characteristics and prospects for east asian economic integration: a korean perspective

Characteristics and prospects for East Asian economicintegration: a Korean perspective

Chang Jae Lee

Published online: 7 October 2008

� Springer Science+Business Media, LLC. 2008

Abstract In terms of economic regionalism, East Asia lags far behind other major

regions. It was only recently that institutionalization of regional economic inte-

gration was started among East Asia countries. However, functional economic

integration has continuously proceeded among East Asian economies even without

a region-wide RTA. This paper analyzes the trends of functional economic inte-

gration both in terms of trade and foreign direct investment (FDI) among East Asian

economies, and reviews recent developments of economic regionalism in East Asia.

It also addresses the prospects for a region-wide FTA in East Asia and draws some

policy implications for East Asian countries at this juncture of economic region-

alism in East Asia.

Keywords East Asia � Economic integration � FTA

JEL Classification F15

1 Introduction

Economic regionalism, which started in Europe in the 1950s, became a worldwide

phenomenon in the 1990s alongside globalization. In light of the US abandonment

of its long-standing opposition to regionalism in the late 1980s, many developing

and transition economies adopted regionalism in the 1990s. Consequently, most

Earlier versions of this paper were presented at the APEC 2004 Economic Outlook International

Symposium on ‘‘FTAs/RTAs in the Asia Pacific Region,’’ in Santiago, Chile, 12-13 August 2004, and at

the International Conference ‘‘APEA 2005’’ organized by the Asia-Pacific Economics Association at

Hitotsubashi University, Tokyo, Japan, 30-31 July 2005

C. J. Lee (&)

Korea Institute for International Economic Policy (KIEP), Seoul, Korea

e-mail: [email protected]

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Econ Change Restruct (2008) 41:331–344

DOI 10.1007/s10644-008-9055-3

industrialized and developing countries believe in the benefits of regionalism, and

many belong to more than one regional trade agreement (RTA). As of 15 June 2006,

there were 197 RTAs in force and notified to the GATT/WTO.1

Regionalism continues to prosper in the first decade of the 21st century. The EU

welcomed 10 new member countries on 1 May 2004 to become a 25-member union,

while 34 countries in the Americas have been pursuing a Free Trade Area of the

Americas. In addition to such continent-wide economic integration movements,

many bilateral FTAs have been concluded between like-minded countries.

In terms of economic regionalism, East Asia lags far behind other major regions.

It was only recently that the institutionalization of regional economic integration

among the East Asian countries began. In the wake of the Asian financial crisis, the

basic institutional framework for regional economic cooperation was established.

The first annual ASEAN?3 (China, Japan, and Korea) Summit Meeting was held in

Kuala Lumpur in December 1997. Furthermore, some East Asian countries

belatedly joined the free trade agreement (FTA) bandwagon in the early 2000s.2 In

particular, Singapore, Japan, Korea, China, and Thailand have concluded many

bilateral FTAs, some of them with East Asian countries. Thus, the debate on a

region-wide FTA began. It is interesting to note that functional economic

integration has proceeded continuously between the East Asian economies even

without a region-wide RTA.

In this paper, first, the trends of functional economic integration both in terms of

trade and foreign direct investment (FDI) among East Asian economies will be

analyzed. This will be followed by a review on recent developments in economic

regionalism in East Asia. This paper will also address the prospects for a region-

wide FTA in East Asia. Finally, at this juncture of economic regionalism in East

Asia, some policy implications will be drawn for East Asian countries.

2 Functional economic integration in East Asia

2.1 Trends of intraregional trade among East Asian economies

The importance of intraregional trade among East Asian countries has risen

substantially since 1990. The share of intraregional trade among the ASEAN?3

countries increased from 28.9% in 1990 to 38.9% in 2003. As shown in Fig. 1, it

continued to rise between 1990 and 2003 except during the Asian financial crisis

period (1997–1998).

As a result, the gap between the share of intraregional trade among the

ASEAN?3 countries and those of the EU and NAFTA shrank significantly from

1990–2005. Nevertheless, it was still much lower than those of the EU or NAFTA,

which were 58.2 and 43.0%, respectively, in 2005.

