Factory Asia and Asia-Pacific Economic Regionalism: The Connectivity Factor Revisited

Abstract

With its strong economic, technological and innovative potential, Asia-Pacific has the potential to drive the global economy. The “engine” of this drive is the system of supply-value chains within the vertically-organized Asia-Pacific conglomerates specializing in producing value-added intermediate goods and services. In the academic literature, this phenomenon is conceptualized as “Factory Asia”. To unlock Asia-Pacific’s true potential, the implementation of measures embracing regional infrastructural, institutional and people-to-people connectivity becomes the key prerequisite for success. The initiatives of Asia-Pacific economic regionalism covering the trans-Pacific and the East Asian/South Asian geographical domain—the Free Trade Area of Asia-Pacific (FTAAP), the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP)—have different possibilities to develop the connectivity agenda. While FTAAP and potentially RCEP can stimulate these processes, for TPP it is highly problematic. This broadens the possibilities for Russia to get more involved in Asia-Pacific economic cooperation with an emphasis upon technologically-advanced exchanges within Factory Asia. Strengthening regional connectivity is the key component in Russia’s agenda in multilateral cooperation with Asia-Pacific countries, which was exemplified by Russia’s APEC agenda. While at present the resource-intensive production in Russia’s Far East is prioritized, the multiplier effect produced by the Territories of Advanced Development on the industrial and innovative sectors of Russian economy can help Russia to enter Factory Asia.