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 6: Productivity, R & D, and Intellectual Property Rights in East Asia and India

Kensuke Kubo


6. Productivity, R&D, and intellectual property rights in East Asia and India Kensuke Kubo 6.1 INTRODUCTION One of the key elements of economic development is improvement in productivity – an increase in the amount of output obtainable from a given amount of input. Productivity improvement is not the only source of economic growth; per capita output – a conventional measure of economic development – can increase through the accumulation of physical capital, even if productivity remains constant. However, economists and policy-makers have recognized that the per capita level of the capital stock is constrained by the savings rate, and that a policy to increase savings has limited impact on long-run economic growth (Romer 2005). The pattern of productivity growth varies over time periods, geographical regions, and across different types of activity. In Section 6.2, we will see how in East Asia (defined as including Southeast Asia) and India since the 1980s, the productivity growth rate in the manufacturing sector has varied widely between sub-periods, across countries, and across different industries within countries. The main objective of this chapter is to explore the factors that account for the observed differences in productivity growth. A starting point is that in most of the developing countries of Asia, the rapid growth of manufacturing output coincided with increased participation in international transactions of finished goods, intermediate goods, and capital. This suggests the existence of a positive relationship between trade and foreign direct investment on the one hand, and productivity growth on the other. By definition, productivity...

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