Abstract
The postwar political economy of East Asia was initially structured under the aegis of the US, reflecting the political and economic conditions in the region at the time. For geopolitical considerations against communist influence in the region in the context of the Cold War, Washington adopted a strategy in East Asia that encouraged closer economic ties among its allies centered on Japan in the postwar years. The development of postwar economic relations between Japan and other capitalist economies in the region basically proceeded along this line.1 By the mid-1960s, with the normalization of diplomatic relations between Japan and South Korea, the East Asian political economy had been solidly established. Thereafter, the major market economies in East Asia successively achieved economic miracles with Japan emerging as a new economic superpower and South Korea, Taiwan, Hong Kong and Singapore becoming NIEs. In this process, these economies became increasingly interdependent through growing trade and FDI flows among them. In the late 1970s China moved away from Mao’s policy of self-reliance and began to participate in the regional and international economy.2 The new orientation of China’s policy not only changed the political and economic environment in East Asia and opened up new prospects for effective regional cooperation, but also vastly expanded the region’s markets, natural resources and industrial potential.
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Notes
For the role of FDI in East Asian integration, see E. J. Lincoln, East Asian Economic Regionalism (Washington, D.C.: The Brookings Institution, 2004), pp.72–113.
Ministry of Finance (Japan), Monthly Finance Review, various Issues, cited in OECD, International Direct Investment Statistics Yearbook 1995 (Paris: Organization for Economic Cooperation and Development, 1995), pp.154–5.
OECD, Foreign Direct Investment Relations between the OECD and the Dynamic Asian Economies (Paris: Organization for Economic Cooperation and Development, 1993), p.135.
The data for 1987 are from UNCTAD, World Investment Directory, Volume VII — Part 2: Asia and the Pacific (New York and Geneva: United Nations, 2000), pp.546–7; the data for 2006 are from Mainland Affairs Council (MAC), Cross-Strait Economic Statistics Monthly No.175, Table 13 (Taipei: Mainland Affairs Council, ROC), http://www.mac.gov.tw.
Export-Import Bank of Korea, cited in C. Lee, “Economic Relations between Korea and China,” Korea’s Economy 2004, vol.20 (Washington, D.C.: Korea Economic Institute, 2004) 71.
An IPN refers to an international division of labor, in which different functional activities of the production process (including design, research and development, material processing, supplier logistics, information and communications management, finance, manufacturing, marketing and end-product distribution) are reorganized to be conducted in the most efficient locations by different firms, including MNEs and local firms. See C. Yun, “International production networks and the role of the state: lessons from the East Asian development experience,” European Journal of Development Research, vol.15, no.1 (2003) 173; Dent, East Asian Regionalism, p.46.
J. C. Abegglen, Sea Change: Pacific Asia as the New World Industrial Center (New York: The Free Press, 1994), p.83.
E. J. Lincoln, “Japanese Trade and Investment Issues,” in D. Unger and P. Blackburn (eds), Japan’s Emerging Global Role (Boulder and London: Lynne Rienner Publishers, Inc., 1993), pp.134–5.
D. Unger, “Japan’s Capital Exports: Molding East Asia,” in Unger and Blackburn (eds), Japan’s Emerging Global Role (Boulder and London: Lynne Rienner Publishers, Inc., 1993), p.156.
Dent, East Asian Regionalism, pp.46–7; G. B. Felker, “Global production and Southeast Asia’s industrialization,” in K. Jayasuriya (ed.), Asian Regional Governance: Crisis and Change (London: Routledge, 2004), pp.82–105;
A. Giroud, “Foreign direct investment and the rise of cross-border production networks in Southeast Asia,” in N. J. Freeman and F. L. Bartels (eds), The Future of Foreign Investment in Southeast Asia (London: Routledge, 2004), pp.104–24;
D. Tachiki, “Between foreign direct investment and regionalism: the role of Japanese production networks,” in T. J. Pempel (ed.), Remapping East Asia: The Construction of a Region (Ithaca, NY: Cornell University Press, 2005), pp.149–69.
For the important role of FDI in China’s economic growth, see L. Lipschitz, C. Rochon and G. Verdier, “A Real Model of Transitional Growth and Competitiveness in China,” IMF Working Paper, WP/08/99, IMF (2008), http://www.imf.org/external/pubs/cat/longres.cfm?sk=21888.0, accessed on 6 May 2009.
But there are also criticisms of the flying geese integration. See, for example, M. Bernard and J. Ravenhill, “Beyond Product Cycles and Flying Geese: Regionalization, Hierarchy and the Industrialization of East Asia,” World Politics, vol.47, no.2 (1995) 171–209.
K. G. Machado, “Japanese Foreign Direct Investment in East Asia: The Expanding Division of Labour and the Future of Regionalism,” in S. Chan (ed.), Foreign Direct Investment in a Changing Global Political Economy (London: Macmillan, 1995), pp.39–66;
S. Awanohara, “Japan and East Asia: Toward a New Division of Labour,” The Pacific Review, vol.2, no.3 (1989) 198–208.
Calculated from IMF, Direction of Trade Statistics Yearbook 2004 (Washington, D.C.: International Monetary Fund, 2004).
Cai, “Is a Free Trade Zone Emerging in East Asia in the Wake of the Asian Financial Crisis?” Pacific Affairs, vol.74, no.1 (Spring 2001) 10.
