Implications of Global Imbalances and Rebalancing for East Asia-Latin America Interdependency

Abstract

Danger to export-oriented East Asia and Latin America lurked closer in the form of “global imbalances.” East Asia and Latin America are at crossroads in global financial crisis. The common experiences of serious global imbalances and the financial and real sector challenges from imminent rebalancing let them reflect on their macroeconomic soundness and new trade trend between the two regions. Despite the dynamism of interregional trade in recent years, intra-industrial trade pattern has not evolved much throughout the past 20 years, which implies the level of integration between the two regions. There are several policy initiatives to accelerate the institutionalization of trade interdependency in the form of FTAs, but financial and monetary sector cooperation has ended up as symbolic and rhetoric stage by far, or falls short of rigorous development with intensive attention.