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Intra-Regional Trade in East Asia: The Decoupling Fallacy, Crisis, and Policy Challenges

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  • Prema-chandra Athukorala

    ()

  • Archanun Kohpaiboon

    ()

Abstract

This paper examines the export experience of East Asian economies in the aftermaths of the global financial crisis against the backdrop of pre-crisis trade patterns. The analysis is motivated by the ‘decoupling’ thesis, which was a popular theme in the Asian policy circles in the lead-up to the onset of the recent financial crisis, and aims to probe three key issues: Was the East Asian trade integration story that underpinned the decoupling thesis simply a statistical artifact or the massive export contraction caused by an overreaction of traders to the global economic crisis and/or by the drying up of trade credit, which overpowered the cushion provided by intra-regional trade? What are the new policy challenges faced by the East Asian economies? Is there room for an integrated policy response that marks a clear departure from the pre-crisis policy stance favoring export-oriented growth? The findings caution against a possible policy backlash against openness to foreign trade arising from the new-found enthusiasm for rebalancing growth, and make a strong case for a long-term commitment to non-discriminatory multilateral and unilateral trade liberalization.

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File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2009/wp_econ_2009_09.pdf
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Bibliographic Info

Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2009-09.

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Length: 62 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:pas:papers:2009-09

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Keywords: production networks; trade patterns; global financial crisis;

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Cited by:
  1. Kimura, Fukunari & Obashi, Ayako, 2011. "Production Networks in East Asia: What We Know So Far," ADBI Working Papers 320, Asian Development Bank Institute.
  2. Eleonora Cutrini & Giorgio Galeazzi, 2012. "Can emerging economies decouple from the US business cycle?," Working Papers 41-2012, Macerata University, Department of Studies on Economic Development (DiSSE), revised May 2012.
  3. Gilles De Truchis & Benjamin Keddad, 2012. "South East Asian Monetary Integration: New Evidences from Fractional Cointegration of Real Exchange Rates," Working Papers halshs-00793503, HAL.
  4. Kucera, David & Roncolato, Leanne & von Uexkull, Erik, 2010. "Trade contraction in the global crisis : employment and inequality effects in India and South Africa," ILO Working Papers 459401, International Labour Organization.
  5. Park, Donghyun & Shin, Kwanho, 2010. "Can Trade with the People’s Republic of China Be an Engine of Growth for Developing Asia ," Asian Development Review, Asian Development Bank, vol. 27(1), pages 160-181.
  6. Siow Yue Chia, 2010. "Regional Trade Policy Cooperation and Architecture in East Asia," Trade Working Papers 22029, East Asian Bureau of Economic Research.
  7. Park, Yung Chul, 2011. "The Global Financial Crisis: Decoupling of East Asia—Myth or Reality?," ADBI Working Papers 289, Asian Development Bank Institute.
  8. Eichengreen, Barry, 2009. "The financial crisis and global policy reforms," Proceedings, Federal Reserve Bank of San Francisco, issue Oct, pages 299-334.

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