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 14: Infrastructure Connectivity for East Asia’s Economic Integration

Biswa Nath Bhattacharyay


1 Biswa Nath Bhattacharyay 14.1 INTRODUCTION The current global financial and economic crisis, which was initially triggered by the rising defaults on sub-prime mortgages in the United States and has spread to other industrialized countries, is a serious concern for East Asia. The prospect of prolonged weak demand for developing East Asia’s goods from these advanced countries could slow down its exports and foreign direct investment (FDI) inflows, reducing Asia’s production and economic growth. At this juncture, enhancing trade and economic integration is essential for boosting intra-regional trade and regional demand, thus offsetting the reduced export prospect from industrialized countries. The past decades have seen a remarkable growth and dynamism in Asia as well as a period of economic and financial turbulence. The Asian financial crisis of 1997 was a wake-up call for policymakers of the region that regional economic cooperation and integration can maximize the benefits of globalization while minimizing the costs. East Asia is again facing a severe global financial and economic crisis. Regional cooperation and integration in trade, investment, and infrastructure development can foster outward-oriented development and generate large economic and social benefits. Integration will bring reduced transaction costs, greater productive infrastructure services, lower trade barriers, faster communication of ideas, goods and services, and rising capital flows. The East Asian economic cooperation is more crucial in this difficult period. Enhanced cross-border or regional physical connectivity between economies through high quality environment-friendly infrastructure can strengthen trade and economic integration. In these trying times, cross-border infrastructure development across East...

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