Dynamic Asian Economies Research Articles

Can Developing Countries ‘Catch Up’ with Weak S&T Eco-Systems: Some Insights from Dynamic Asian Economies

The post-war era, particularly from the mid-1980s, can be seen as a turning point for various Asian countries. Japanese success in industrialisation based on technology transfer from the industrialised West and evolution of unique endogenous scientific and technological capacities led scholars to conceptualise ‘late industrialisation’ and ‘catching up’ strategies. In a large measure, the ‘East Asian Miracle’ led to some erroneous misconceptions on science, technology, and innovation (STI) policies. Various writings and commentators from Africa, Asia and Latin America advocated to follow the path of East Asian Dragons. These writings begun to assume that countries can build innovation systems or dynamic technological sectors of economy within their respective countries, without paying much attention to building and strengthening science and technology (S&T) eco-systems. There are now clear STI policy signals which point to the significance of building science and technology systems before fully embarking on innovation policies. Drawing on some exemplary cases, this essay will explore the importance of S&T systems in the context of developing countries.

Global Imbalances and EU Core-Periphery Division: Institutional Framework and Theoretical Interpretations

This article places the core-periphery division in the European Union (EU) within the framework of global imbalances and the dramatic geopolitical changes which have affected them in the past decades. These changes, which have been shaping the new world order, amount to the restructuring of developed economies with the engulfing of manufacturing by the financial sector; the shift in the geography of industrial activity resulting from the increased outsourcing and offshoring of production and increasing services; the transfer of competitiveness from West to East, to dynamic Asian economies, notably China; the emergence of chronic trade and financial imbalances in the global system, leading to the “debt-fuelled growth” of many advanced economies. The above developments, facilitated by free trade market reforms and enhanced by the financial crisis of 2008, threaten economic and political dominance of the West, particularly the US, and therefore the existing core-periphery pattern. A similar pattern of developments has been taking place within Europe (through the transfer of industrial production from the West to the East) which implies changes to the old European core-periphery pattern. The article approaches critically and qualitatively the above issues, by examining the convergence trends among EU member states and the possible factors underlying them, as well as a number of theoretical approaches that interpret spatial inequalities and core-periphery patterns.

THE ROLE OF THE STATE IN SINGAPORE: PRAGMATISM IN PURSUIT OF GROWTH

This paper looks at how government intervention shapes the evolution of the Singapore economy and accounts for its successes and failures over the past 50 years. Compared with other dynamic Asian economies, the Singapore government's approach to intervene in the economy is both more extensive and more intrusive, but with a narrow focus on GDP growth and surplus accumulation as the primary objectives. The ruling government's near complete dominance in politics has enabled it to mobilize resources to create the preconditions for strong GDP growth and high savings. But the impact on the broader development of the economy and the long term sustainability of growth is less obvious. High GDP growth and strong savings have been achieved without developing the inherent production and indigenous innovation capacity, securing a larger hinterland and providing a less skewed income distribution and higher quality of life for residents. As the economy enters a new phase where more complex and multi-faceted development is needed, the Singapore government will require more than its vaunted competency in mobilizing resources to deliver the outcome.

The growth path of the dynamicAsian economies

The rapid and sustained growth of severalAsian economies led researchers, policymakers, and decision‐makers in the world of international business to search for a plausibleAsian model of growth. Numerous explanations of the dynamic growth in Asia have been put forward, including the ‘new structuralist’ approach proposed by Lin (2012). This paper examines the various explanations of what these countries did to unleash their growth potential. Industrial policy and market intervention are two such explanations. While the dynamicAsian economies did not flout theWashingtonConsensus, they adapted it in different ways. The policies that they followed under theBeijingConsensus allowed them to proactively follow pro‐business policies. They also exploited the concepts of economic statism or state capitalism, which became an integral part of what became known as the ‘Asia model’.

China and the Asian Economies: mutual acceptance, economic interaction and interactive dynamics

The objective of this article is to explore the economic relationship between China and the surrounding dynamic Asian economies. It delves into China's influence over the Asian economies and whether this relationship has evolved in a market- and institution-led symbiotic manner. The three principal channels of regional integration analyzed in this article are trade, FDI and vertically integrated production networks. Another issue that this article explores is the so-called China ‘threat’ or ‘fear’ in Asia. The China threat implied that China was crowding out exports from the other Asian economies in the world market place. Also, as China became the most attractive FDI destination among developing countries, it was understood that China was receiving FDI at the expense of the Asian economies. These concerns were examined by several empirical studies and the inference was that they were exaggerated. The article concludes that China methodically expanded and deepened its economic ties with its regional neighbors. At the present juncture, China's integration with the surrounding Asian nations is deep. Both China and its dynamic Asian neighbors have benefited from this synergy.

