Abstract
This paper provides trade flow projections for major Asian developing economies (ADEs) for the next two decades against the backdrop of an in-depth analysis of policy shifts and trade patterns over the past 4 decades. Merchandise trade of ADEs has grown at a much faster rate in the global context, with a distinct intraregional bias. Global production sharing has become a unique feature of the economic landscape of the region, with the People’s Republic of China playing a pivotal complementary role as the premier assembly center within the regional production networks. According to the projections made within the standard gravity modeling framework, total real nonoil trade of ADEs would increase at an average annual rate of 8.2 during the next two decades, with a notable convergence of individual countries’ rates to the regional average. The share of intraregional trade in total nonoil trade would increase steadily from 53% in 2010 to 58% in 2030. The trade-to-GDP ratio would increase from 39.4% and 74.4% between these 2 years. These predictions need to be treated with caution as they are based on the assumption that the trade structure pertaining to the estimation period will remain unchanged in the next 2 decades.
Highlights
The purpose of is paper is two-fold: to examine emerging trends and patterns of merchandise trade in Asia over the past 4 decades and to generate projections for Asian trade through to 2030 using the standard gravity model of international trade
Developing Asian economies have become increasingly open to foreign trade and investment over the past 4 decades, but still there are notable contrasts patterns between East and South Asia, between the People’s Republic of China (PRC) and India, notwithstanding converging growth rates
Global production sharing has become an integral part of the economic landscape of East Asia
Summary
The purpose of is paper is two-fold: to examine emerging trends and patterns of merchandise trade in Asia over the past 4 decades and to generate projections for Asian trade through to 2030 using the standard gravity model of international trade. Trends and patterns of merchandise trade of the ADEs are examined in the context of the commercial policy environment, growth and structural change in these countries, and institutional and technological factors governing international production and global trade. Relating to the latter, a key theme running through this paper is the implications of global production sharing2—that is, the geographic separation of activities involved in producing a good (or service) across two or more countries—for rapid trade growth in these countries. The final section summarizes the main findings and draws out some general inferences
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