Asian Regionalism
Lesson expectations:
1. Differentiate between regionalization and globalization.
2. Identify the factors leading to a greater integration of Asian region
3. Analyze how different Asian states confront the challenges of globalization and
regionalization.
Regionalism is an expression of a common identity implementation of institutions that express
a particular identity, and it shapes the collective action within the geographical region. Asia is
the new stabilizing engine of global economic growth. It greatly influences the world. Since it
plays a vital role in the global economic leadership.
Asian regionalism is integration of Asian countries for economic or global economic progress.
● The product of economic interaction.
● Helps the region to grow richer and closer together
● Focused on finding new and flexible forms of cooperation.
● Regional initiatives are intended to complement global relationships.
How is Asian economies connected?
1. Trade. At the beginning of the 21st century, nearly all countries were responding to
globalization of production by promoting exports and opening domestic markets to
international competition to varying degrees.
Japan, for example, has played a prominent role in Asian trade. South Korea, China and
Taiwan have also traded more heavily with other Asian countries. Over the years, China
and Association of SouthEast Asian Nations (ASEAN), ASEAN members are Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand
and Vietnam, have enjoyed growing political mutual trust and strong regional economic
reciprocity, which have all played a significant part in the growth of bilateral trade and
economic operation. According to Keyan Fang, the director of the research department
of the National Strategy Institute at Shingwa University. ASEAN now becomes China's
largest trading partner in 2020 with 7% growth.
There has been an effort on the part of Asian countries to improve their trading position
by also joining organizations of commodity producers.
For example, the most prominent and occasionally successful of these groups is the
Organization of Petroleum Exporting Countries (OPEC), which is dominated by the
major oil producing countries of SouthWest Asia. ASEAN also has fostered joint
economic ventures among its member states to reduce tariff trade barriers.
2. Financial Transactions. According to Gemma Estrada, Dong Yun Park and Arif
Aramayan in 2010, economic theory suggests sound and efficient financial systems. Like
banks, equity markets and bank markets which channel the capital to its most productive
users are beneficial for economic growth.
Asia has been the world's largest regional banking market for a decade. Generating pretax profit in excess of $700 billion and accounting for 37% of global banking profit pools
in 2018. The estimation is that as incomes continue to rise and the middle class grows to
include ⅔ of Asian households, personal financial assets in the region will total to $69
trillion by 2025, which will represent approximately three quarters of the global total.
According to Jacob Dal, Ervin Nam and Joy Deepsanggupta.
3. Direct investments. An investment in the form of controlling ownership in a business in
one country by an entity based in another country.
In 2019, China was the largest foreign direct investment recipient, attracting 38% of the
total foreign direct investment inflows to the region. Japan was the largest source of
investment from the region in 2019, which is responsible for 42% of the regional outward
foreign direct investment. As the cross border investments, Asia emerges as a major
global investor while it continues to attract feasible Foreign Direct Investments(FDI). And
in 2018, 43.1% of global inward FDI went to Asia, creating around 900,000 jobs.
4. Economic relationships. In Asia, regional economic integration has mainly focused on
trade in goods and services and to some extent investment. So regarding trade in
goods, most intra-ASEAN trade or trade between ASEAN and its six FDI partners
(China, Korea, Japan, Australia, New Zealand and India) already involve tariffs that are
very close to zero. The highest level of interregional trade within Asia is in East Asia.
The 10 countries, ASEAN including South Korea, Japan, and China, there has been a
high share of Interregional investment in Asia with the five largest investors (Japan,
China, South Korea, Singapore, and Hong Kong).
5. Labor and Tourist flows. In view of the division of labor that existed between the
colonial countries and the metropolitan powers in colonial days, it is not surprising that
until the 1970s, the economies of the independent states or countries in Asia were more
competitive.
According to the most recent International Labor Organization (ILO) estimates in 2007,
there were 163.8 million migrant workers in the world. Asia and the Pacific host 20.4% of
these migrants. The Arab states, have the highest proportion of migrant workers to all
workers, which is 40.8% and host 13.9% of migrant workers worldwide, while most of
them from Southeast and South Asia.
