IDEAS home Printed from
   My bibliography  Save this paper

The new regionalism and Asia: impact and options


  • Jeffrey A. Frankel
  • Shang-Jin Wei


New regional initiatives abound, both outside Asia and within. Free Trade Areas in the West - notably NAFTA, its possible enlargement into an FTA of the Americas, and the European Union - have implications for Asia. Asian manufacturers will experience trade diversion, especially in textiles and apparel. Balancing such losses is the likelihood of gains from higher import demand caused by stronger economic growth in the Americas and Europe. ; New estimates of the gravity model of bilateral trade confirm the presence of implicit or de facto trade blocs in Asia and the Pacific, as in Europe and the Western Hemisphere. By testing concentric groupings at once, we ascertain that the right place to "draw the line" in describing existing patterns seems to be so as to include all of Asia. (There is also an independent Pacific effect, which can take the form either of an East Asia bloc or an APEC bloc). ASEAN does not function as an independent bloc, and South Asia is actually an anti-bloc: India and Pakistan trade much less with each other than would two otherwise-similarly situated countries. ; The strategic question, from the viewpoint of an individual Asian country, is whether to pursue unilateral, sub-regional, pan-regional, or multilateral routes to enhanced trade. Multilateral liberalization is much more advantageous than regional agreements. To the extent that domestic politics prevents unilateral liberalization and international politics prevents multilateral liberalization, however, regional arrangements may have some advantages. The advantages are particularly clear if the regional initiatives help to build political momentum, both domestically and internationally, for unilateral and multilateral liberalization. ; The last part of the paper reviews many political economy arguments: first those that suggest that regionalism undermines support for more generalized liberalization and then those that say that regional initiatives help build political momentum for global liberalization. We return to the gravity model for a verdict on which category of political economy forces appear to have been dominant among the trade blocs of 1970-1992. The conclusion is that regionalism has in the recent experiences been politically consistent with more general liberalization, particularly in the cases of East Asia and the European Community.

Suggested Citation

  • Jeffrey A. Frankel & Shang-Jin Wei, 1995. "The new regionalism and Asia: impact and options," Pacific Basin Working Paper Series 95-10, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfpb:95-10

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    1. Reuven Glick & Ramon Moreno, 1995. "Is pegging the exchange rate a cure for inflation? East Asian experiences," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov3.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Arvind Panagariya, 1999. "The Regionalism Debate: An Overview," The World Economy, Wiley Blackwell, vol. 22(4), pages 477-512, June.
    2. John Whalley, 1998. "Why Do Countries Seek Regional Trade Agreements?," NBER Chapters,in: The Regionalization of the World Economy, pages 63-90 National Bureau of Economic Research, Inc.
    3. Rahapakse, Purnima & Arunatilake, Nisha, 1997. "Would a reduction in trade barriers promote intra-SAARC trade?: A Sri Lankan perspective," Journal of Asian Economics, Elsevier, vol. 8(1), pages 95-115.
    4. Andriamananjara, Soamiely & Schiff, Maurice, 1998. "Regional groupings among microstates," Policy Research Working Paper Series 1922, The World Bank.
    5. Prema-chandra Athukorala, 2005. "Product Fragmentation and Trade Patterns in East Asia," Asian Economic Papers, MIT Press, vol. 4(3), pages 1-27, Fall.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedfpb:95-10. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Federal Reserve Bank of San Francisco Research Library). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.