1 http://www.wto.org/english/tratop_e/region_e/region_e.htm.2 Before these new waves of FTAs, three preferential arrangements (the Bangkok Agreement, the Laos-

Thailand Preferential Arrangement, and AFTA) were the only regional trade agreements (RTAs) in East

Asia.

332 Econ Change Restruct (2008) 41:331–344

123

http://www.wto.org/english/tratop_e/region_e/region_e.htm

However, the share of intraregional trade among the ASEAN?5 economies

(including Hong Kong and Taiwan) grew from 40.6% in 1990 to 52.0% in 2005.

Thus, in 2005, the share of intraregional trade among the ASEAN?5 economies

was still lower than that of the EU, but significantly higher that that of NAFTA (see

Fig. 2).

However, since the bigger the group, the higher the share of intraregional trade,

the share of intraregional trade cannot be a good measure of regional trade

concentration. To obtain a better measure of regional concentration, we need to

adjust the intraregional trade share by the region’s share of world trade to obtain a

simple intraregional trade concentration ratio.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

ASEAN+3 NAFTA EU

Fig. 1 Share of intraregional trade in ASEAN?3, NAFTA, and the EU. Source: Appendix Table 1

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

ASEAN+5 NAFTA EU

Fig. 2 Share of intraregional trade in ASEAN?5, NAFTA, and the EU. Source: Appendix Table 2

Econ Change Restruct (2008) 41:331–344 333

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Figure 3 indicates the movements of simple intraregional trade concentration

ratios for the EU, NAFTA, and ASEAN?3. For 1990–2005, the intraregional trade

concentration ratio of ASEAN?3 increased from 1.83 to 1.94, although it decreased

in some years. During the same period, it was higher than that of the EU, while it

was in general lower than that of NAFTA.

When it comes to the simple intraregional trade concentration ratio for

ASEAN?5, it fluctuated between 1.86 and 2.16, changing from 2.04 in 1990 to

2.08 in 2005 (see Fig. 4). During the same period, it was higher than that of the EU,

whereas it was in lower than that of NAFTA, except in 2000.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

ASEAN+3 NAFTA EU

Fig. 3 Simple concentration ratio of intraregional trade in ASEAN?3, NAFTA, and the EU. Source:Appendix Table 1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

ASEAN+5 NAFTA EU

Fig. 4 Simple concentration ratio of intraregional Trade in ASEAN?5, NAFTA, and the EU. Source:Appendix Table 2


123

These figures clearly show that functional economic integration in terms of trade

was strengthened in East Asia during 1990–2005. Furthermore, even without a

region-wide trade arrangement, the intensity of intraregional trade among the East

Asian economies was actually stronger than that of the EU, although in general

lower than that of NAFTA.

2.2 Trends of intraregional FDI in East Asia

FDI differs from trade in two aspects. First, as shown in Figs. 5 and 6, FDI trends

were much more volatile than those of trade. Secondly, unlike trade, symmetric

situations are rare in bilateral relations. In other words, country A’s outward FDI to

country B is usually quite different from country B’s outward FDI to country A.

ASEAN?3’s share of intraregional FDI inflows rose from 26.6% in 1990 to

62.9% in 1995 before decreasing to 47.5% in 2003. In 1990, its share of

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0%

ASEAN+3 EU NAFTA

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Fig. 5 Share of intraregional FDI inflows in ASEAN?3, NAFTA, and the EU. Source: AppendixTable 3

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Year

Rat

io

ASEAN+3 EU NAFTA

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Fig. 6 Simple concentration ratio of intraregional FDI inflows in ASEAN?3, NAFTA, and the EU.Source: Appendix Table 5


123

intraregional FDI inflows was much lower than that of the EU and higher than that

of NAFTA. But the share of intraregional FDI inflows of ASEAN?3 was about the

same as those of the EU and NAFTA in 2003.3

However, when the size of each group’s total FDI inflows is taken into

consideration, the picture is quite different. For 1990–2002, the concentration ratio

of the intraregional FDI inflows was much higher than those of the EU and NAFTA.

In other words, considering the relative size of ASEAN?3’s FDI inflows, the level

of intraregional FDI inflows was more important than those of the EU and NAFTA.

3 Emergence of formal economic integration in East Asia

3.1 Recent developments

Along with the worldwide rise of regionalism, it was the Asian financial crisis that

prompted East Asians to seriously consider economic regionalism.

