Law, Trade and Finance
Edited by Ross P. Buckley, Richard Weixing Hu and Douglas W. Arner
Richard Weixing Hu, Douglas W. Arner and Ross P. Buckley The purpose of this volume has been to analyze recent developments and likely future paths for regional economic integration in East Asia. Our perspective on the issue was inspired by a paradox: East Asia enjoys a high degree of trade integration but a low degree of financial and monetary integration, even though it has an abundance of capital and foreign reserves. On the trade side, the region is highly integrated in terms of intra-region trade, foreign direct investment, and GDP correlation, both formally through an ever-expanding web of free trade agreements and functionally through well-established production networks in the region. East Asia is the world’s manufacturing hub. It produces over 50 per cent of global manufacturing trade. China is a global manufacturing powerhouse, and yet over 40 per cent of the value of its exports consists of inputs imported into China from the rest of East Asia. On the finance side, however, East Asia exhibits a very low level of integration. Most East Asian economies are far more financially linked with North America and Europe than they are with other economies in the region. Yet East Asia enjoys the world’s highest savings rates and China, Japan, Taiwan, South Korea, Singapore and Hong Kong have among the largest foreign exchange reserves in the world. While formal and functional regional trade integration is only likely to accelerate, financial and monetary integration is likely to continue to proceed at a much more modest...
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