Integration helps deliver Asian dream
China Daily  Updated: 2005-04-23 06:04

The Annual Report 2005, released yesterday at Boao Forum for Asia in South China's Hainan Province, depicts a phenomenal trend to which not only Asian nations but also the rest of the world must adapt.

More evident than ever, the economic integration is promoting the upgrading of Asia into an increasingly important player in the world economy.

It is a remarkable achievement that developing Asian economies have increased their share in the world aggregate GDP from 15 per cent in 1990 to 23.8 per cent in 2003. The continent produced 38 per cent of world output that year.

More amazing is the prospect that, if the growth momentum continues, Asia as a whole will soon contribute nearly half of the world output.

Surely, this will represent an unprecedented shift in the focus of the world economy in modern historical terms.

However, for Asian nations to ride the trend, it is more important to understand the driving force behind it rather than simply to take it for granted.

A strong desire shared by the Asian people to accelerate economic development and social progress is most certainly one of the underlying causes of the emergence of Asia in recent years.

But as the report noted, the growth in the share of Asian economies in world trade and output was not uniform across the area over the last 20 years. The largest increase in output and trade share accrued to East Asian countries.

Robust growth of the Chinese economy has fed through to the rest of East Asia to a degree, which explains the disparity in the pace of growth between various parts of the continent.

Yet, the more fundamental reason lies in the impressive expansion of East Asian intra-trade based on the growing symbiosis of export and import composition of countries in the group.

It is noteworthy that East Asian intra-regional trade grew even more rapidly than its global trade; its intra-trade share in world trade went up threefold from 2.2 per cent to 6.5 per cent over 1985-2001.

The fact that trade between China and individual East Asian countries is considerably greater than what should be expected based on their proximity and relative size in world trade reflects a growing interdependence between them. That is clearly a result of the active participation of these countries in the international vertically integrated production sharing across Asia.

This is an important finding that all Asian nations should take to heart if the growth miracle of Asia will be sustained to deliver common prosperity.

Although the success of the last 20 years does not guarantee smooth sailing for the Asia economy in the coming decades, the experience accumulated in one part of the continent should allow Asian nations to learn from and contribute to one another.

A key message the report has helped drive home is that co-ordinated policy approaches are essential to the emergence of integrated international production systems in Asia.

Rapid development will spread across Asia only when greater economic and political co-operation strengthen trade ties in both multilateral and regional frameworks.

(China Daily 04/23/2005 page4)

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