Slide 1. Title
Slide 2. Purpose
In the recent decades the global power center has shifted from West to East and China has witnessed a tremendous rise, accelerating integration in East Asia region. Currently there are at least two significant integration processes there, among which regionalism remains the most visible and powerful (Szczudlik-Tatar, 2013).
Asian regionalism focuses mainly on economic cooperation between ASEAN members, which differ politically and economically. However, deep regional integration in East Asia may result in the establishment of a single market.
This writing analyzes the nature of Asia’s emerging regionalism, the relationship between Asian Regionalism and global free trade, and reveals the impact of the structure of Asian regional integration on the world economy and trade negotiations, providing a basis for better understanding of this problem.
Slide 3. Creation of an Asian Economic Community
In the recent decades, modern Asia has achieved great success that is characterized by rapid development, an expanding middle class and poverty reduction (‘Emerging Asian Regionalism,’ 2008). The success of Asian regionalism lies in a successful combination of regional differences into a single unity, which provides a new basis for the development of both Asian and world economies. Asian economies become complex, larger, and integrated through social and economic exchange, direct investments and financial flows (‘Emerging Asian Regionalism,’ 2008). Moreover, Asian region’s leaders support their interdependence focusing mainly on regional integration and cooperation
Slide 4. 2004 and 2020 Shares of World Nominal GDP
This figure shows that the US and EU are predicted to remain the largest markets, but China and Germany will be at the same level by the end of this decade (till 2020).
Slide 5. Increasing Intraregional Trade Shares (1955 – 2005)
In the recent decades the global power center has shifted from West to East and China has witnessed a tremendous rise, accelerating integration in East Asia region. This figure demonstrates increasing intraregional trade shares of integrating Asia, North America, European Union between 1955 and 2005.
Slide 6. Phases of Asian Regionalism
Historically, East Asian regionalism had three major Phases (‘Emerging Asian Regionalism,’ 2008):
- Phase 1 (mid 1980s – 1990). During this phase the nation was driven by the desire to attract more manufacturing jobs, mostly from Korea, Japan, and Hong Kong.
- Phase 2 (1990 – 2000). During this period of time intra-regional trade developed rapidly with the fast economic development of China.
- Phase 3 (2000 to today). This phase started after China’s willingness to negotiate an FTA with the ASEANs (Association of South-East Asian Nations).
Slide 7. Challenges of Asian Cooperation
Growing economic interdependence of Asian countries provides three major opportunities for cooperation: integrating production and financial markets, macroeconomic links (‘Emerging Asian Regionalism,’ 2008).
Slide 8. Challenges of Asian Cooperation (details)
Integrating Financial Markets
The major disadvantage of Asian Regionalism is poor financial integration. Though financial markets have become deeper and larger in the recent decades, Asian funds are still intermediate because of remote global markets and lower Asian assets (‘Emerging Asian Regionalism,’ 2008). Several improvements should be implemented to improve the integration of financial markets and namely modification of regulatory structures, improvement of investor protection. Greater investments in the regional markets will make them more attractive and improve business development, build a strong regional financial infrastructure and information exchange system (‘Emerging Asian Regionalism,’ 2008).
Managing Macroeconomic Interdependence
Along with the growth of financial and trade cooperation, Asia’s macroeconomic interdependence has also improved. Despite Asia’s interconnection and interdependence on European and American economies, stable macroeconomic results demonstrate supportive global environment (‘Emerging Asian Regionalism,’ 2008). Asian policy makers should explore and monitor economic activity and develop initiatives for global and regional development.
