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Developing Indicators for Regional Economic Integration and Cooperation




We develop indicators to measure the degree of economic integration and cooperation among East Asian economies and compare these with similar measures for other regions. Our indicators cover regional integration in trade, investment, financial assets, and people-to-people exchange. We also analyze measures of regional cooperation such as the density of free trade agreements and official policy dialogues. We find that in various Asian groupings, and especially in a group of 16 integrating Asian economies, interdependence in trade, direct investment, financial flows, and other forms of economic and social exchange has increased significantly over time, and now approaches that in the European Union. Nonetheless, Asia’s official cooperation remains weak and formal regional institutions remain relatively underdeveloped. To provide insight into the causes of this discrepancy, we also develop quantitative measures of political and cultural similarity of nations, and find that Asian countries have relatively low levels of political and cultural proximity compared to regions such as Europe. The diversity of political interests and cultural values may have hindered more intense cooperation among Asian economies in the past. But if regional economic and social interactions continue to grow, requirements for joint decision-making are also likely to expand, leading to stronger frameworks of official cooperation.

Suggested Citation

  • Capannelli, Giovanni & Lee, Jong-Wha & Petri, Peter, 2009. "Developing Indicators for Regional Economic Integration and Cooperation," Working Papers on Regional Economic Integration 33, Asian Development Bank.
  • Handle: RePEc:ris:adbrei:0033

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    References listed on IDEAS

    1. Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
    2. David Hummels & Volodymyr Lugovskyy, 2006. "Are Matched Partner Trade Statistics a Usable Measure of Transportation Costs?," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 69-86, February.
    3. Basim Makhoul & Samuel Otterstrom, 1998. "Exploring the accuracy of international trade statistics," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1603-1616.
    4. Pomfret, Richard & Sourdin, Patricia, 2009. "Have Asian trade agreements reduced trade costs?," Journal of Asian Economics, Elsevier, vol. 20(3), pages 255-268, May.
    5. Zafar Mahmood & Mohammad Azhar, 2001. "On Overinvoicing of Exports in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(3), pages 173-185.
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    Cited by:

    1. Boubakri, Salem & Guillaumin, Cyriac, 2015. "Regional integration of the East Asian stock markets: An empirical assessment," Journal of International Money and Finance, Elsevier, vol. 57(C), pages 136-160.
    2. Hong Bum Jang, 2011. "Financial Integration and Cooperation in East Asia: Assessment of Recent Developments and Their Implications," IMES Discussion Paper Series 11-E-05, Institute for Monetary and Economic Studies, Bank of Japan.
    3. Masahiro Kawai & Peter J. Morgan, 2014. "Regional financial regulation in Asia," Chapters,in: New Global Economic Architecture, chapter 6, pages 112-147 Edward Elgar Publishing.
    4. Morgan, Peter J. & Lamberte , Mario, 2012. "Strengthening Financial Infrastructure," ADBI Working Papers 345, Asian Development Bank Institute.
    5. Schou-Zibell, Lotte & Madhur, Srinivasa, 2010. "Regulatory Reforms for Improving the Business Environment in Selected Asian Economies - How Monitoring and Comparative Benchmarking Can Provide Incentive for Reform," Working Papers on Regional Economic Integration 40, Asian Development Bank.
    6. Rigg, Robert & Schou-Zibell, Lotte, 2009. "The Financial Crisis and Money Markets in Emerging Asia," Working Papers on Regional Economic Integration 38, Asian Development Bank.
    7. Moon, Woosik, 2013. "Cross-Border Price Differentials and Goods Market Integration in East Asia," ADBI Working Papers 426, Asian Development Bank Institute.
    8. Capannelli, Giovanni & Filippini, Carlo, 2009. "East Asian and European Economic Integration: A Comparative Analysis," Working Papers on Regional Economic Integration 29, Asian Development Bank.
    9. Kiichiro Fukasaku & Bo Meng & Norihiko Yamano, 2011. "Recent Developments in Asian Economic Integration: Measuring Indicators of Trade Integration and Fragmentation," OECD Science, Technology and Industry Working Papers 2011/3, OECD Publishing.
    10. Madhur, Srinivasa & Wignaraja, Ganeshan & Darjes, Peter, 2009. "Roads for Asian Integration: Measuring ADB's Contribution to the Asian Highway Network," Working Papers on Regional Economic Integration 37, Asian Development Bank.
    11. Woosik Moon & Yeongseop Rhee, 2012. "Asian Monetary Integration," Books, Edward Elgar Publishing, number 14191.
    12. repec:agr:journl:v:3(612):y:2017:i:3(612):p:51-62 is not listed on IDEAS
    13. Warwick McKibbin & Waranya Pim Chanthapun, 2009. "Exchange Rate Regimes in the Asia-Pacific Region and the Global Financial Crisis," CAMA Working Papers 2009-30, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    14. Dupont, Cédric, 2011. "What role for regional economic organizations in a fragmented trade world? The case of ASEAN," Papers 242, World Trade Institute.
    15. Chin, Gregory, 2012. "Responding to the Global Financial Crisis: The Evolution of Asian Regionalism and Economic Globalization," ADBI Working Papers 343, Asian Development Bank Institute.

    More about this item


    Regional integration; economic cooperation; East Asia;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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