First, the basic institutional framework for regional economic cooperation was

established. In addition to the annual ASEAN?3 Summit Meetings, various

ASEAN?3 Ministerial Meetings and Senior Officials Meetings have been held

regularly since 2000.

Another significant development in the region was the creation of Summit

Meetings for the leaders of three Northeast Asian countries, China, Japan, and

Korea. It was within the ASEAN?3 framework that the dialogue channel between

China, Japan, and Korea developed. At the ASEAN?3 Summit Meeting in Manila

in November 1999, the leaders of the three countries had their first historic meeting.

Since then, this three-way summit has also become an annual event.4

Furthermore, some East Asian countries jumped on the FTA bandwagon in the

early 2000s. Among them, Singapore has pursued, by far, the most active FTA

policy. Singapore signed the Closer Economic Partnership Agreement with New

Zealand in November 2000 and the Economic Partnership Agreement with Japan in

January 2002, which was the first bilateral FTA among East Asian countries. Then,

Singapore concluded bilateral FTAs with EFTA,5 Australia, the US, Jordan, India,

Korea, and Panama, and formed the Trans-Pacific Strategic Economic Partnership

Agreement (SEP) with Brunei, New Zealand, and Chile. In addition, Thailand

signed FTAs with Australia and New Zealand.

The three Northeast Asian countries, Japan, Korea, and China, have also become

interested in bilateral FTAs. Japan signed FTAs with Singapore, Mexico, Malaysia,

and The Philippines. Korea signed FTAs with Chile, Singapore, and EFTA, as well

as a Trade in Goods Agreement with ASEAN (except Thailand). As for China, it

3 The trends of the share of intraregional FDI outflows also show a high volatility. For 1990–2003, the

share of intraregional FDI outflows increased from 13.9 to 39.0%, while those of the EU and NAFTA

changed from 60.2 to 32.2% and from 24.2 to 16.6%, respectively (see Appendix Table 4).4 Lee (2003). However, this trilateral summit was not held in 2005 because of aggravated political

relations among them.5 Switzerland, Iceland, Liechtenstein, and Norway are the members of the European Free Trade

Association.


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signed separate Closer Economic Partnership Arrangements (CEPA) with Hong

Kong and Macao, a Trade in Goods Agreement with ASEAN, and an FTA with

Chile.

Among them, there exist several bilateral FTAs among East Asian countries,

such as the Japan–Singapore EPA, the Korea–Singapore FTA, the ASEAN–China

FTA, the ASEAN–Korea FTA, the Japan–Malaysia EPA, the Japan–Philippines

EPA, the China–Hong Kong CEPA, and the China–Macao CEPA.

Apart from these FTAs, there are many ongoing FTAs, some under negotiation,

and others are still being researched.

On top of all this, the debate on an East Asia FTA (EAFTA) has also begun. In

fact, the East Asian Vision Group (EAVG), established following a decision reached

at the Hanoi ASEAN?3 Summit Meeting, recommended the formation of an ‘‘East

Asia Free Trade Area’’ in a report submitted to the leaders of ASEAN?3 on 31

October 2001. Then, the East Asia Study Group (EASG) also proposed the

formation of an EAFTA on 4 November 2002.

However, no serious effort had been made until the eighth ASEAN?3 Summit in

Vientiane, on 29 November 2004, which welcomed the decision by the ASEAN?3

Economic Ministers to set up an expert group to conduct a feasibility study on an

EAFTA. Following four workshops, the Joint Expert Group for Feasibility Study on

an EAFTA submitted its report ‘‘Towards an East Asia FTA: Modality and Road

Map’’ to the ASEAN?3 Economic Ministers, which was held on 23 August 2006.

Unfortunately, the ministers failed to put EAFTA on the economic cooperation

agenda in 2006 during the tenth ASEAN?3 Summit.

3.2 Motives behind the East Asian FTAs

The first wave of East Asian FTAs was caused by worldwide rising regionalism and

the Asian financial crisis. How can we explain the subsequent proliferation of FTAs

in East Asia?

The benefits of forming an RTA are well known. Through reciprocal concessions

on trade barriers, participants enjoy a larger market, permitting the achievement of

economies of scale. Another conventional economic motive is that a unified market

provides a more competitive environment for firms, thus raising economic

efficiency. There are also other motives, which are more political than economic.

