In the past, political differences, separate economic interests, multiplicity of the culture and different ideological disagreements have posed obstruction to the economic integration among East Asian nations. The Asian financial crisis in has also held back the development process. Following the historical introduction of Euro and North American integration, the integration process in East Asia has been intensified now.
Gripped by this wave of regionalism, the East Asian economies have expedited further liberalization process and have started unmarked trade liberalization strategies, enhanced economic cooperation, and negotiating on currency union. The creation of a single currency seems implausible at this point, however the region may begin with loose agreements to stabilize currencies, followed later by tighter agreements and culminating ultimately in adoption of single currency.
Introduction Globalization and regionalization are two parallel concepts. The proponents of globalization are calling for one world and one economic system. To this end, WTO is the latest notion. Despite several arrangements and meetings, the members of the WTO have failed to reach on any common agreement. Due to the stalement at WTO, the concept of regionalization is gaining popularity.
Following the historical introduction of Euro, regionalization slogan has become popular now. Inspired by this concept, the economic integration among the East Asian countries has been intensified. In the past, political differences, separate economic interests, multiplicity of the culture and different ideological altercation have posed obstruction to the economic integration among East Asian nations. Besides, lack of uniform economic policies, non- cooperation in the field of trade, commerce, investment, and discrepancies in financial and legal framework have further held back integration process.
Moreover, most of countries have same growth pattern.
Regional Economic Integration and Dispute Settlement in East Asia
East Asian region has been bestowed with young and skilled labor force. The region holds all natural and acquired resources, necessarily essential for development. Many common challenges and matching resources calls for mutual beneficial cooperation and exchange not only in economic sphere, but also in political, security, environment, social, cultural, and educational realm. The financial crisis of was a big jolt for East Asian economic.
The Evolving Legal Framework
The crisis had given rise to the recognition that East Asia needs to institutionalize its cooperation to solve similar issues and prevent new ones. Realizing need of the time, the East Asian countries have started unmarked trade liberalization polices, enhance economic cooperation and achieving economic prosperity through economic integration.
The objectives of the paper are to understand the key characteristics of East Asian economies and look into the possibilities and complexities in the paths of economic integration. The paper is organized as follows: In the following section, we will discuss on why East Asian integration.
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Section III describes the efforts towards integration, Section IV explains the pillars of integration, Section V elucidates the challenges one the way of integration and finally Section VI ends with conclusion. Why East Asian Economic Integration? The advocates of East Asian economic integration support idea on the following grounds.
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First, the economic globalization as backdrop regional grouping pace is accelerating, the world is divided in several regional blocks and zones. Even the only superpower in the world feels inadequate in front of the economic globalization and needs to look for support in regional grouping. Therefore it is no coincidence that the East Asian countries reached a common understanding on East Asian Community. It is the need of the regional grouping development, the result of Asian people's thinking and action pushed by regional grouping development and the inevitability of history.
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Second, the most fundamental reason for the emergence of recent initiatives for institutional cooperation to support economic integration in Asia is the deepening of regional economic linkages and interdependence. The degree of regional economic integration through trade in East Asia has risen fast over the last twenty-five years.
This share is still lower than that in the European Union 64 percent , but exceeds that of the North American Free Trade Area 46 percent. Recent economic cooperation has spurred the foreign direct investment flow to East Asia. Incashing the opportunity, all major multinational firms have established their offices and heavily invested in the region. Market-driven financial integration has also been underway as a result of the increased deregulation of the financial system, opening of financial services to foreign institutions, and liberalization of the capital account in Asia.
As a result of market-driven economic integration, macroeconomic interdependence within the region has become stronger. Third, there is a common consternation among the East Asian countries that after the European and North American economic integration, the two big blocks will dominate the rule setting global economy, while marginalized role and weight of other countries. To keep abreast with the new scenario and to keep the power balance, it is inevitable for East Asian countries to establish a similar block so as to play its due role in global economic affairs.
The crisis had taught the important lesson that East Asia needs to strengthen monetary and financial cooperation.
