Structural change in a globalized Asia: macro trends and US policy challenges

Abstract

In this paper, we focus on directional and structural change in developing Asian trade patterns, with a focus on economic interaction with the United States (and using the EU as a benchmark). Several important results from the analysis are that: (1) while private-sector-led regional integration in Asia has increased for most developing Asian countries (in some cases, impressively), the United States remains the region’s single most important export market; (2) the trade structure of developing Asian countries has changed significantly over the past decade, a result that resonates with the literature on structural transformation in developing Asia; (3) the economic dynamism of developing Asian exports is consistent with the changes in trade with the United States (and the EU); and (4) SITC 7, which is the most sophisticated sector of the SITC groups, has become the most important sector for most developing Asian exports (and imports), and the US market has been a key protagonist in this process. In addition, the paper considers emerging policy challenges in developing the US–Asian economic relationship at various levels, using the Viet Nam–US Bilateral Trade Agreement (BTA) as an ex post case study and considering a number of ex ante initiatives that are currently being developed.