Some countries participate in regional trade agreements to help lock in domestic

reform policies. Yet another objective is to raise the bargaining power of the

members in the international arena, including multinational trade talks and

international financial institutions. In addition, one cannot underestimate the

importance of strategic motives in regional economic integration. For instance, the

main motive of European integration was the prevention of a new European war,

and economic cooperation was the means to achieve this goal. Furthermore, a

possible rationale for the proliferation of regionalism is provided by Baldwin’s

domino theory of regionalism, which is based on the dynamics of domestic politics.6

6 Lee (2004); Baldwin (1999).


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Singapore’s active FTA policy is easy to understand. Given its very low level of

tariff rates and the economic difficulties of Southeast Asian countries in the wake of

the Asian financial crisis, Singapore chose to go global, and its FTA policy is one

mode of achieving this goal.

However, the motives of initial FTAs and their proliferation involving the major

Northeast Asian countries do not look as simple as Singapore’s. Therefore, it seems

necessary to examine the earlier attempts of Korea, Japan, and China at FTAs more

carefully, as well as the recent proliferation of East Asian FTAs.

First, although multilateralism remains the backbone of Korea’s trade policy, the

Korean government decided to consider regionalism in light of increasing

regionalism worldwide and chose to explore the possibilities of forming an FTA

with Chile in 1998. Following the preparatory meetings, the leaders of the two

countries declared the official launch of Korea–Chile FTA negotiations at the APEC

Summit Meeting in September 1999. Meanwhile, in October 2000, Japanese Prime

Minister Yoshiro Mori and Singapore’s Prime Minister Goh Chok Dong agreed that

the two countries should enter into formal negotiations with a view to concluding a

Japan–Singapore Economic Agreement for a New Age Partnership.7

Additionally, the Korea Institute for International Economic Policy (KIEP) and

the Institute of Developing Economies (IDE) in Japan started a joint study in 1999,

commissioned by their respective governments, on the implications of an FTA

between Korea and Japan. However, the study came short of producing a strong

recommendation for a Korea–Japan FTA.8

Then, China proposed forming an ASEAN–China FTA in 2001, and signed the

Framework Agreement on Comprehensive Economic Cooperation with ASEAN in

2002. China’s sudden interest in RTAs took many people and countries by surprise

and produced some new developments.

Japan signed a framework agreement between ASEAN and then started FTA

talks with several Southeast Asian countries and ASEAN. Japan also accelerated the

Japan–Korea FTA process, which has been under negotiation since December 2003.

Korea started FTA negotiations with Singapore in January 2004, and the Korea–

ASEAN FTA has been under negotiation since February 2005.

The initial FTA moves of Korea and Japan can be characterized as ‘‘me, too’’

regionalism,9 as they did not want to fall further behind in the worldwide rise of

regionalism.

However, the events following the start of Korea–Japan FTA talks can be better

explained, in our view, by a ‘‘new domino theory’’ that is based on the dynamics of

international politics. In fact, there has been a sort of competition between Japan

and China, as both are fearful of being left behind in the race to form FTAs with

other East Asian countries. Therefore, geopolitical reasons rather than economic

were the main underlying forces of the recent proliferation of bilateral FTAs among

the East Asian countries.

7 Lee (2004).8 ibid.9 Shott and Goodrich (2004).


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4 Prospects for an East Asian FTA

4.1 Rationales for an EAFTA

First, establishing an EAFTA would seem to be a natural reaction of East Asian

countries to the rise of worldwide regionalism, as it remains the only major

economic region without a region-wide RTA. Regionalism became a worldwide

phenomenon in the 1990s and continues to prosper in the first decade of the 21st

century. In particular, it is quite likely that we will see the emergence of two mega-

trade blocs: one in Europe and the other in the Americas, seen in Europe’s 2004

expansion and the 34 countries in the Americas working toward a Free Trade Area

of the Americas (FTAA).

Another rationale for an EAFTA comes from growing interdependence among

the East Asian economies. As mentioned earlier, the share of intraregional trade

among the ASEAN?3 countries increased from 28.9% in 1990 to 39.9% in 2005,

while the share of intraregional trade among the East Asian economies, including

Hong Kong and Taiwan, grew from 40.6% to 52.2%. Thus, East Asian economies

will benefit significantly from a region-wide FTA.

