Intra-Regional Trade in East Asia: The Decoupling Fallacy, Crisis, and Policy Challenges
AbstractThis paper examines the export experience of East Asian economies in the aftermaths of the crisis against the backdrop of a systematic analysis of precrisis trade patterns. The analysis is motivated by the “decoupling” thesis, which was a popular theme in 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 precrisis policy stance favoring export-oriented growth? The findings serve to caution against a possible costly backlash against openness to foreign trade arising from the newfound enthusiasm for rebalancing growth (redressing the strong bias for exports in development policy), and make a strong case for a well-coordinated strategy to fight new protectionism, as part of a long-term commitment to nondiscriminatory multilateral and unilateral trade liberalization.
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Bibliographic InfoPaper provided by Asian Development Bank Institute in its series ADBI Working Papers with number 177.
Length: 48 pages
Date of creation: 11 Dec 2009
Date of revision:
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decoupling; intra-regional trade; growth rebalancing; asia;
Other versions of this item:
- Prema-chandra Athukorala & Archanun Kohpaiboon, 2009. "Intra-Regional Trade in East Asia: The Decoupling Fallacy, Crisis, and Policy Challenges," Departmental Working Papers 2009-09, The Australian National University, Arndt-Corden Department of Economics.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-INT-2010-05-22 (International Trade)
- NEP-SEA-2010-05-22 (South East Asia)
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