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Energy Market Integration and Economic Convergence: Implications for East Asia


  • Yu SHENG

    (Yu SHENG Crawford School of Economics and Government, The Australian National University, Canberra, Australia)

  • Xunpeng SHI

    (Economic Research Institute for ASEAN and East Asia (ERIA))


Energy Market Integration (EMI) has been pursued by East Asian countries in recent years, but how it could play a role in facilitating economic growth of countries in the region remains to be an empirical question. This paper uses the economic convergence analysis (including both the σ-convergence and β-convergence approaches) to examine the impact of EMI - measured by two newly constructed indexes (namely, the energy trade index and the energy market competition index) - at the country level, on dynamic economic growth path across countries, with a special interest to inform policy makings related to promoting EMI among East Asian countries. The result shows that a more integrated energy market may significantly reduce income disparity across countries and thus help poor countries to catch up with rich countries in economic development. Moreover, a comparison among the three regions including EU, NAFTA and EAS shows that EAS countries are more likely to achieve economic convergence along with the construction of EMI process. An important policy implication is that less developed countries in the EAS region can increase benefits from actively participating into the EMI process.

Suggested Citation

  • Yu SHENG & Xunpeng SHI, 2011. "Energy Market Integration and Economic Convergence: Implications for East Asia," Working Papers DP-2011-05, Economic Research Institute for ASEAN and East Asia (ERIA).
  • Handle: RePEc:era:wpaper:dp-2011-05

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    Cited by:

    1. Yu Sheng & Xunpeng Shi, . "Economic Development, Energy Market Integration and Energy Demand: Implication for East Asia," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Yu Sheng & Xunpeng Shi, . "Energy Market Integration and Economic Convergence: Implications for East Asia," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    3. Widodo, Tri, 2016. "Comparative Advantage of Energy Products in the Midst of ASEAN Economic Integration," MPRA Paper 79964, University Library of Munich, Germany.
    4. Dandan ZHANG & Xunpeng SHI & Yu SHENG, 2014. "Enhanced Measurement of Energy Market Integration in East Asia: An Application of Dynamic Principal Component Analysis," Working Papers DP-2014-23, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Chirathivat, Suthiphand & Cheewatrakoolpong, Kornkarun, 2015. "Thailand's Economic Integration with Neighboring Countries and Possible Connectivity with South Asia," ADBI Working Papers 520, Asian Development Bank Institute.
    6. Zhang, Dandan & Shi, Xunpeng & Sheng, Yu, 2015. "Comprehensive measurement of energy market integration in East Asia: An application of dynamic principal component analysis," Energy Economics, Elsevier, vol. 52(PB), pages 299-305.

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