From global factory to global mall: East Asia’s changing export composition
Matthias Helble, Boon-Loong Ngiang 08 September 2014
Over the past two decades East Asia has been highly successful in building up and joining global supply chains, and has been described as Factory Asia. This column argues that East Asia, apart from being the centre of global manufacturing, is now also emerging as one of the world's leading final markets for consumption goods.
Over the past decades, East Asia has been the most successful region in the world in building up cross-border supply chains and has subsequently become described as “Factory Asia” (Baldwin 2008). In a form of “triangle trade”, advanced countries in East Asia exported sophisticated parts and components to less developed countries in the region, where these are assembled into final consumption goods and then shipped to rich-nation markets, especially the US and EU (Baldwin and Kawai 2013).
Development International trade
supply chains, Factory Asia, East Asia
How the euro synchronised EZ cycles
Ayako Saiki, Sunghyun Henry Kim 02 February 2014
Before the introduction of the euro, it was hoped that by promoting increased intra-regional trade it would increase business-cycle synchronisation within the Eurozone, and thus help it to fulfil the criteria for an optimum currency area. This column presents recent research that compares the evolution of business-cycle synchronisation in the Eurozone and east Asia. While the euro has had some impact on business-cycle synchronisation in the Eurozone, it has done so not through increased intra-regional trade intensity, but rather through some other channel – most likely financial integration.
Prior to the introduction of the euro, the topic of whether the Eurozone fulfils the conditions for an optimum currency area was highly debated (e.g. Bayoumi and Eichengreen 1992).
EU institutions International finance International trade
eurozone, euro, trade, business cycles, East Asia, supply chains, optimum currency area
Who benefits from aid for trade?
Philipp Hühne, Birgit Meyer, Peter Nunnenkamp 31 July 2013
One of the few areas where multilateral trade talks are making progress is the so-called Aid-for-Trade Initiative designed to remove frictional barriers to trade such as in transportation, communication and energy infrastructure. This column discusses research suggesting that both donors and recipients benefit from the aid. Aid-for-Trade, however, seems to best promote the exports of middle-income countries rather than, for instance, sub-Saharan African ones.
Donors are widely believed to use aid as a means to foster their own commercial interest (e.g., Berthélemy 2006, Hoeffler and Outram 2011). Nevertheless, assessments of the Aid-for-Trade initiative have largely ignored so far that exporters in the donor countries may be among the main beneficiaries.1 Furthermore, there is limited theoretical guidance with respect to the relative strength of the effects of Aid-for-Trade on recipient versus donor exports.
Development International trade
Africa, Latin America, aid, East Asia
The need for a second round of ‘look east’ policies in south Asia
Pradumna B. Rana, Chia Wai Mun 01 April 2013
The global economy was once dominated by north-north relations, with some limited concern for north-south relations. This column argues that south-south economic relations now matter and explains what new ‘look east’ policies that are being implemented in south Asia mean for the global south and the global economy.
The global economy was traditionally dominated by north-north relations with some concern for north-south relations. South-south economic relations were, until recently, of minor import.
In the early 1990s, south Asian countries initiated their ‘look east’ policies to enhance closer relations with east Asia (see Haokip 2011, Ladwig III 2009). India announced its ‘look east’ policy in 1991 and subsequently other countries followed suit. This shift is best thought of as part of their economic reform programs.
Development Global economy
India, East Asia, look east
Growth dynamics and policy choices facing Indonesia
Ganeshan Wignaraja 21 February 2013
Until 2012, the past decade saw Indonesia’s growth maintain a respectable momentum. This column argues that recent hints of political dirigisme presents Indonesia with a stark development choice. Policymakers can continue their tightening of political control – staving off the trade effects of a global crisis in the run up to elections next year – or they can orient the economy outward, with complementary policies to sustain long-term growth.
