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Trade Structure and the Transmission of Economic Distress in the High-Income OECD Countries to Developing Asia

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  • Juthathip Jongwanich
  • William E. James
  • Peter J. Minor
  • Alexander Greenbaum

Abstract

This paper examines the structure and direction of developing Asia’s trade over the past two decades. The impacts of economic slowdown in high-income Organisation for Economic Co-operation and Development (OECD) countries on developing Asia in 2009–2010 are then projected through a computable general equilibrium model of world trade and production. The paper shows that despite a jump in intraregional trade—which is found to reflect increasing fragmentation of production with trade in intermediate goods and assembly of final products in the People’s Republic of China—the region remains dependent on external demand from the European Union, United States, and Japan. Simulations indicate the crisis may decrease real income in the region by 6–10 percent over the next two years largely as a result of a fall in exports. Although fiscal stimulus may mitigate these losses, a resurgence of protectionism would work in the opposite direction.

Suggested Citation

  • Juthathip Jongwanich & William E. James & Peter J. Minor & Alexander Greenbaum, 2009. "Trade Structure and the Transmission of Economic Distress in the High-Income OECD Countries to Developing Asia," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 26(01), pages 48-102, June.
    • Handle: RePEc:wsi:adrxxx:v:26:y:2009:i:01:n:s0116110509500036
    DOI: 10.1142/S0116110509500036
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    References listed on IDEAS

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    Cited by:

    1. Simon J.Evenett & Mia Mikic & Ravi Ratnayake (ed.), 2011. "Trade-led growth: A sound strategy for Asia," ARTNeT Books and Research Reports, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), number brr10.
    2. Wang, Qian, 2010. "Sources of Economic Fluctuations in East Asia from 1980 to 2006—Analysis Based on Panel VAR," Conference papers 331922, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Prabir De & Chiranjib Neogi, 2010. "Global Financial Crisis : Implications for Trade and Industrial Restructuring in India," Trade Working Papers 23067, East Asian Bureau of Economic Research.
    4. Anna Strutt & Terrie Walmsley, 2011. "Trade and sectoral impacts of the global financial crisis – a dynamic computable general equilibrium analysis," STUDIES IN TRADE AND INVESTMENT, in: Trade-led growth: A sound strategy for Asia, chapter 14, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

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    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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