The Economics of East Asian Integration
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The Economics of East Asian Integration

A Comprehensive Introduction to Regional Issues

Edited by Masahisa Fujita, Ikuo Kuroiwa and Satoru Kumagai

This study is intended to be the most comprehensive textbook on economic integration in East Asia. It introduces the reader to various issues related to the topic such as institutional building of FTAs; production networks and the location choice of MNEs; R & D and innovation; infrastructure development and transport costs; international migration and service trade; monetary integration; regional disparity and poverty. It also deals with critical energy, environmental and agricultural concerns. Each chapter contains ample data and rigorous analyses, complemented by illustrative box articles.
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Chapter 2: Analytical Framework for East Asian Integration (1): Industrial Agglomeration and Concentrated Dispersion

Koji Nishikimi and Ikuo Kuroiwa


Koji Nishikimi and Ikuo Kuroiwa 2.1 INTRODUCTION The past few decades have seen economic integration in East Asia progress significantly on both de facto and de jure bases. Such integration generally encourages trade and investment in the integrated region and leads to a dynamic evolution in the intra- and inter-regional structure of production advantages. Each country’s potentials for industrialization and economic development are thus significantly affected by the integration progress.1 In this chapter and the next, we provide a framework for analyzing the influences of economic integration on industrial development in the integrated countries from the viewpoint of new economic geography (or spatial economics). The recent progress in industrialization in East Asia has been closely associated with the development of industrial agglomerations. The selfreinforcing mechanism of agglomeration growth enables the rapid and spontaneous process of industrial development. In drawing a blueprint for economic integration, therefore, the effective utilization of agglomeration economies constitutes a critical factor for the successful industrial development of each member country. In this chapter, we examine the individual causes of agglomeration economies and explore the major influences of economic integration. The remainder of this chapter is organized as follows. In the next section, we overview the two economic forces of dispersion and agglomeration, which exert crucial influences on industrial location. Influenced by these forces, an industrial cluster having substantially grown may become saturated and start to disperse again to other regions that have good logistic connections with the present cluster. This process of concentrated 51 M2668 -...

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