Growth slowed in Indonesia in 2012, indicating that the global financial crisis and economic slowdown had indeed had an effect on ASEAN’s biggest economy. Indonesia grew at 6.2% in 2012, down slightly from 6.5% in 2011. Overall, this remains a respectable figure. Bear in mind that Indonesia's annual average growth in the previous decade was below 6% (see Figure 1). Developing Asia as a whole grew at 6.1% in 2012.
Development Politics and economics
trade, natural resources, East Asia, state capitalism
The impact of China’s exchange-rate policy on trade in Asia
Alicia García-Herrero, Tuuli Koivu 16 April 2010
If China’s currency does appreciate, what impact will it have? This column argues that while Chinese exports will fall, so will Chinese imports, because China imports components from other East Asian countries that are then processed before being exported to western markets. A 10% rise in the renminbi would reduce imports of components by 6%.
The amazingly rapid rise in China’s exports, to a large extent at the cost of other countries’ market shares, has heightened the discussion about China’s exchange rate. The question really is whether such an export boom can at least partly be explained by an undervalued currency.
Exchange rates International trade
China, East Asia, exchange-rate policy
Alternatives to sizeable hoarding of international reserves: Lessons from the global liquidity crisis
Joshua Aizenman 30 November 2009
The spectacular increase in hoarding of international reserves by emerging markets since the East Asian crisis has been one of the defining features of global imbalances. This column explores lessons from the crisis regarding alternatives to massive hoarding. It says that the crisis validates the need for external debt management policy and that the presence of fire-sale externalities associated with deleveraging, optimal external borrowing-tax cum international reserves hoarding-subsidy reduces the cost and the scale of hoarding international reserves.
The spectacular increase in hoarding of international reserves (IR) by emerging markets, in the aftermath of the East Asian crisis, has been one of the defining features of global imbalances (Summers 2006). This accumulation reflects, among other factors, the self insurance provided by international reserves against sudden stops and deleveraging crises (Aizenman and Lee 2007).
reserves, East Asia, sudden-stops
Tangled up in trade? The “noodle bowl” of free trade agreements in East Asia
Masahiro Kawai, Ganeshan Wignaraja 15 September 2009
East Asian economies adopted numerous preferential trade agreements over the last decade. This column summarises the results of a survey of firms in the region examining the effects of those trade deals. The region’s exporting manufacturers largely view trade preferences positively, though further policy action is needed to maximise the potential benefits.
The inability to conclude the comprehensive WTO Doha Round has spawned a proliferation of bilateral and plurilateral free trade agreements (FTAs) across the globe. While East Asia is a relative newcomer to FTAs, the region has seen dramatic growth in FTAs in recent years. A lively debate over the impact of FTAs on business in the region has resulted.
regionalism, East Asia, FTAs, noodle bowl
East Asia and the new world economic order
Peter Drysdale, Hadi Soesastro 07 April 2009
This column says the G20 summit was a remarkable event as leaders crafted a coherent set of strategies to address the crisis. The Asian participants emerged as a constructive force, agreeing to expand their role in IMF funding and governance, ease the trade credit bottleneck, and advocate the standstill on trade barriers.
Now that the dust has begun to settle, it’s time to assess British PM Gordon Brown’s claim that the G20 Summit saw the creation of a new world economic order.
Global economy Global governance
IMF, G20, East Asia
East Asia, the G20, and global economic governance
Hadi Soesastro 10 March 2009
The G20 has stepped up to provide political guidance to global economic governance. This column argues that East Asian members should embrace a pro-active role aimed not only at securing their role in global economic governance but also at increasing East Asia’s effectiveness in projecting the region’s strategic efforts towards global economic recovery.
East Asian members of the G20 must participate strategically in this emerging global forum. They need to make sure that the G20 can produce policies and actions that will help bring the global economy out of the current crisis as soon as possible. Existing international institutions have been helpless in dealing with the issues the world now confronts and are in dire need of major reforms. There is now no better forum than G20.
Global crisis Global governance
G20, East Asia, global economic governance