There are other key migration corridors in the region, including two and within the
association of southeast Asia region. So, moreover, as clearly illustrated in the United
Nations World Trade Organizations(UNWTO) compendium of best practices and
recommendations for eco-tourism in Asia and the Pacific has become an important niche
market in the region, helping to extend the benefits of tourism to poorer local
communities in less developed tourism countries such as Cambodia, Philippines,
Vietnam, and Sri Lanka, as well as in less developed areas of more established tourism
destinations like Thailand and Indonesia
6. Technology. Digital economy refers to a broad range of economic activities that use
digitized information and knowledge as key factors of production. The internet, cloud
computing, big data, Financial Technology (FinTech), and other new digital technologies
are used to collect, store, analyze and share information digitally and transform social
interactions. Asia’s digital transformation is already having a massive impact on the
region's economies. Asia’s eCommerce translation actions account for 25% of the
business to consumer market in the world led by the People's Republic of China, where
companies like Alibaba and 10 cents have grown at a breakneck pace.
FinTech has risen to the new ways of delivering financial services in Asia, particularly in
facilitating payment and lending. It promotes financial inclusion in many developing
Asian countries, FinTech based lending in Asia reached up to $102.8 billion in 2015
while the proliferation of technologies further improved the efficiency of the payment
system and strengthened Asia's position as the largest payment market in the world.
Digitized networks and intelligent information and communication technologies (ICT)
enable modern economic activities to be more flexible, agile, and smart.
Importance of this Asian Regionalism?
1. helped to sustain the region's growth
2. underpinned the region stability
3. reduce inequality
4. marshal common response to major challenges
5. sustain global economic progress.
Economic and political cooperation is not yet well established in the Asia Pacific region. In
Europe, many states believe that it is important to keep their own distinct economic and political
profile. Diverse regional cooperation structures are emerging in this region too.
Different ASIAN Groups and Associations
According to the Federal Foreign Office, there are different regional organizations in Asia.
1. Association of Southeast Asian Nations (ASEAN)
- was founded in 1967
- now it has 10 member states. (Brunei DaruSsalam, Cambodia, Indonesia, Laos
Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam).
- Cooperation in ASEAN to date has focused on economic integration.
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ASEAN Charter
- provides a foundation for the further development of ASEAN community
and gives ASEAN a legal personality.
- records ASEAN state's commitment to the rule of law, democracy, and
good governance and envisages the formation of a human rights body
that's supporting to ASEAN work.
2. Asia-Europe meeting
- According to the official website of Asia-Europe meeting is an interregional dial
forum for multilateral exchange between Europe and Asia in the spheres of
politics, business, and culture.
- Founded in 1996 at the Initiative of Singapore and France, which has expanded
from its original membership from 26 to 53 members today.
- The European side, these are the 28 European Union members states ( which
include Switzerland, Norway). On Asian side, they comprise China, Japan, India,
South Korea, Brunei, Indonesia, Cambodia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam).
- The Australian secretariat (Pakistan, Australia, New Zealand, Sri Lanka,
Bangladesh, Russia, and the Kazakhstan).
3. Asia-Pacific Economic Cooperation (APEC).
- Founded in 1989 on the Initiative of Japan and Australia
- Aims to strengthen the economic growth in the Asia Pacific region
- Dismantling tariffs and other barriers to trade their summit in Bogor,Indonesia in
1994.
- APEC countries agreed to set up a free trade area within the economic
community
- Summits at the head of state and government level are held annually with the
participation of the business executives.
- Climate protection appeared on APEC's agenda for the first time at the 15th
summit in Sydney in 2007.
- Currently APEC has 21 member economies (Australia, Brunai, Canada, Chile,
China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua
New Guinea, Peru, the Philippines, the Russian federation, Singapore, South
Korea, Taiwan, Thailand, the United States and Vietnam.
- Together these economies account for some 55% of global gross domestic
product and some 45% of the global train.
4. South Asian Association for Regional Cooperation (SAARC)
- According to SAARC-SEC.ORG, it was founded in 1985 by Bangladesh, Butan,
India,Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan has had eight
members since 2007.
- Together with China, Japan, South Korea, and the United States, the European
Union also attended the SAARC Summit as an observer for the first time in 2007.
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Had observer status at the United Nation since December 2004.
SAARCconcentrates on economic and trade issues. The agreement to create the
South Asian Free Trade Area (SAFTA), which entered into Force 2006, brought a
milestone in regional economic cooperation.
SAFTA has been ratified by all member states, the SAARC remit extends to
cooperation in seven key areas, including agriculture and rural development,
environment and forestry, human resources development, and transportation.