China’s Contribution to Recent Convergence and Integration among the Asian Economies

I. IntroductionTwo relevant and interrelated economic realities are as follows: First, the People's Republic of China (hereinafter China) in 2013 is a large economy in both absolute and relative terms. Over the three decades of macroeconomic reforms and the resulting dynamism turned it into the largest regional economy in mid-2010. Second, the recent economic transformations in China and the surrounding dynamic Asian economies have been nothing short of thoroughgoing. This group of Asian economies has turned into the most rapidly growing in the global economy. During and after the global financial crisis (2008-09), Asian economy proved to be a compelling and credible force in the global economy. It not only led the global economic recovery from what is being termed the Great Recession but also contributed to it (Das, 2011a). According to Shinohara (2010) it provided a pull force to the global recovery. Asia emerged from the global financial crisis as a growth driver and an anchor of stability of the global economy.Over the preceding three decades, the mutual relationship of China and surrounding Asian countries has evolved in a pragmatic and synergetic manner. This article delves into their process of progressive economic interaction. The objective of this article is to examine how China is influencing its neighboring Asian economies and to see how their economic relationship is developing into a market-led, private sector driven symbiosis. The principal issue that is being addressed in this article is how private business firms and multinational enterprises (MNEs) in the region, driven basically by profit maximizing motives, are interacting with each other and in the process bringing the economies close together and integrating Asia. Trade, foreign direct investment (FDI) and regional and global production networks has been operating as the principal channels of market-driven or de facto regional integration among the Asian and Chinese economies. In this kind of regional integration business firms reach across national boundaries, expand and coordinate trade and investment, creating larger and integrated markets. No formal or officious agreements are required for de facto regional integration.II. Asian Crisis Causing China's Strategic Policy ShiftThe Asian crisis that started in July 1997 was a watershed point in China's relationship with its Asian neighbors. This was a learning-by-doing phase for the apex Chinese hierarchy, and they treated economic growth and security related issues separately. The Asian crisis was a revelation to the Chinese policy makers revealing that economic wellbeing of China and domestic economic stability were intertwined with what would happen to the surrounding Asian economies (Zhengyi, 2004). This revelation turned policy makers' attention towards its dynamic Asian neighbors and strengthened the national and regional link. Their understanding regarding the significance of engagement with the regional economies grew.In general, this was a period when a sense of regional identity and seeking efforts for regional resolutions to regional problems became strong among the Asian economies. A clear evidence of this fact was the informal Kuala Lumpur meeting of the ASEAN leaders with the top political leaders of China, Japan and Korea in December 1997. This was the genesis of the concept of the ASEAN-Plus-Three (APT). This was the newest idea in the regional economic governance.The APT concept progressed further, and in May 2000 during the Finance Ministers' meeting of the APT countries held in Chiang Mai, Thailand, the Chiang Mai Initiative (CMI) was put together. This was an innovative initiative of a network of bilateral swaps intended for mutual assistance at the time of any future crises. The APT countries agreed to draw on each other's reserves to cover sudden outflows of foreign currency. The regional economies concurred to help and support each other through a network of currency swaps. …

Exchange rate movements and foreign direct investment (FDI): Japanese investment in Asia, 1987–2008

The paper estimates the impact of exchange rate movements on foreign direct investment (FDI). By using the panel data of Japanese FDI flows to nine dynamic Asian economies during 1987–2008, the paper finds that (i) FDI declined with a depreciation of the yen against host country currencies; (ii) it increased with exchange rate volatility; and (iii) it was little affected by the Asian financial crisis, especially when disguised financial flows were removed from the data. A novel result concerns the negative response of FDI to the third moment of monthly exchange rate changes: the volume of FDI was smaller when the distribution was positively skewed (i.e., when the yen was biased towards relatively large depreciation shocks). If skewness proxies for expected mean-reverting changes, this supports the idea that source country investors care about the future stream of revenues and returns denominated in their own currency. These results are robust, with other standard control variables having statistically significant coefficients with expected signs.

