Upload
alexander-thornton
View
244
Download
0
Tags:
Embed Size (px)
Citation preview
East Asia: Regional East Asia: Regional Integration Among Integration Among Open EconomiesOpen Economies
Homi KharasHomi KharasSector Director & Chief EconomistSector Director & Chief Economist
East Asia & Pacific RegionEast Asia & Pacific RegionWorld BankWorld Bank
Presentation at National Economic & Social Development Board (NESDB), Bangkok
7 April 2006
Share of country’s intra- and extra-regional exports in Share of country’s intra- and extra-regional exports in
GDPGDP
0
10
20
30
40
50
60K
orea
Rep
. 94
-96
Kor
ea R
ep.
02-0
4
Chi
na &
HK
94-
96
Chi
na &
HK
02-
04
Tha
iland
94-
96
Tha
iland
02-
04
Em
ergi
ng E
ast
A.
94-9
6E
mer
ging
Eas
t A
.02
-04
Japa
n 94
-96
Japa
n 02
-04
NA
FT
A 9
4-96
NA
FT
A 0
2-04
EU
94-
96
EU
02-
04
Exports to Intra/GDP Rest of exports/GDP
Note: Intra-regional exports in the case of the EU and NAFTA refer to intra-exports to the region. In all other countries intra-regional exports are exports to Emerging E. Asia.
East Asia’s aggressive reduction in tariffsEast Asia’s aggressive reduction in tariffs
Source: UN-TRAINS
Changes in weighted average MFN rates (1994-2004)
-100
-50
0
50
100
150T
otal
Tra
de
Foo
d &
live
ani
mal
s
Bev
erag
es a
ndto
bacc
o
Cru
de m
ater
ials
Min
eral
fuel
/lubr
ican
ts
Ani
mal
/veg
oil
Che
mic
als/
prod
ucts
Man
ufac
ture
dgo
ods
Mac
hine
ry/tr
ansp
equi
pmt
Oth
erm
anuf
actu
red
%
World East Asia (excl. J apan)
Emerging East Asia’s countries have high shares Emerging East Asia’s countries have high shares of FDI from other East Asian countriesof FDI from other East Asian countries
Share of FDI inflows originating from emerging East Asia
0
10
20
30
40
50
60
70
Thailand Vietnam China Indonesia Malaysia Philippines Korea
%
1998-00 2001-03
Dispersion in equity returns is fallingDispersion in equity returns is falling
Sounrce: Datastream, weekly dividend-adjusted return
Dispersion of weekly equity returns
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
May-90
May-91
May-92
May-93
May-94
May-95
May-96
May-97
May-98
May-99
May-00
May-01
May-02
May-03
May-04
May-05
Developing East Asia (4)
NIEs (4)
Emerging East Asia (8)
QuestionsQuestions
1.1. Trade direction: Regionalism or Trade direction: Regionalism or Regionalization?Regionalization?
2.2. Trade pattern: Heckscher-Ohlin or Trade pattern: Heckscher-Ohlin or Krugman?Krugman?
3.3. Finance: Country differentiation or Co-Finance: Country differentiation or Co-movement?movement?
4.4. Policy priorities: Goods or Services?Policy priorities: Goods or Services?
International or International or Domestic? Domestic?
-3
-2
-1
0
1
2
3
-6 -4 -2 0 2 4 6 8
Cha
nge
in e
xtra
-reg
iona
l sha
re
(cha
nge
in:
expo
rts
to e
xtra
-reg
ion/
Wor
ld e
xpor
ts t
o ex
tra-
regi
on)
Change in intra-regional share(change in: exports to emerging East Asia/World exports to emerging East Asia)
Japan
ThailandKorea
Singapore
Philippines
China & HK
Emerging EA
Vietnam Malaysia
Cambodia
Lao
Indonesia
Taiwan
Percentage point change in extra-regional and intra-regional market shares between 1994-96 average and 2002-04 average
1. Trade direction: Regionalism vs. Regionalization1. Trade direction: Regionalism vs. Regionalization
Decomposition of intra-regional export growth, 1994 to 2004 (%)
Orientation Openness GDP
Emerging East Asia 102 11 28 64
Cambodia 19 -218 185 52
China & Hong Kong 133 12 22 99
Indonesia 73 15 20 38
Korea 124 33 44 47
Lao 13 -45 14 45
Malaysia 85 8 31 46
Philippines 168 59 78 30
Singapore 72 10 20 41
Taiwan 98 36 40 22
Thailand 96 20 64 12
Vietnam 145 -40 83 102
Japan 56 20 39 -4
Growth of intraregional
exports
Intraregional export growth accounting for changes in
change in changein change in changein
exports orientation openness economicsize
log log log logR W
R i ii iW
i i
X Xd X d d d GDP
X GDP
Regionalism vs. RegionalizationRegionalism vs. Regionalization
Statistically, China & Hong Kong, Korea and Japan import more from East Asia than predicted
East Asia dummy coefficients in regressions
China & Hong Kong Korea Japan
2.24*** 2.43*** 3.37*** [0.60] [0.64] [0.51]
1.48*** 2.53*** 3.21*** [0.55] [0.74] [0.70]
2.96*** 2.83*** 3.38*** [0.95] [0.65] [0.94]
2.87*** 3.64*** 3.52*** [0.80] [0.84] [0.90]
1994Parts & Components
2004
1994
2004
Total
2. Trade pattern: Heckscher-Ohlin vs. Krugman2. Trade pattern: Heckscher-Ohlin vs. Krugman
The explosive growth in East Asia’s parts and The explosive growth in East Asia’s parts and components trade is broadly shared across components trade is broadly shared across
most economiesmost economiesAverage annual growth rates of exports and imports of parts & components 1994-2004
0
5
10
15
20
25
30
China Korea Rep. HongKong,China
Taiwan, China Singapore Japan Emerging EastAsia*
World
%
Exports p&c Imports p&c
* Emerging East Asia: China & Hong Kong, Indonesia, Korea Rep., Malaysia, Philippines, Singapore, Taiwan (China) and Thailand.
