East and South Asia in Global Trade and Economic Development

Abstract

This paper measures the integration of the East Asian and South Asian economies in the global economy and their potential for regional and global economic integration through merchandise trade. East Asian economies are shown to be achieving much more of their potential trade than South Asian economies, both in terms of intra-regional trade but also in trade with the rest of the world. South Asia realises more of its potential trade with trade partners outside the region than within its own region. East Asian economies in general achieve more of their trade potential among East Asian partners than globally. India is shown to be achieving more of its trade potential with East Asia, most prominently with China, than within its own region. The Sino-Japan, India-Pakistan and cross-straits Taiwan-mainland China bilateral relationships are examined to explain that integration into the global economy, starting with deep regional economic integration, has allowed economic relations to dominate and constrain difficult political relations in East Asia while in South Asia, adverse political relations have hampered development of the economic relationships. There is also evidence of trade in the less integrated South Asia being affected more by the ups and downs of political relations than in East Asia.