Five Paradoxes of China; Beginning of New Era with CPS-China

Since the introduction of the open door policy -so-called‘Deng Xiaoping Reform’ after 1978, its economy has been growing progressively.Moreover, it seems to be following the same processes that other Dynamic Asian Economies, the‘4 Little Tigers’ and ASEAN4, have gone through these decades. More importantly, emerging China as the‘world factory’is particularly significant not only for an Asianpattern of economic growth but also for the structural change of the worldwide political economy.It looks apparently as though China came on the same line of driving force as the other DAEs.However, deliberating implications of structural changes brought by the entry of China into the Asian and world economy, this means that thebeginning of a new era with the advent of the new Continental Power States (CPS) of China in Asia as the US for the post-war regime, and the transfer to completely a different system of international relations with the end of the previous APEG process.CPS-China has, on the one side, homogeneity with other Asian countries and heterogeneity toCPS countries such as the US and EU, and vice versa on the other.It is very clear that China has Asiatic homogeneities in state-bureaucracy system regardless of whether it is socialistic, economic development with anunlimited-supply of labor, export-led industrialization with a leap-step type of technological transfer and development.The heterogeneities are; (1) CPS has the deep and widepossibility for development of inside hinterland of the CPS, so-called‘Domestic Colonization’.‘Domestic Colonization’effectively becomes the spring board for new industry, as seen in the USA since the '30s.(2) CPS has an emerging large scale of inter-states and regional linkage in CPS by high-way networks just like the US since the 50s and EUsince the 60s, accompanying with today's simultaneous progressive development of IT networks.(3) CPS is a federal nation with multi-states, and an agri-power with well endowed natural resources, and has multi-credits of foreign trade matrix of manufactured products, introduction of top-down technology development by federal governmental policies in the process of emerging CPS- applicable to the US as before -.Intense change in China has threatened the previous economic models of growth to change the fundamental prepositions.I named these changes the‘Five Paradoxes of China’.(1) In China, significant thought has been used that its huge population should be a‘resource of wealth, ’which is opposite to India, even though they has the common social issue of surplus of population, which causes unemployment and poverty by rapid mechanization.The exception in the world history is China's experience of progressive economic growth with high-GINI co-efficiency and huge emigration.(2) Unlike the USSR experiences, the socialist China has been coming in for both of‘Dividends of Cold War’and‘Dividends of Peace’or‘Collapse of Cold-War Regime.’ (3) There is no historical example of transformation of a socialistic country to be a‘socialist modern fiscal state’but China.We should see it as that it is just under the process of grand experimentation of Asian type of socialism by CPS-China.(4) The turning point for development should depend on big projects for development of the middle and western China, and moreover the development for heavy industries of eastern and northern, under the initiative of joint power of state-and private capital including foreign capital and businesses.On the other hand, for the other Asian countries, China is becoming a big market for their manufacturing, primary products and is replacing the role of the US.

Globalization, Comparative Advantage, and Europe's Double Competitive Squeeze

The past decade has witnessed an increasingly rapid tendency toward globalization in the world economy, and this has significantly affected the comparative advantage and international competitiveness of nations. This paper examines the effect of globalization on the comparative advantage and international competitiveness of Europe in manufactured goods as a whole, in high technology goods, and in office equipment and telecommunications during the past two decades. In particular, the paper evaluates the view that Europe is facing a serious double competitiveness squeeze – in high-technology goods from the United States and Japan and from the bottom in simpler manufactured goods from emerging developing countries, especially the Dynamic Asian Economies. This view is based on the over-regulation and rigid labor markets prevailing in most European countries. The paper shows, however, that this view is not generally correct.

Exchange Rates and the Trade Balance for Dynamic Asian Economies—Does the J-Curve Exist for Singapore, Malaysia, and Korea?

The purpose of this article is to examine the relationship between the real trade balance and the real exchange rate for bilateral trade in merchandise goods between Singapore, Korea, and Malaysia and the USA and Japan on a quarterly basis over the period 1970 to 1996 using the partial reduced form model of Rose and Yellen (1989) derived from the two-country imperfect substitutes model. With the exception of Korean trade with the USA, and in line with recent work using a similar methodology, our findings suggest that the real exchange rate does not have a significant impact on the real trade balance, and for Singapore and Malaysia we can find no persuasive evidence for J-curves. For Korea, however, the data were consistent with some J-curve effects with respect to both Japan and the USA. Moreover, it is possible that for Korea these effects were being masked or muted by “small” country pricing of exports in foreign currency, but there was no evidence that imports subsequently fell as the lag length on the real exchange rate increased, which would be required to support a strict interpretation of the J-curve.