Slide 9. Benefits of Asian Regionalism to Asia
Regionalism is a relatively new issue of Asian economic development. It can be characterized as flexible and pragmatic (‘Emerging Asian Regionalism,’ 2008). It is based on their willingness to adopt the priorities of several members into a single structure. Asian regionalism supports regional markets, their close cooperation and healthy competition, since they differ in many cases and demonstrate various economic results. However, this model of pragmatism and flexibility has several limitations, which include, first of all, the poor realization of important regional objectives of the government and, as the result, their reluctance to generate tangible results (‘Emerging Asian Regionalism,’ 2008). Asia’s economies are interconnected via direct investments; financial transactions, labor flows and technology. However, the main question, whether regionalism can benefit Asia. Asian regionalism brings lots of benefits (‘Emerging Asian Regionalism,’ 2008):
- Sustainable region’s growth and boosted productivity owing to the combination of the competitive strengths of Asian diverse economies.
- Reduced capital costs, enhanced financial stability, improved opportunities for risk distribution due to the connection of the region’s capital markets.
- Minimized effects of regional and global shocks and alleviated resolution of world imbalances owing to the cooperation in establishing of macroeconomic policies and exchange rates.
- More resources available for development and investment due to the combined regional foreign exchange reserves.
- Supported and enhanced open global trade owing to the developed and excellent leadership in global decision making.
- Reduced differences within Asian economies supported by collaboration on inclusive development and connected infrastructure.
- Improved environmental and safety issues based on the well-adjusted mechanisms.
These changes and benefits underline the importance of regional integration and its significance for national decision making. Moreover, according to the latest trade data and researches on Asian Regionalism, the rest of the world countries could also benefit.
Slide 10. Benefits of Asian Regionalism to Global Free Trade
Since Asia’s economies closely cooperate with each other and with the rest world countries, Asian rapid economic development and growth, sustained by regional interaction, could have a tremendous impact on global economic growth and trade negotiations. Asian economies have gradually become outward-looking and require global markets to operate effectively. Moreover, Asia will continue to cooperate with global economies to have more influence on global markets and additionally (‘Emerging Asian Regionalism,’ 2008):
Slide 11. Conclusion
This paper has outlined the nature of Asia’s emerging regionalism, the main trends, prospects, and challenges associated with the rapid spread of Asian integration. The paper also considered the relationship between Asian regionalism and global free trade. The evidence highlights a recent shift from West to East, China’s tremendous rise, accelerating integration in East Asia (Szczudlik-Tatar, 2013). The great success of modern Asia is characterized by its rapid development, an expanding middle class and poverty reduction (‘Emerging Asian Regionalism,’ 2008). Furthermore, growing economic interdependence of Asian countries provides three major opportunities for cooperation: integrating production and financial markets, macroeconomic links. Poor financial integration is the major disadvantage of Asian regionalism. Flexible and pragmatic Asian regionalism is based on their willingness to adopt the priorities of several members into a single structure and brings lots of benefits to Asia, and namely, sustainable region’s growth, reduced capital costs, enhanced financial stability, improved environmental and safety issues (‘Emerging Asian Regionalism,’ 2008). Moreover, Asian regionalism has a tremendous impact on global economic growth and trade negotiations because it enhances productivity, generates new ideas, increases competition, improves the efficiency and stability of world financial markets, expands global demand, establishes regional mechanisms to handle environmental and safety issues. Thus, Asian regionalism can help to support global trade and economic progress along with improved regional welfare. Furthermore, regional and global integration in Asia complement each other and enhance the productivity and competitiveness of Asian and global economies. In general, Asian regionalism benefits both Asian and world countries and economies smoothening global business cycle, communication, stimulating productivity and innovations.
Slide 12. References
‘Emerging Asian Regionalism’ (2008). ADB Economics Working Paper Series.
Kawai, M., Wignaraja, G. (2010) ‘Asian FTAs: Trends, Prospects, and Challenges,’ ADB Economics Working Paper Series No. 226.
Szczudlik-Tatar, J. (2013) ‘Regionalism in East Asia: A Bumpy Road to Asian Integration,’ The Polish Institute of International Affairs, 16(64), pp. 1-7.
Wanandi, J. (2008) ‘East Asian Regionalism and Global Governance,’ East Asia at a Crossroads’ Tokyo: Japan Center for International Exchange, pp. 19-37.