Asia Pacific Economic Co‑Operation (APEC)

Abstract

The emergence of the new process of Asia Pacific Economic Co-operation (APEC) since early 1989 has been a significant development for a vast region which accounts for almost half the world economy. The process is designed to provide an increasingly effective means of expressing the common interests of a diverse group of economies from Northeast and Southeast Asia, Australia, and New Zealand together with their major trading partners across the Pacific ? the United States and Canada. APEC and its future direction is particularly important for the ASEAN economies, who represent half of the current participants in the process. The views of ASEAN (Association of Southeast Asian Nations) have been important in defining the nature of the new process and its guiding principles. It provides an important forum for presenting ASEAN's economic priorities to a broader group of regional economies in a constructive, non-confrontational environment. Following a brief description of the economic setting and origins of APEC, this paper reviews developments to date and some challenges for the future. The Setting During the last thirty years, there has been a dramatic economic transformation in the Asia-Pacific region, leading to remarkable improvements in living standards and economic strength. Japan has led the way towards prosperity, but there are similar success stories with the same potential for future prosperity for Hong Kong, Singapore, the Republic of Korea (ROK), Taiwan and, more recently, for an in creasing part of Southeast Asia. The growth record of the People's Republic of China (PRC) in the decade to 1989 has also been impressive. The success of these Western Pacific economies has been based on good eco nomic management and high saving rates which allowed these economies to invest massively in human and physical capital, leading to spectacular and sustained increases in productivity. Success has also stemmed from the ability and willingness to take advantage of changing international market opportunities. But, perhaps most importantly, the rapid sustained growth of these economies has been due to a relatively open multilateral trading system which has prevailed during recent decades. While the system of international trade under the General Agreement on Tariffs and Trade (GATT) is deficient in several important respects, it has made it possible for Japan and other Western Pacific economies to exploit their comparative advantage. Success in exporting, initially of light manufactures, followed by an