Thirdly, given the current trend of uncoordinated proliferation of bilateral FTAs,

there seems to exist a real risk that East Asian countries may face a ‘‘spaghetti bowl

effect’’ in the near future. An EAFTA encompassing the East Asian countries would

be more desirable than many bilateral FTAs with different rules of origin.

The 2001 EAVG report mentioned above describes its vision of an East Asian

Community and recommends the formation of an East Asia Free Trade Area well

ahead of the Bogor goals set by APEC. Based on this EAVG recommendation,

President Kim Dae-jung proposed that there should be efforts toward an East Asia

Free Trade Area at the Brunei ASEAN?3 Summit Meeting.10

4.2 Scenarios for an EAFTA

The most ideal path to lead to an East Asia FTA is to accelerate the East Asian

economic integration process through the existing ASEAN?3 framework (Fig. 7).

Although the ASEAN?3 process started only as a Summit Meeting, its institutional

framework has been strengthened by adding Ministerial Meetings and Senior

Officials Meetings. Yet, so far, it lacks even a formal institutional framework

comparable to APEC. The process to overcome this inherent weakness is being led

by ASEAN, while the three Northeast Asian participants act as guests.

Another possible path to an East Asia FTA is through a series of bilateral FTAs

(Fig. 8). The emergence and proliferation of Northeast–Southeast Asia FTAs or

FTAs within Northeast Asia may create an environment leading to the formation of

an East Asia FTA.

In addition, an East Asia FTA could theoretically be formed through a merger

between the existing AFTA and a newly created Northeast Asia FTA that included

China, Japan, and Korea.

10 Lee (2002).


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All the above scenarios are possible, but considering the recent developments in

bilateral FTAs, the paths to an EAFTA through a series of bilateral FTAs deserve a

more detailed examination. Among them, the most probable scenarios are as

follows: First, a series of ASEAN?1 FTAs will develop into an East Asia FTA.

Secondly, a Korea–Japan FTA, when realized, will create an environment directly

leading to an East Asia FTA. The latter could be achieved gradually, with the other

East Asian countries joining the former when they are ready. Thirdly, Korea forms

an FTA with China following a Korea–Japan FTA, thus creating an environment

leading to a China–Japan–Korea FTA or directly to an East Asia FTA.

However, despite the recent predominance of bilateral FTAs, the final stage of

the formation of an East Asian FTA is likely to be dealt with within the framework

of ASEAN?3. In this regard, the emergence of the East Asian Summit, which

includes Australia, New Zealand, and India in addition to the ASEAN?3 countries,

has made the situation more complex.

5 Policy implications

Out of the above bilateral FTA scenarios, only the second path would give Japan a

certain hub status for some time, while in the first and the third scenarios, both

East Asia Free Trade Area

ASEAN+3 Summit Bilateral FTAs AFTA

CJKFTA

East Asia Summit

Fig. 7 Paths toward an East Asia FTA

East Asia FTA

ASEAN + C JK FTA

CK FTA

ASEAN + J

ASEAN + K CJK FTA

Fig. 8 Paths toward an East Asia FTA through bilateral FTAs


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ASEAN and Korea may serve as a hub for a certain duration. Therefore, unlike

other regions, the race to become a hub is not likely to produce a negative hub-spoke

situation that is unfavorably balanced in favor of large economies. The quest to be a

hub on the part of several countries could serve as a catalyst for the creation of an

East Asia FTA and trade liberalization.

In the same vein, in our view, the proliferation of FTAs based on the dynamics of

international politics is not necessarily harmful to East Asia. At least in the initial

stages of East Asian economic integration, the geopolitical dynamics have

contributed to the formation of bilateral FTAs between East Asian countries.

However, when it comes to the formation of an EAFTA, the rivalry between China

and Japan may constitute a major stumbling block.

Therefore, the three Northeast Asian countries should not neglect the importance

of a China–Japan–Korea FTA in their pursuit of an EAFTA, even though, given the

current political relations among the three countries, a CJK FTA is not likely to be

pursued by the governments of the three countries in the near future.

