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Balancing Economic Integration and Dependency: Insights Into Trade and Investment Dynamics in the Indo‐Pacific

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  • Jacques Yana Mbena

Abstract

This study examines the impact of trade diversification, foreign direct investment (FDI) inflows, and macroeconomic fundamentals on economic dependency on China among members of the Indo‐Pacific Economic Framework for Prosperity (IPEF). Grounded in dependency theory, it highlights the risks of overreliance on a dominant partner. Using panel data from 2014 to 2023 across 10 IPEF member countries, the analysis employs ordinary least squares (OLS), Generalized Least Squares (GLS), and the Driscoll–Kraay estimators to assess export and import‐driven dependencies. Findings indicate that greater trade openness and strong gross domestic product (GDP) growth reduce reliance on China, while exchange rate stability fosters diversified trade relationships. However, FDI inflows have a dual effect: supporting industrial development while also reinforcing dependency. The study shifts the policy question from “how much” to trade or invest toward “how to shape” the composition and conditions of trade, finance, and macroeconomic policy so that openness translates into resilience. Further research should explore financial and technological dependencies. 本研究考察了贸易多元化、外国直接投资 (FDI) 流入和宏观经济基本面对印太经济繁荣框架 (IPEF) 成员国对中国经济依赖程度的影响。本研究以依赖性理论为基础, 强调了过度依赖主导伙伴的风险。本研究使用 2014 年至 2023 年十个 IPEF 成员国的面板数据, 运用普通最小二乘法 (OLS)、广义最小二乘法 (GLS) 和 Driscoll‐Kraay 估计量来评估出口和进口驱动的依赖程度。研究结果表明, 贸易开放程度的提高和强劲的国内生产总值 (GDP) 增长可以降低对中国的依赖程度, 而汇率稳定则有助于促进多元化的贸易关系。然而, FDI 流入具有双重效应:既支持工业发展, 又强化依赖性。本研究将政策问题从“贸易或投资多少”转向“如何塑造”贸易、金融和宏观经济政策的构成和条件, 从而将开放转化为韧性。进一步的研究应探讨金融和技术依赖性。 Este estudio examina el impacto de la diversificación comercial, las entradas de inversión extranjera directa (IED) y los fundamentos macroeconómicos en la dependencia económica de China entre los miembros del Marco Económico Indopacífico para la Prosperidad (IPEF). Basado en la teoría de la dependencia, destaca los riesgos de una dependencia excesiva de un socio dominante. Utilizando datos de panel de 2014 a 2023 de diez países miembros del IPEF, el análisis emplea Mínimos Cuadrados Ordinarios (MCO), Mínimos Cuadrados Generalizados (MCG) y estimadores Driscoll–Kraay para evaluar las dependencias impulsadas por las exportaciones e importaciones. Los hallazgos indican que una mayor apertura comercial y un sólido crecimiento del producto interno bruto (PIB) reducen la dependencia de China, mientras que la estabilidad del tipo de cambio fomenta relaciones comerciales diversificadas. Sin embargo, las entradas de IED tienen un doble efecto: apoyan el desarrollo industrial y, al mismo tiempo, refuerzan la dependencia. El estudio traslada la cuestión política de “cuánto” comerciar o invertir a “cómo moldear” la composición y las condiciones de la política comercial, financiera y macroeconómica para que la apertura se traduzca en resiliencia. Se recomienda que futuras investigaciones exploren las dependencias financieras y tecnológicas.

Suggested Citation

  • Jacques Yana Mbena, 2025. "Balancing Economic Integration and Dependency: Insights Into Trade and Investment Dynamics in the Indo‐Pacific," World Affairs, John Wiley & Sons, vol. 188(4), December.
    • Handle: RePEc:wly:woraff:v:188:y:2025:i:4:n:e70037
    DOI: 10.1002/waf2.70037
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