Regionalisation in East Asia – With Special Reference to Japan
East Asia’s international economic relations presently seem in flux, following a complex dynamic that could hardly be expected to emerge ten years ago. Increasing shares of intraregional trade and investment, bilateral and regional agreements, and informal policy coordination with a tendency to exclude extraregional actors can be regarded as characteristics of this process. Japan and China are reasonably regarded as the most important drivers, with diverging intererests in the monetary and trade-investment spheres adding a further twist. Even the multilateral trading system’s role has changed – strengthened by China’s WTO accession, it is being weakened by bilateral and regional initiatives now under negotiation.
The picture thus is substantially less clear than expected ten years ago. Then, the emergence of an Asian economic structure centered on Japan was widely expected. Now, both China and Japan have the potential to act as ‘sponsors’ of regional integration. Strong economic and political interests of the United States as an extraregional actor further complicates the picture.
Taking this as the point of departure, the dissertation analyses the process of regionalisation in east Asia from the perspective of Japan. A number of subfields of economics are drawn upon to construct a framework of analysis: elements from the theory of international trade and direct investment, international macroeconomics, and international political economy are used to motivate an empirical examination using the gravity approach. This approach has been used extensively in the analysis of bilateral trade patterns, but has found applications in the study of international financial relations, international migration and international direct investment more recently.
Preliminary results from this analysis hint at a continuing importance of resource endowments à la Heckscher and Ohlin combined with falling costs of international interaction as the most important drivers of regional integration in east Asia. These influences are reinforced by exchange rate policies of Asian countries that use the US dollar as a de facto common external anchor, thus reducing bilateral exchange rate volatility, but incurring periodical large exchange rate shocks. China’s accession to the WTO seems to have alleviated institutional concerns in trade and investment, reducing risk and thus strengtheing regional trade and investment links. Japan’s role can be characterised as asymmetrical: whereas global economic linkages are most important overall, the risk of being frozen out of regional economic relations by preferential deals among the other east Asian countries is a growing reason for concern. Special interest groups have traditionally been quite influential in Tokyo, so it seems reasonable that the Japanes government will take these into account and pursue ‘taylored’ bilateral deals, at least in the area of international goods and services trade and factor flows. In the monetary arena, regional agreements seem a genuine possibility.
German Association for Asien Studies
German Association for Social Science Research on Japan
Asia-Europe Foundation University Alumni Network