The world efforts to strengthen the international financial system in this regard have been disappointing. Since then, the member countries have been making serious efforts to remove import quotas and lower tariffs. In , the six advanced members had reduced their tariffs to percent. Currently many East Asian countries have kicked off several bilateral and multilateral trade arrangements. To make the job simple, it would be preferable to design from the outset regional FTAs in a coherent way in terms of rules of origin, exclusion lists, and liberalization timeframe.
In order to boost trade and investment in the region, drastic changes have been made in the rules and regulations. With these changes, the economic activities have been increased significantly and now the region has become a center of global economic activates. Pillars of Integration 1. Monetary and Financial Cooperation a Creation of regional liquidity support facility through CMI b Policy dialogue and economic surveillance c Asian bond markets initiative d East Asian currency union a Creation of regional liquidity support facility through CMI After the Asian financial crisis, East Asian countries shared the need to promote regional financial cooperation.
After Asian Financial Crisis, member countries started this initiative to manage regional short-term liquidity problems and to facilitate the work of other international financial arrangements and organizations like IMF. Identification of vulnerable aspects of the economy, finance, and recommendation of appropriate policy are the prime objectives. Surveillance is primarily focused on domestic macroeconomic variables such as Gross Domestic Products GDP , inflation rate, and soundness of financial sector.
Through the groups' activities, it has been pointed out that exchange rates, which are currently not subject to surveillance, need be covered in order to closely monitor regional currency fluctuation. Steps have been taken for monitoring short-tem capital flows and developing a regional early-warning system to detect regional financial vulnerabilities, with a view to preventing financial crises in the future. Hence, the next stage will be to further strengthen the CMI and economic surveillance. Activities of the ABMI focus on the following two areas: 1 facilitating access to the market through a wider variety of issuers and types of bonds, and 2 enhancing market infrastructure to foster bond markets in Asia.
Significant issuances of local currency-denominated bonds have been made by various parties including international financial institutions and multinational corporations. Some experts believe that the currency union is far-fetched and unrealistic at this point. East Asia lacks the infrastructure and environment; a necessary factor for the integration. Contrary to this opinion, some specialists support East Asian currency union on the following foundations. First, East Asian currency union will eliminate exchange rate risk with other monetary union members, which facilitates trade among them.
Second, it makes price differences in member countries more transparent and, therefore, sharpens competition. Third, it may increase policy discipline; specifically, an individual country's central bank may become more credible in its commitment to price stability by delegating authority for monetary policy to a regional central bank.
Regional Economic Integration in East Asia
Eichengreen and Bayoumi have conducted a study and have calculated an optimum currency index for East Asia. Therefore, ex ante East Asia is suited for a currency union. Together with the findings of Frankel and Rose , i. The region therefore appears to be a good candidate for currency union. Through the community, the East Asian nations are currently undertaking the future development of the region by creating a viable framework for closer cooperation and deeper integration.
The community seeks to promote a stable cooperative security environment based on human trust and respect. In the interest of common prosperity, the community vowed to promote trade, investment, and financial cooperation of the region. However, the intractable problem is that there are a lot of diversities and heterogeneity that have prevented the East Asian nations from reaching coordinated policies for the promotion of regional cooperation and combining efforts on integrating their economies with each other V.
Challenges on the Way of Integration East Asia's history and current circumstances, the differences among its countries, its dependence on extra-regional trade, its political diversity, its lack of strong collective institutions, and its capital mobility imply that the idea of East Asian integration is not so easy to realize.
Qty : Please note there is a week delivery period for this title. This was a novel development for the region, since East Asian States had previously followed a largely informal, market-driven approach to regional economic integration. This book systematically analyses and explains the development, nature and challenges of rules-based regional economic integration in East Asia with particular attention to the region's first four RTAs. The book provides a systematic, comparative account of the scope, depth and hard law versus soft law quality of rules-based economic integration achieved under these four RTAs in the areas of trade in goods and services, investment liberalisation and protection, labour mobility, and dispute settlement.
Introduction II. Summary 2. Summary 3. Introduction and Objectives II. Background Information III.