5. Shanghai Cooperation Organization (SCO).
- Emerged in 2001 from the Shanghai five set up in 1996.
- The original five members were China, Kazakhstan, Kyrgyzstan, the Russian
Federation, and Tajikistan.
- Uzbekistan joined in 2001
- Mongolia, India, Iran, and Pakistan became observers in 2004 and 2005
- Belarus and Sri Lanka dialog partners in 2009
- SCO Summit in Beijing, China in June 2012, Afghanistan, which had attended
the SCO Summit as a special guest for several years, was granted observer
status, and Turkey also obtained dialogue partner status. Turkmenistan,
however, is not a member of the SCO on the grounds of its permanent neutrality,
but it attends the summit as a special guest of honor.
- SCO has held observer status and the United Nation since 2004.
- SCO maintains cooperation agreement with the Commonwealth of Independent
States (CIS) and the ASEAN. CIS is a regional intergovernmental organization in
Eastern Europe and Asia.
- SCO's original focus was on security cooperation in the member states' border
regions.
6. Regional Comprehensive Economic Partner (RCEP)
- A free trade agreement between AsiaPacific Nations of Australia, Brunei,
Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand,
Philippines, Singapore, South Korea, Thailand, and Vietnam.
- 15 member countries account for about 30% of the world's population, which is
2.2 billion people and 30% of global gross domestic product (GDP), which is
$26.2 trillion as of 2020, making it the biggest trade bloc in history.
- Unifying the preexisting bilateral agreements between the 10 members. ASEAN
envies its major partners.
- Signed on November 15, 2020 at the virtual ASEAN summit, which was hosted
by Vietnam, and it took effect after 60 days.
- RCEP is the first free trade agreement between China, Japan, and South Korea.
Three of the five largest economies in Asia. (China is the largest economy in
Asia, followed by Japan, India, South Korea, and Indonesia. These five together
hold a huge 76.5% share of the Asian economy.)
- Several analysts predicted that it would offer significant economic gains for
signatory nations, as well as pull the economic center of gravity back towards
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Asia, with China poised to take the lead in writing trade rules for the region,
leaving the US behind in economic and political affairs. Reactions from other
were neutral or negative with some analysts saying that economic gains from the
trade deal would be modest.
RCEP has been criticized for ignoring labor, human rights and environmental
sustainability issues.
7. Pacific Islands Forum (PIF).
- Founded in Wellington, New Zealand in 1971.
- Provides a forum for dialogue and cooperation on politics, economics,
environment, culture, education, and social affairs.
- This forum is the only multilateral forum in the Pacific region to also look at the
security policy aspect.
- 16 member states are Australia, Cook Islands, Federated States of Micronesia,
Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Republic of
the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.
- European Union (Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain and Sweden) is one also of the 14
Dialogue partners of the PIF.
- Other dialogue partners of PIF are China, France, Italy, Japan, the United
Kingdom, and also the United States.
8. ASEAN PLUS THREE (APT) and ASEAN+6
- A forum that functions as a coordinator of cooperation between the ASEAN-Plus Three
(APT) which consists of 10 ASEAN Member States (Brunei DaruSsalam, Cambodia,
Indonesia, Laos Malaysia, Myanmar, the Philippines, Singapore, Thailand, and
Vietnam), and PLUS Three - China, Japan, and the Republic of Korea (ROK).
- The government leaders, ministers and senior officials from the 10 members of the
ASEAN and the three East Asian states consult on an increasing range of issues.
- APT is the latest development of Southeast Asian - East Asia regional cooperation.
- Proposals such as South Korea's goal for an Asian common market in 1970, in Japan's
1980, suggestions for an Asian network have been made to bring closer to regional
cooperation.
- APT was the first of attempts for further integration to improve the existing ties of
Southeast Asia with the East Asian countries . This was followed by an even larger East
Asia Summit (EAS) which included APT as well as India, Australia, and New Zealand.
This group acted as a prerequisite for the East Asia community, which was supposedly
patterned after the European community, which is now transformed into the European
Union (EU). ASEAN eminent persons group was created to study the policy. Possible
success and failure.
- The group became ASEAN Plus Six with Australia, New Zealand, and India, and stands
as the linchpin of Asia Pacific’s economic political securities, social, cultural architecture,
as well as the global economy and relations between these countries has seen progress
through the development of the regional comprehensive economic partnership,which is a
free trade agreement involving the 15 countries of the ASEAN Plus Six, excluding the
India. The RCEP would, in part, allow the members to protect local sectors and give
more time to comply with the aim for developed country members. So the economies in
this region that have not joined RCEP are Hong Kong, India, Macau, North Korea and
Taiwan.
