Economic Integration in Asia - Paul J. J. Welfens€¦ · Selected Graphs from ADB Report 2015 plus...
Transcript of Economic Integration in Asia - Paul J. J. Welfens€¦ · Selected Graphs from ADB Report 2015 plus...
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Prof. Dr. Paul JJ Welfens (EIIW and Chair for
Macroeconomics; Jean Monnet Chair for
European Economic Integration)
Economic Integration in AsiaSelected Graphs from ADB Report 2015 plus key reflections
ADB: Asian Economic Integration Report 2015
Required reading: pp. 1-62
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
GDP Per Capita, Germany, Japan, Asean C., China
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Regional Integration: in Asia (see ADB Report)
• Removing barriers to trade, investment andmigration
– EU 1992= EU single market = free trade (previouslyonly for merchandise trade, not for services trade) plus free capital flows plus free migration
– Asean 2016: Starting a single market project in the region with 10 countries and 620 millionpeople; China, Japan trying also regional integration
– WTO framework crucial= stands for global liberalization framework; China member countrysince 2001
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Global Value-added Chains: trade in intermediate
products rising – not least due to ICT/digital technology
that allows more complex international
outsourcing/offshoring (within MNC)
Final Product
(and export
of final
product)
Final Product
(and export
of final
product)
Medium-
tech
suppliers
Medium-
tech
suppliers
Imported
Inter-
mediate
input
Imported
Inter-
mediate
input
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
In Asia...
• there are high FDI inflows from the US, the EU and Japan...
• China has attracted much FDI over decades (in special economiczones), but has become a major foreign investor since 2005 itself –more Chinese firms with ownership specific advantages (DUNNING: OLI approach) and China‘s labor force supply has peaked in 2015 so that further wage pressure to be expected; hence Chinese firms havestarted outsourcing and offshoring in Asia
• Similar reasoning relevant for many ASEAN countries
• India is different; however, India and China active in asset-seekingFDI in EU and US (e.g. technology-intensive firms whose innovationdynamics are considered as crucial)
• Links between trade, FDI and innovation dynamics
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Interaction Trade, FDI, Innovation Dynamics
• Trade expansion as a starting point = real income gains
• With output growth and rise of per capita income thedemand for differentiated products will rise: pressure forproduct innovation
• Expansion of information and communication technology (ICT) is ongoing, some Asian countries are strong here
• More competition through globalization encouragesinnovation and FDI – competition = lower rate of return on investment; innovation basis for raising rate of return on inv.
• FDI flows to countries with advantages in relative unit laborcost and with attractive technology/innovation fields (asset-seeking FDI – different from OLI)
• Product cycle trade...
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade• Rise of China‘s role as high & medium tech exporter; however,
unclear to which extent US, Japanese, EU subsidiaries in China are drivers of this development (some insights for US firms...)
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Trade; DVA = domestic value added absorbed abroad („true
exports“ = gross exports minus intermediate imports)
China‘s position increasing
over time, Japan‘s pos declining
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
FDI
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
FDI: long run rise of regional FDI (not clear how strong
the role of US/EU subsidiaries is for this development)
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
FDI
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
FDI
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Migration
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
Migration
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Prof. Dr. Paul J.J. Welfens, www.eiiw.eu
12 countries in Trans-Pacific Partnership (TPP)
• TPP concluded by US and 11 other Pacific Rim countries (including Japan and Australia)
• Estimation of economic benefit of TPP is – according toPETRI/PLUMMER/ZHAI (2014) – $ 285 bill. or 0.9% of GDP of the 12 countries involved. Several other Asian countries – not involved in negotiations – have expressed interest to join.
– Petri, P.; Plummer, M.; Zha, F. (2014), The TPP, (the People‘s Republic of) China and the FTAAP. The Case for Convergence. In G. Tang and P.A. Petri, eds., New Directions in Asia-Pacific Economic Integration, Honolulu: East-West Center
– Welfens: If more countries join TPP, benefits could reach about $ 350 bill.
– Do not forget TTIP project: EU-USA which could generate benefits of about € 550 bill. or about $ 600 bill. (with macro repercussion effects a bit higher) seeWELFENS/IRAWAN (2014), WELFENS (2015); based on global GDP of $ 65 000 bill. global output increase of € 1000 bill. (TPP+TTIP) = + 1,5% of world GDP
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