Introduction

This volume, the outcome of the Jean Monnet-sponsored project, EUROPEAN UNION and ASEAN: Historical Dimensions, Comparative Analysis and Politico-Economic Dynamics, seeks to enhance our understanding of the ASEAN and Asian Economies, and to study EU integration as a means of improving our understanding of potential developments in the ASEAN integration process. The previous volume focussed on a wide range of historical, political and social issues in addition to economics matters. This volume is more closely focussed, with one or two exceptions, on economics issues with a range of both discursive and theoretical pieces (including the development of some new theoretical tools) to better understand regional economics integration. The contribution by Welfens and Borbély takes a closer look at key issues of structural change and trade dynamics in the context of economic globalization and EU integration. The authors present fresh theoretical approaches and a battery of empirical material, which partly puts the focus on the issue of international outsourcing and offshoring. The analytical findings, based on input—output analysis, do not support the bazaar hypothesis according to which Germany's export dynamics reflect structural weaknesses. For example, the fact that the share of imported intermediate inputs in Germany's exports has increased largely reflects successful international specialization and a profitable global division of labour. Moreover, exports are also contained in imports, and with respect to major German trading partners, one may assume that the share of exported intermediate inputs in Germany's imports of goods and services has increased. As regards the specialization of selected EU countries—including countries from eastern Europe—and Asian countries, one can identify clear patterns on the EU15 market, which largely are in line with a modern interpretation of the Heckscher-Ohlin approach: Asian countries are often strongly specialized in labour-intensive products. Only after some transition and modernization process does one find that China and selected ASEAN countries have established a comparative advantage in technology-intensive goods and in science-intensive goods; export unit values have also improved in some fields over time for some countries. The considerable role of foreign direct investment (FDI) inflows for such specialization dynamics is emphasized, and major policy conclusions are derived. For the EU, economic globalization has created many opportunities. However, there is also additional adjustment pressure in the wake of the US financial market crisis. With the US banking crisis unfolding and showing negative spillover effects, one should not rule out that the combination of the banking crisis and the impact of US policy intervention—for example, expansionary monetary policy, which implies additional side effects of much higher oil prices as well as a depreciation of the US dollar—will lead to new social conflicts in the context of enhanced redistribution conflicts at the national and international level; this could slow down structural change and Schumpeterian dynamics. Whether globalization will be sustainable is still an open question, and there is no doubt that policymakers would be wise to organize the process of globalization in a consistent manner. Excessive financial globalization with inadequate regulation could undermine the long-term benefits from globalization in the real sphere.