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The Shift from "Market-led" to "Institution-led" Regional Economic Integration in East Asia in the late 1990s


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  • Shujiro Urata


The paper identifies the changes in the nature of regional economic integration in East Asia from "market-led" to "institution-led" integration in the late 1990s. Before the late 1990s active foreign trade and foreign direct investment (FDI) mainly resulting from trade and FDI liberalization led to greater intra-regional dependence among the countries in East Asia. Indeed, regional production systems have been developed in industries such as electronics, automobiles, and apparel, mainly by the initiatives of foreign companies. After the late 1990s East Asian countries started to show strong interest in regional institutions such as free trade agreements (FTAs) largely because of the outbreak of Asian crisis and growing interest in FTAs in other parts of the world. FTAs are likely to bring economic, political, social and other types of benefits to the region and the rest of the world, but there exist various obstacles to the formation of FTAs. Some serious obstacles are strong opposition to trade and FDI liberalization by non-competitive sectors and a lack of mutual understanding about historic, political, and other issues among East Asian countries. The paper makes several propositions such as increasing mutual exchange of people to overcome these obstacles.

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Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 04012.

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Length: 44 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:eti:dpaper:04012

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  1. Jeffrey A. Frankel., 1993. "Is Japan Creating a Yen Bloc in East Asia and the Pacific?," Center for International and Development Economics Research (CIDER) Working Papers C93-007, University of California at Berkeley.
  2. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
  3. Shujiro Urata & Kozo Kiyota, 2003. "The Impacts of an East Asia FTA on Foreign Trade in East Asia," NBER Working Papers 10173, National Bureau of Economic Research, Inc.
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Cited by:
  1. Vlatka Bilas & Sanja Franc, 2010. "Globalization, Regionalization and Information-Communication Convergence of Africa," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage:, vol. 8(2), pages 104-118.


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