In addition, it is high time to discuss EAFTA among the ASEAN?3 countries. In

this regard, ASEAN?3’s previous efforts have thus far not resulted in any concrete

developments, and as mentioned above, EAFTA will not be on the 2006 ASEAN?3

Summit Meeting agenda. Of course, consensus building may be difficult among the

13 countries. However, should there be political determination on the part of the

leaders, an independent process to form an EAFTA could be launched with a view

to forming an EAFTA.

Finally, what will be the effects of the proliferation of FTAs in East Asia and the

emergence of an EAFTA on APEC and worldwide trade liberalization, and what are

the policy implications for Korea?

According to the Bogor Declaration, APEC’s industrial economies should

achieve the goal of a free trade and investment area no later than 2010, and no later

than 2020 for developing economies. Although it is unclear at the moment whether

the first target of 2010 for the industrial economies can be met, the formation of an

East Asia Free Trade Area ahead of 2020 — say 2015 — will significantly raise the

chances of realizing this APEC goal.

Furthermore, in order to make trade liberalization within East Asia a building

block toward worldwide trade liberalization, the Korean government should pursue

the following policy directions.

First, along with ASEAN, Korea should play the role of facilitator in forming an

East Asian FTA. Given the size of their economies, Japan and China are natural

candidates for regional FTA hubs in East Asia. However, neither country can

become a true hub without forming an FTA with the other, which is not likely to

happen in the foreseeable future. So far, ASEAN has the most potential to become

an FTA hub in East Asia through a series of ASEAN?1 FTAs, while Korea’s

position still seems uncertain.

The Korean government must adopt an active FTA policy based on a proactive

liberalization policy. On the one hand, Korea should form an FTA with Japan,

China, and ASEAN, and on the other hand, it should also be active in promoting a

China–Japan–Korea FTA as well as an EAFTA. In addition, Korea should form an


123

FTA with the US, the EU, and other countries. In doing so, Korea would be able to

assume the role of link between a more liberalized East Asia and the world.

Second, East Asian countries must try to form high-quality FTAs. In particular,

given the size of the economies and the level of their economic development, a

Korea–Japan FTA is important. It must set high standards for other East Asian

FTAs, containing comprehensive elements, permitting great market access for

goods and services, with simple rules of origin and an accession clause. It must take

into consideration the fact that it will be open to other East Asian economies and/or

that it could serve as a template for other East Asian FTAs. However, there is a

danger. Given the strong interest groups in Japan and Korea, both governments will

be confronted with the temptation of accommodating their demands, thus lowering

the quality of the FTA.

The same logic can apply to the formation of an EAFTA. Given the diversity of

East Asian countries in terms of their economic development levels, it will be

difficult to form a high quality EAFTA. However, a low quality EAFTA existing

along with many bilateral FTAs among East Asian countries will be a largely

symbolic one. Unless the EAFTA is a high quality one, it will be beneficial neither

to East Asian economies nor to worldwide trade liberalization.

Appendices

Table 1 Share of intraregional trade and its simple concentration ratio in ASEAN?3, NAFTA, and the

EU

ASEAN?3 NAFTA EU

Share Ratio Share Ratio Share Ratio

1990 28.9 1.83 37.4 2.10 56.8 1.40

1991 31.3 1.87 39.1 2.16 57.0 1.44

1992 31.4 1.86 39.9 2.20 57.5 1.48

1993 34.1 1.80 41.2 2.09 53.4 1.54

1994 35.8 1.85 42.6 2.18 53.8 1.56

1995 37.3 1.89 42.1 2.28 54.6 1.55

1996 37.8 1.96 43.5 2.30 53.9 1.56

1997 36.8 1.95 44.5 2.21 54.8 1.50

1998 33.7 2.01 45.8 2.16 55.9 1.45

1999 35.8 2.04 46.9 2.15 62.0 1.63

2000 37.8 2.00 46.9 2.09 60.0 1.70

2001 37.7 2.07 46.6 2.11 59.5 1.64

2002 38.8 2.07 46.0 2.19 59.9 1.64

2003 39.3 2.05 44.9 2.34 60.6 1.61

2004 39.4 1.98 43.7 2.42 59.9 1.63

2005 39.9 1.94 43.0 2.43 58.2 1.68

Source: IMF. 2005. Direction of Trade Statistics


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Table 2 Share of intraregional trade and its simple concentration ratio in ASEAN?5, NAFTA, and the

