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 13: Economic Integration and the Expansion of Trade and Transport Networks

Ikumo Isono


Ikumo Isono 13.1 INTRODUCTION Freight transport in East Asia has been developing extremely rapidly in recent decades. This is the result of a great expansion in demand for international trade. Transport networks, which have a variety of routes, modes, speed and quality, have evolved to offer faster, more extensive and more accurate services to meet industry needs. At the same time, manufacturing firms have been changing their behavior regarding the utilization of transport networks. Trade volume has grown dramatically as markets have become integrated and production bases have dispersed to several countries according to the different products and production processes. On the other hand, there are several unsolved bottlenecks remaining in East Asia, where there are great differences in the level of transport development as well as in the level of economic development. To find the remaining bottlenecks, it is necessary to determine what factors affect transport costs and trade patterns. Thus, this chapter discusses how transport networks have been improved, what factors affect transport costs and trade patterns, and what issues and bottlenecks remain unsolved, especially in East Asia. Figure 13.1 shows the basic framework for transport networks, transport costs and other factors in this chapter. We describe transport networks as the all-shipping routes and modes available, or the total reticulated ‘trails’ in a figurative sense. Moving goods leaves trails in roads, railroads, sea and air, like animal trails. Manufacturing and logistics firms utilize preferable routes many times, so that certain routes become beaten and more usable.1 Manufacturing and...

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