World Bank, East Asia: The Road to Recovery (Washington, D.C.: The World Bank, 1998), p.11.
For a thorough discussion of China’s changing attitude and policy toward regional free trade arrangements in East Asia in general and East Asia in particular, see K. G. Cai, “Chinese Changing Perspective on the Development of an East Asian Free Trade Area,” The Review of International Affairs, vol.3, no.4 (Summer 2004) 584–99.
This article is reprinted in R. C. Keith (ed.), China as a Rising World Power and its Response to ‘Globalization’ (London and New York: Routledge, 2005), pp.78–93.
For a discussion of these earlier efforts for regional economic cooperation in the Asia-Pacific, see J. Ravenhill, “Institutional Evolution at the Trans-Regional Level: APEC and the Promotion of Liberalisation,” in M. Beeson (ed.), Reconfiguring East Asia: Regional Institutions and Organisations after the Crisis (London and New York: Routledge, 2002), pp.228–30.
See also M. Beeson, Institutions of the Asia-Pacific: ASEAN, APEC and Beyond (London and New York: Routledge, 2009), pp.38–40.
However, it was believed that Japan with the support of the US had been the real initiator of the APEC project. The reason that Japan would rather stay behind the initiative and let Australia propose the idea was that Japan wanted to avoid suspicion from other Asia-Pacific countries of its motive behind such a regional project, if the initiative could be successfully launched. See Y. Funabashi, Asia Pacific Fusion: Japan’s Role in APEC (Washington, D.C.: Institute for International Economics, 1995).
APEC Secretariat, APEC at a Glance (Singapore: APEC Secretariat, 2009).
R. Stubbs, “ASEAN Plus Three: Emerging East Asian Regionalism,” Asian Survey, vol.42, no.3 (2002) 447.
M. Beeson, “ASEAN: The Challenges of Organisational Reinvention,” in M. Beeson (ed.), Reconfiguring East Asia: Regional Institutions and Organisations after the Crisis (London and New York: Routledge, 2002), p.185.
P. Bowles and B. MacLean, “Understanding trade bloc formation: The case of the ASEAN free trade area,” Review of International Political Economy, vol.3, no.2 (1996) 319–48. Dent, East Asian Regionalism, pp.92–3.
For a comparative study of the EU and ASEAN, see K. A. Eliassen and C. B. Arnesen, “Comparison of European and Southeast Asian Integration,” in M. Telo (ed.), European Union and New Regionalism: Regional Actors and Global Governance in a Post-Hegemonic Era, 2nd edition (Aldershot, England and Burlington, VT: Ashgate Publishing, 2007), pp.202–21.
D. Webber, “Two funerals and a wedding? The ups and downs of Regionalism in East Asia and Asia-Pacific after the Asian Crisis,” The Pacific Review, vol.14, no.3 (2001) 356.
For a discussion of ASEM, see C. M. Dent, “ASEM and the ‘Cinderella Complex’ of EU-East Asia Economic Relations,” Pacific Affairs, vol.74, no.1 (2001) 25–52.
According to William W. Grimes, “financial regionalism” involves attempts to reduce currency volatility, to create frameworks to contain financial crises, and to develop local financial markets in a region. For a thorough discussion of financial regionalism in East Asia, see W. W. Grimes, Currency and Contest in East Asia: The Great Power Politics of Financial Regionalism (Ithaca and London: Cornell University Press, 2009).
W. Mattli, The Logic of Regional Integration: Europe and Beyond (Cambridge and New York: Cambridge University Press, 1999).
B. Eichengreen, “China, Asia, and the world economy: The implications of an emerging Asian core and periphery,” China and World Economy, vol.14, no.3 (2006) 1–18.
Shiping Tang has a similar discussion of the leadership issue within the APT. S. Tang, “Leadership in institution building: The case of ASEAN+3,” in B. Fort and D. Webber (eds), Regional Integration in East Asia and Europe: Convergence or Divergence? (London and New York: Routledge, 2006), pp.69–84.
For more discussion on the APT and the APO, see K. G. Cai, “The ASEAN-China Free Trade Agreement and East Asian Regional Grouping,” Contemporary Southeast Asia, vol.25, no.3 (2003) 392–5.
V. Aggarwal and S. Urata (eds), Bilateral Trade Agreements in the Asia-Pacific (London and New York: Routledge, 2005);
C. M. Dent, “Bilateral free trade agreements: boon or bane for regionalism in East Asia and the Asia-Pacific?” European Journal of East Asian Studies, vol.4, no.2 (2005) 287–314;
C. M. Dent, New Free Trade Agreements in the Asia-Pacific (Basingstoke: Palgrave, 2006);
J. Ravenhill, “The new bilateralism in the Asia-Pacific,” Third World Quarterly, vol.24, no.3 (2003) 299–318;
V. H. Tran and C. Harvie (eds), Regional Trade Agreements in Asia (Cheltenham: Edward Elgar, 2007).
See, for example, M. Kawai and G. Wignaraja, “A Broad Asian FETA Will Bring Big Gains,” Far East Economic Review, vol.171, no.3 (April 2008) 46–8.
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© 2010 Kevin G. Cai
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Cai, K.G. (2010). Regional Economic Integration in East Asia. In: The Politics of Economic Regionalism. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230277267_5
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