Economic Integration in East Asia

Economic Integration in East Asia

Perspectives from Spatial and Neoclassical Economics

Edited by Masahisa Fujita, Satoru Kumagai and Koji Nishikimi

Increasing numbers of free trade and economic partnership agreements have been concluded among many countries in East Asia, and economic integration has progressed rapidly on both a de facto and de jure basis. However, as the authors of this book argue, integration may intensify regional inequalities in East Asia and so this process has attracted much attention of late. Will it actually succeed in achieving greater economic growth or will it in fact cause growing regional disparity?

Chapter 1: Introduction

Masahisa Fujita, Satoru Kumagai and Koji Nishikimi

Subjects: asian studies, asian development, asian economics, development studies, development economics, economics and finance, asian economics, development economics, regional economics, geography, economic geography, urban and regional studies, regional economics


Masahisa Fujita, Satoru Kumagai and Koji Nishikimi The past few decades have seen a significant acceleration in the integration of the world economy. This has been mainly the result of reductions in transport and communication costs, the lowering of trade barriers, and an increasing mobility of capital and labor. From the 1990s, these trends in the global market have been reinforced by institutional development based on free trade and economic partnership agreements (FTAs and EPAs) that have been rapidly negotiated among many countries. By the end of 2002, GATT/WTO had received notification of some 250 regional trade agreements (RTAs), including various FTAs and EPAs, and an additional 70 RTAs are reportedly now under negotiation.1 Due to this progress of economic integration, an increasing number of consumer goods are being imported from all over the world. Also, many producers are operating affiliated factories in various countries and expanding their global networks of input procurement and product distribution. Accordingly, the world export–GDP ratio has risen, on average, from 15.0 percent in 1990 to 26.2 percent in 2005. Figure 1.1 shows the major RTAs signed before December 2007.2 Two giants, the EU (European Union) and NAFTA (North American Free Trade Agreement), produce respectively US$15.0 and 15.9 trillion. In Asia, ten ASEAN (Association of South East Asian Nations) countries participate in AFTA (ASEAN Free Trade Area), but their total GDP is about US$2.3 trillion. This is equivalent to 15 percent of that of the EU and NAFTA. However,...