Total exports
China & Hong Kong have experienced a China & Hong Kong have experienced a notable technological upgradingnotable technological upgrading
Product Category 1994 2004 1994 2004 1994 2004 1994 2004 1994 2004Labour-intensive and resource-intensive manufactures 46.4 30.9 20.7 15.2 8.1 8.4 14.9 11.7 15.3 12.4
Leather, textiles, apparel, and footwear 34.2 21.5 14.5 10.2 2.6 2.6 7.1 5.1 8.6 6.5
Low skill-, technology-, capital- and scale-intensive manuf. 4.9 7.5 7.5 7.8 3.4 3.8 7.5 7.2 6.6 6.8Fabricated metal products 2.4 3.1 2.1 2.2 1.7 1.9 2.6 2.5 2.2 2.2
Medium skill-, technology-, capital- and scale-intensive manuf. 11.0 15.6 24.5 23.9 30.0 29.9 29.7 30.8 25.8 26.0Rubber and plastic products 2.3 2.2 1.8 1.7 1.4 1.7 2.1 2.0 1.7 1.7Non-electrical machinery 2.4 4.7 8.9 8.3 11.4 11.2 12.7 12.4 10.5 10.0Electrical machinery other than semiconductors 6.0 8.0 6.3 6.9 5.1 5.5 4.8 4.5 4.9 5.1Road motor vehicles 0.3 0.7 7.5 7.0 12.2 11.5 10.1 11.8 8.7 9.2
High skill-, technology-, capital- and scale-intensive manuf. 23.7 35.4 33.0 39.7 30.5 32.4 24.2 28.3 26.3 29.4Chemical and pharmaceutical products 3.3 3.4 4.8 6.6 8.3 10.1 12.3 15.6 9.0 11.0Computers and office equipment 3.9 12.1 8.4 10.0 6.1 5.5 3.5 3.4 4.9 5.0Communications equipment and semiconductors 11.6 15.9 15.8 18.6 8.3 9.1 3.9 4.8 7.6 8.7Scientific instruments, watches and photographic equip. 4.8 3.9 3.7 4.3 3.4 4.2 2.7 3.0 3.1 3.3
Remaining exports 14.1 10.6 14.3 13.4 28.0 25.4 23.7 22.1 26.0 25.4Note : Category definitions from Mayer, Butkevicius and Kadri (2002). Trade between China and Hong Kong not computed in the values presented above. East Asia= emerging East Asia plus Japan.
Source: COMTRADE, SITC Rev. 2. Data reported by member countries.
WORLDExport composition by factor intensity, 1994 & 2004 (%)
China & HK NAFTA EUEast Asia
Share of foreign affiliates (FA) in total China’s trade, Share of foreign affiliates (FA) in total China’s trade,
1992-20041992-2004
Foreign affiliates played a key role in China’s explosive growth of parts & components trade
Source: Gaulier et al. (2005).
Japan/NIEs
New Traditional
Manufacturing
Country 1
Part A
Manufacturing
Country 2
Part B
Japan/NIEs
Quality Control A
B
A
BChina/
ASEAN
A
B
Japan/NIEs
Japan/NIEs
Sent for Assembly
Sent for Assembly
Sent for Assembly
A
BGrouping into kits or further processing
The fragmentation of production by multinational corporations has changed the allocation of production networks in East Asia
3. Finance: Country differentiation vs. Co-3. Finance: Country differentiation vs. Co-movementmovement The influence of external The influence of external
news is increasing.news is increasing. On average, equity markets in On average, equity markets in
East Asia are showing greater East Asia are showing greater integration with the region, integration with the region, Japan, and the US.Japan, and the US.
0
5
10
15
20
25
30
35
40
45
50
Before crisis After crisis%
Regional Japan US
0 10 20 30 40 50 60
After
Before
After
Before
After
Before
After
Before
After
Before
After
Before
After
Before
After
Before
%
Regional Japan US
Singapore
Hong Kong
Taiwan
Korea
Indonesia
Malaysia
Philippines
Thailand
news
itGtG
JtJ
RtL
ected
itit eeeZR
exp
1
Variance of news: 22222
,it
GtG
JtJ
RtRit eee
Variance ratio
2
2
it
JtRJ
it
eVR
j = Region, Japan, Global (US)
4. Policy Priorities: Goods vs. 4. Policy Priorities: Goods vs.
ServicesServices
Manufacturing
China
India
90100110120130140150160
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Services
60708090
100110120130140
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
India
China
Main MessagesMain Messages
1.1. East Asia is integrating, but at a different pace in East Asia is integrating, but at a different pace in trade, finance and services.trade, finance and services.
2.2. Integration is driven by the private sector, with Integration is driven by the private sector, with public regionalism in a supporting role.public regionalism in a supporting role.
3.3. Regional integration is complementing global Regional integration is complementing global integration combining best practices from the integration combining best practices from the region with the best from the world.region with the best from the world.
4.4. The public policy agenda is largely behind-the-The public policy agenda is largely behind-the-border in trade facilitation, improving investment border in trade facilitation, improving investment climate, liberalizing services, and encouraging climate, liberalizing services, and encouraging FDI and domestic capital market development.FDI and domestic capital market development.