The export competitiveness of dynamic Asian economies 1983‐1995

Compares changes in the competitive position of six Dynamic Asian Economies (DAEs) – Singapore, Thailand, Malaysia, Korea, Taiwan and Hong Kong – exporting to the USA, Japan and the European Union (EU) between 1983 and 1995. Dynamic shift‐share methods are applied to two digit data for the top five manufactured exports to the USA and the EU, and the top four in the case of Japan. Findings emphasise the magnitude of the structural transformation which occurred over this period as the emerging DAEs such as Malaysia and Thailand became more competitive across a broad range of manufactured goods relative to the older DAEs, while the latter endeavoured to switch into higher value‐added manufacturing and services or new markets, or to establish manufacturing facilities overseas as a substitute for exports.

The export competitiveness of dynamic Asian economies, 1986–93: A shift‐share analysis

This paper uses shift‐share analysis to compare changes in the competitive position of six dynamic Asian economies (DAEs) ‐ Singapore, Thailand, Malaysia, Korea, Taiwan and Hong Kong ‐ exporting to the USA, Japan and the Economic Union (EU) between 1986 and 1993. Two‐digit data are selected for the top five manufactured exports to the USA and the EU, and the top four in the case of Japan. Our findings support the view that the older DAEs have become less competitive over this period in manufactured goods relative to emerging countries such as Malaysia and Thailand.

Regional and global developments in electronic and cross-border payments

This paper examines the features of electronic and cross-border payments arrangements in those regions of the world where significant activity is observed. The developments in the European Union have many insights to offer for regional integration also in North America. Developments elsewhere—particularly in the Dynamic Asian Economies and in Australia-New Zealand, South Africa, and Eastern Europe—indicate that central banks are playing an active role in promoting electronic payments, especially by way of RTGS systems for high-value funds transfers. They are also devising more refined arrangements for the provision of intra-day liquidity, that balance the requirements of risk-mitigation and of lowering the cost of funds to banks.

Predictive Control Policies Between Advanced Regional Economies and Growing Asian Economies: NAFTA, EU Japan vs. Asian NIES and ASEAN

This paper deals with the future predictability of the interdependent macroeconomies of the major economic regions, US, Japan and EU by using interacting control policy. Firstly, a proto-type modified Mundell-Fleming macroeconomic models with interacting macro-economic variables is constructed. Secondly, the predictive control policy is formulated by logarithm-type with explaining the constant growth rate policy converted from the linear quadratic-type optimal stabilization policy. Thirdly, the estimated results of the annual macroeconometric models of US, EU Japan, Asian NIES and ASEAN from 1970-1992 are shown by modifying a proto-type macroeconomic model described in the earlier section. Fourthly, policy simulations are carried out for the future performances for advanced regional economies driven by the dynamic Asian economies during 1994-1999 as ex-ante simulation. Finally, some comments and the future extensions will be stated on this method.

Introduction: East Asian governments: Governing the market, governing the media?

The high-performing economies of east Asia measured an unprecedented growth during one generation. This success is by some observers described as the deast Asian miracled, but a recent report by the World Bank pointed out that there was nothing miraculous about rapid growth of the dynamic Asian economies. Much of the success was due to the fact that the governments got their deconomic fundamentalsd right. A stable macroeconomic environment, accumulation of physical and human capital, and strong and effective marketoriented policies have been key factors.’ 1

Implications for the Asia-Pacific region of coordination of macroeconomic policies in the OECD

The empirical evidence on the gains from coordinating macroeconomic policies in the major economies suggests that the gains to these economies of coordination are quite small. In an earlier study, Sachs and McKibbin found that although this was the case in the industrial economies, there were potentially substantial gains to the developing countries from coordinating policies in the Organization for Cooperation and Development in the case of a global disinflation, as was experienced in the early 1980s. The purpose of the current paper is to explore this issue further by focusing on the differential impacts on the dynamic Asian economies (Hong Kong, Korea, Singapore, Taiwan) and a subgroup of ASEAN nations (Indonesia, Malaysia, Philippines, and Thailand) of coordinated versus uncoordinated policy responses in the OECD. We focus on the transmission of a major fiscal adjustment in the United States under alternative policy responses in the OECD: a money rule, nominal income targeting, noncooperative monetary policy, and cooperative monetary policy, the latter two regimes being defined by solving for dynamic game equilibria given welfare functions in the industrial economies. We find that when the industrial economies either noncooperatively or cooperatively adjust monetary policy in the face of a fiscal contraction in the United States, they tend to follow expansionary monetary policy, which results in the export of U.S. unemployment to the two Asian regions under the current policy regimes in those regions.

Development strategies and economic performance of the dynamic Asian economies: Some comparisons with Latin America

Development strategies and economic performance of the dynamic Asian economies: Some comparisons with Latin America