the host economies.

This chapter reviews the role of technology in regional integration and of regional integration in the development of technologies. Trends are noted in the use of technology to overcome trade barriers, while technologies of exclusion also persist. The chapter also reviews the determinants and the limits of regional cooperation on AI development such as has been seen with the countries of the European Union and extract theoretical insights from these early patterns (particularly neofunctionalism), while also taking stock of the potential limits of the extent to which this model can be applied on a more global scale. We also consider the potential role of China’s Belt and Road Initiative in global integration while noting controversies surrounding it.

As the integration development of the Yangtze River Delta area is defined as a national strategy, both the “integration” and “high level” have become the common development goals of the three provinces and one municipality within the area. Therefore, how to promote high-quality agricultural integration development with the internal resource flow within the Yangtze River Delta so as to solve the problems of large differences and imbalances in the agricultural development in this area is of great importance. Based on the policy orientation for agricultural development, the fiscal expenditure related to agriculture, the total agricultural machinery power, and the cultivated land area are selected as the three independent indicators to analyze the impact they would make on the total agricultural output. By using a multiple linear regression model, we have found that both fiscal expenditures related to agriculture and the cultivated land area will make a significantly positive impact on the total output, while the machinery power will help to improve the output value to some extent.

We use the US International Trade Commission’s uniquely detailed 1995-2007 Chinese Customs data to better understand the pattern of trade between China and its two largest trading partners, Japan and the United States. Our review finds that only a small share of these flows can be characterized as arm’s length, one-way trade in final goods. Instead, we find extensive two-way trade, deep vertical specialization, concentration of trade in computer and communication devices, and a prominent role for foreign-invested enterprises. While these characteristics define both bilateral relationships, important differences between the two pairs do emerge, suggesting that trade costs influence the method by which multinationals choose to integrate their production with China. Consequently, we argue that dialogue on East Asian trade liberalization should include the possibility of significant production gains for the US from its inclusion in any regional agreements.