Law, Trade and Finance
Asian Commercial, Financial and Economic Law and Policy series
Edited by Ross P. Buckley, Richard Weixing Hu and Douglas W. Arner
Ross P. Buckley, Richard Weixing Hu and Douglas W. Arner The economic integration of East Asia is a remarkably uneven phenomenon. Production of goods is highly integrated. Many products labeled ‘Made in China’ would be more accurately identified as ‘Made in East Asia’, as over 40 per cent of the content of manufactured exports from China typically consists of components or other inputs imported from the region. This system of production is replicated in other nations of the region – the nation that finally assembles a product may well contribute less than onehalf of the actual value of the final product. Indeed, manufacturing in East Asia today can often more accurately be viewed as a regional, rather than national, endeavour. This production integration is supported by a high degree of formal trade integration achieved by way of a noodle bowl of regional and bilateral trade agreements. It is also supported by a high degree of direct investment integration, with nations in the region investing in production facilities in other nations. This investment integration in support of production activities is in turn supported by a network of multilateral and bilateral investment treaties. Regional portfolio investment, however, is less well developed. In stark contrast, financial integration in the region is underdeveloped. Most East Asian nations are more closely integrated financially with nations outside the region, typically in Europe or North America, than they are with other nations in the region. This would make sense if the region were capital poor and the principal...