EU

ASEAN?5 NAFTA EU

Share Ratio Share Ratio Share Ratio

1990 40.6 2.04 37.4 2.10 56.8 1.40

1991 43.9 2.04 39.1 2.16 57.0 1.44

1992 45.1 2.04 39.9 2.20 57.5 1.48

1993 45.9 1.86 41.2 2.09 53.4 1.54

1994 47.6 1.90 42.6 2.18 53.8 1.56

1995 50.9 2.01 42.1 2.28 54.6 1.55

1996 48.8 1.96 43.5 2.30 53.9 1.56

1997 48.4 1.97 44.5 2.21 54.8 1.50

1998 45.9 2.09 45.8 2.16 55.9 1.45

1999 47.5 2.10 46.9 2.15 62.0 1.63

2000 51.6 2.20 46.9 2.09 60.0 1.70

2001 49.1 2.12 46.6 2.11 59.5 1.64

2002 51.0 2.15 46.0 2.19 59.9 1.64

2003 51.8 2.16 44.9 2.34 60.6 1.61

2004 52.0 2.11 43.7 2.42 59.9 1.63

2005 52.0 2.08 43.0 2.43 58.2 1.68

Source: IMF. 2005. Direction of Trade Statistics

Table 3 Share of intraregional FDI inflows in ASEAN?3, NAFTA, and the EU (unit: percent)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

ASEAN?3 26.6 31.6 47.4 57.7 58.7 62.9 47.5 55.7 57.6 37.6 41.7 43.8 53.7 47.5

EU 52.6 60.8 66.8 59.3 53.1 49.7 52.9 58.7 56.4 77.2 90.9 67.3 48.8 47.4

NAFTA 12.1 14.9 37.4 21.1 32.0 20.9 20.2 19.2 18.6 18.6 14.3 25.6 33.1 45.1

Sources: ASEAN: Statistics of Foreign Direct Investment in ASEAN: Comprehensive Data Set, 2003

Edition, ASEAN Secretariat; EU, NAFTA, Korea, Japan: International Direct Investment Statistics

Yearbook 2002, 2003, 2004 Edition, OECD; China: Annual Statistical Yearbook 1998–2004 Edition,

Bureau of Statistics, China

Table 4 Share of intraregional FDI outflows in ASEAN?3, NAFTA, and the EU (unit: percent)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

ASEAN?3 13.9 18.3 35.3 41.9 66.9 60.5 39.4 48.6 39.9 60.5 34.5 25.3 35.6 38.9

EU 60.2 57.3 59.7 49.6 46.4 49.4 48.7 44.9 37.5 47.1 69.2 43.2 46.0 32.2

NAFTA 24.2 14.1 12.0 8.5 18.9 18.1 17.4 19.9 19.9 19.6 27.4 30.5 21.6 16.6

Sources: ASEAN: Statistics of Foreign Direct Investment in ASEAN: Comprehensive Data Set-2003





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References

Annual Statistical Yearbook (1998–2004) Bureau of Statistics, China

ASEAN Secretariat (2003) Statistics of Foreign Direct Investment in ASEAN: Comprehensive Data

Set-2003 Edition

Baldwin R (1999) A Domino theory of regionalism. In: Bhagwati J, Krishna P, Panagariya A (eds)

Trading blocs: alternative approaches to analyzing preferential trade arrangements. MIT Press,

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IMF (2005) Direction of trade statistics

Lee CJ (2002) East Asian economic regionalism and the role of South Korea. Paper presented at the

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Table 5 Simple concentration ratio of intraregional FDI inflows in ASEAN?3, NAFTA and the EU

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

ASEAN?3 2.95 2.46 2.92 2.90 2.74 3.15 2.50 3.19 5.18 4.48 7.14 4.69 4.59 3.22

EU 1.13 1.24 1.53 1.83 1.79 1.46 1.85 2.27 1.56 1.75 1.88 1.54 0.88 0.90

NAFTA 0.43 0.77 2.20 0.80 1.22 0.90 0.75 0.72 0.61 0.63 0.50 0.98 2.27 5.35

Sources: ASEAN: Statistics of Foreign Direct Investment in ASEAN: Comprehensive Data Set, 2003





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characteristics and prospects for east asian economic integration: a korean perspective

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