Perspectives from Spatial and Neoclassical Economics
Edited by Masahisa Fujita, Satoru Kumagai and Koji Nishikimi
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,...