9. Comprehensive and Progressive Agreement for Trans Pacific Partnership
(CPTPP11)
- A trade agreement between countries. (Australia, Brunei Canada, Chile, Japan,
Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam)
- This agreement evolved from the trans pacific partnership (TPP), which never entered
into force due to the withdrawal of the United States.
- The 11 signatories have combined economies representing 13.4% of the global cross
domestic (GDP) at approximately 13.5 trillion US$, making the CPTPP one of the world's
largest free trade areas by GDP.
- Along with the United States, Mexico, Canada Agreement, the European single market,
and the Regional Comprehensive Economic Partnership.
10. ASEAN Regional Forum (ARF)
- which is promoting peace and security through dialogue and cooperation in the Asia
Pacific.
- ARF was founded in 1994 following a decision by the ASEAN Foreign Ministers.
- The ARF deals with security issues, and it's the only institutionalized security policy
discussion forum in the Asia Pacific Region and along with the 10 ASA members states
another 16 countries, Australia, Bangladesh, Canada, China, India, Japan, Mongolia,
New Zealand, North Korea, Pakistan, Papua Gua, Russian Federation, South Korea, Sri
Lanka to more or less in the United States currently participate as well as the European
Union.
- For the European Union, the ARF is the important forum in the Asia Pacific for
advocating its security policy concepts and promoting confidence building and
preventive diplomacy.
Benefits Asian Regionalism to Asia
1.
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8.
Link the competitive strengths of its diverse economy.
Create regional mechanisms.
Effective global solutions.
Connects the region's capital market.
Pooled the region's foreign exchange.
Cooperate in setting exchange rate and macroeconomic policies.
Exercise leadership in global decision making.
Build connected infrastructure and collaborative on inclusive development.
9. Generate productivity gains, new ideas, and competition.
10. Diversify the sources of global demand.
11. Contribute to the efficiency and stability of global financial markets
12. Stabilize the world economy.
13. Diminished the risk post by global imbalances.
14. Provide leadership
Asian regionalism has brought greater impact in the region's growth and development. In 2001
for example, India had one of the fastest growing service sectors in the world with an annual
growth rate of 9%.
In 2010, Iraq, Saudi Arabia, the United Arab Emirates (UAE) and Kuwait registered high GDP in
the years. In 2012 - 2013, the Philippines managed to grow at rates at par with China. In 2013,
China opened its Shanghai Free Trade Zone, which then in 2015, China surpassed the United
States and the European Union to become the world's largest economy.
In 2019-2020. United States of America is no longer the strongest country when it comes to
economy, China is now in the top one. According to the International Monetary Fund (IMF),
China has the biggest GDP in the world, followed by US, India, Japan, and also Indonesia.
Indeed in 2020,accordingly, Asia’s GDP will overtake the GDP of the rest of the world if
combined. By 2030, the region is expected to contribute roughly at least 60% of the global
growth. Asia Pacific will also be responsible for the overwhelming majority of 90% of the 2.4
billion new members of the middle class, which is entering the global economy.
The bulk of that growth will come from the developing markets of China, India, and throughout
Southeast Asia, and it'll give rise to a host of new decisions for businesses, governments, and
the NGOs.
Risk of Asian Regionalism
1. The global demand and financial can be compromised.
2. Financial reversal and economic slowdowns.
3. New health or security threats could also make the flow of people and goods more
difficult and expensive. Environmental damage could also result in radical changes in
economic policy.
4. Social instability could generate tension and uncertainty that overwhelms economic
progress.
GDP Growth Forecasts
Asia's economy growth today according to Asian Development Banks, the regional economic
growth in developing Asia will decline sharply in 2020. Due to the effects of the NovelCoronavirus (Covid 19) pandemic, before recovering in 2021, according to Asian development
out looking 2020.
All developing Asia subregions will see growth within this year (2022) because of weak global
demand. And in some economies because of domestic outbreaks, containment policies and
subregions that are more economically open like East and Southeast Asia or tourism dependent
like the Pacific will be hard hit.
Economic activity, however, the Pacific subregion is expected to contract by 0.3% into 2020
before recovering to 2.7 in 2021.