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Competition, Complementarity and Contagion in East Asia

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  • Diwan, Ishac
  • Hoekman, Bernard

Abstract

This paper explores to what extent the magnitude and speed of the contagion effects that materialized in East Asia in the second half of 1997 may have had "real" underpinnings, in the sense that the pattern of production, consumption and trade increased the vulnerability of East Asian countries to external shocks. Two major possibilities are investigated using available disaggregated data on intra- and extra-regional trade and direct investment: that Asian economies compete extensively with each other on world markets; or, to the contrary that Asia is best regarded as an integrated economy with countries specializing in complementary production. The data provide greater support for the latter hypothesis.

Suggested Citation

  • Diwan, Ishac & Hoekman, Bernard, 1999. "Competition, Complementarity and Contagion in East Asia," CEPR Discussion Papers 2112, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2112
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    References listed on IDEAS

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    1. Frankel, Jeffrey A. & Wei, Shang-Jin, 1996. "ASEAN in a Regional Perspective," Center for International and Development Economics Research (CIDER) Working Papers 233438, University of California-Berkeley, Department of Economics.
    2. Gian M Milesi-Ferretti & Lorenzo Giorgianni, 1997. "Determinants of Korean Trade Flows and their Geographical Destination," IMF Working Papers 97/54, International Monetary Fund.
    3. Warwick J McKibbin & Will Martin, 1998. "The East Asian Crisis: Investigating Causes and Policy Responses," Departmental Working Papers 1998-06, The Australian National University, Arndt-Corden Department of Economics.
    4. Hoekman, Bernard & Djankov, Simeon, 1997. "Determinants of the Export Structure of Countries in Central and Eastern Europe," World Bank Economic Review, World Bank Group, vol. 11(3), pages 471-487, September.
    5. Muscatelli, V. A. & Stevenson, A. A. & Montagna, C., 1994. "Intra-NIE competition in exports of manufactures," Journal of International Economics, Elsevier, vol. 37(1-2), pages 29-47, August.
    6. Li-Gang Liu & Marcus Noland & Sherman Robinson & Zhi Wang, 1998. "Asian Competitive Devaluations," Working Paper Series wp98-2, Peterson Institute for International Economics.
    7. Shujiro Urata, 1993. "Japanese Foreign Direct Investment and Its Effect on Foreign Trade in Asia," NBER Chapters,in: Trade and Protectionism, NBER-EASE Volume 2, pages 273-304 National Bureau of Economic Research, Inc.
    8. Anderson, Kym & Francois, Joseph, 1997. "Commercial Links Between Western Europe and East Asia: Retrospect and Prospects," CEPR Discussion Papers 1760, C.E.P.R. Discussion Papers.
    9. Finger, J M & Kreinin, M E, 1979. "A Measure of 'Export Similarity' and Its Possible Uses," Economic Journal, Royal Economic Society, vol. 89(356), pages 905-912, December.
    10. Noland, Marcus, 1997. "Has Asian export performance been unique?," Journal of International Economics, Elsevier, vol. 43(1-2), pages 79-101, August.
    11. Jenny Corbett & David Vines, 1999. "Asian Currency and Financial Crises: Lessons from Vulnerability, Crisis and Collapse," The World Economy, Wiley Blackwell, vol. 22(2), pages 155-177, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mora, Ricardo & Siotis, Georges, 2005. "External factors in emerging market recoveries: An empirical investigation," European Economic Review, Elsevier, vol. 49(3), pages 683-702, April.
    2. Roberta De Santis, 2004. "Has Trade Structure Any Importance in the Trasmission of Currency Shocks? An Empirical Application for Central and Eastern European Acceding Countries to Eu," ISAE Working Papers 43, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    3. Alan G. Ahearne & John G. Fernald & Prakash Loungani & John W. Schindler, 2003. "China and emerging Asia: comrades or competitors?," Working Paper Series WP-03-27, Federal Reserve Bank of Chicago.
    4. Eric Girardin, 2004. "Regime-Dependent Synchronization of Growth Cycles between Japan and East Asia," Asian Economic Papers, MIT Press, vol. 3(3), pages 147-176.
    5. Alan G. Ahearne & John G. Fernald & Prakash Loungani & John W. Schindler, 2006. "Flying geese or sitting ducks: China’s impact on the trading fortunes of other Asian economies," International Finance Discussion Papers 887, Board of Governors of the Federal Reserve System (U.S.).
    6. Madani, Dorsati H., 2001. "Regional integration and industrial growth among developing countries - the case of three ASEAN members," Policy Research Working Paper Series 2697, The World Bank.

    More about this item

    Keywords

    Contagion; East Asia; Financial Crisis; Interdependence; Regional Economic Integration;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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