Asian Economic Integration Do or Die ?
In recent years, various policy initiatives have been undertaken in Asia to create free trade areas and form economic partnership agreements between different economies. Cooperation in the area of monetary policy has also been accelerated. Will such initiatives lead to prosperity and stability in Asia and eventually serve as a building block toward a global regime for free movement of goods, services, capital and people across the border?
"Asian Economic Forum" target to integrate the diverse economies in the Asian region to maintain a regional platform of dialogue for promoting business cooperation and common development in Asia.
Asia's GDP grew by over 6 percent annually in the past seven years, contributing to 20 percent of the world economic growth and sustained development in Asian countries has led to closer economic links within the region. Global economy watching the Asian countries pursuing the new strategy for high-tech driven industrialization, resources-efficient and environment-friendly strengthens with human resources.
World power houses and its impact on economy
IMF expected to have an energetic performance for the global economy by this year, even though the biggest player, the United States, is expected to experience its weakest growth in five years. The IMF is projecting the world economy to grow by 4.9% this year moderation from last year's 5.4% and the US economy is expected to grow by 2.2% this year, which would be the slowest since 2002, when it was recovering from a recession. Where as in the last year, the US economy managed to expand by 3.3% even after painful housing slump. The US has been dealing with strain from a housing market that started to crumble last year, after a five-year boom.
Interestingly Indian-American grouping has aimed to raise at least $5million for Hillary Clinton's presidential campaign. Having already raised a sum around $one million, "Indian American for Hillary 2008 (IAFH)", members include community leaders, prominent businesspersons, physicians and investment bankers, is confident of surpassing its target. Major tycoons including steel baron Lakshmi Mittal and leading NRI businessman SP Hindujas, and their interst in rising fund for IAHF yet to know.
Involvement of G7 countries.
China has declined an invitation to take part in talks on the global economy at a meeting of G7 nations because of ‘domestic policy' priorities. Aside from Group of Seven countries - Britain, Canada France, Italy, Japan, Germany and the United States - and China, these talks will include Russia, the United Arab Emirates and Saudi Arabia.
There could be some reasons to do with domestic policy which will prevent the Chinese finance minister and central bank head. Reason is not immediately clear what domestic priorities were keeping senior Chinese officials from the Washington meeting.
Importance of Asia Economic Integration
Intraregional trade is flourishing.
This is especially true of East Asia, where intra-regional trade has grown from less than 35% of all trade in 1980 to 54% in 2003. This is a lower proportion than in the EU, but significantly higher than the NAFTA region, where intra-regional trade represents 46% of all trade.
Intraregional investment is significant.
The large multinational firms diversified across Asia, new regional production networks and new channels for intraregional investment were created. In the period covering 1990 to 2002, for example, Japan was the largest developed country investor in the ASEAN countries (excluding Singapore), and Hong Kong was the largest investor in China and seen the development of an identifiable "trade-investment nexus" - a mutually reinforcing relationship between the two.
Many Asian countries are joining together to lay the foundations for closer trading relationships, primarily - but not exclusively - through development of shared infrastructure.
Issues and Challenges
The process of integration is still at a very early stage. Much more needs to be done to create a truly pan-Asian community and an Asia-wide future of hope and prosperity.
Asia is an extremely diverse region - in cultures, governments, income levels, living standards and overall socio-economic conditions. And there are many hurdles to overcome - development gaps, lack of government capacity, sensitivities about national sovereignty and geographical barriers, such as the dispersion of small island nations, to name a few.
Perhaps most importantly, unlike Europe, North America or Latin America, the region lacks a coherent and comprehensive strategy for intensifying its efforts toward integration. Yet doing so is critical to its future. Economic and social disparities in the region are widening - due, at least in part, to unequal linkages to the global economy. Inadequate access to markets, finance and technology prevents some countries from benefiting from regional growth.
With changing global investment trends, Asia must strengthen its comparative advantage to compete. Firms are looking less for cheap labor, and more toward economies that can offer a skilled workforce, adequate infrastructure, stable and efficient legal and financial systems, competent suppliers, and institutions that can effectively harness technology in order to attract investment. In many parts of Asia, this will best be achieved by combining forces at a regional level.
Regional integration should also serve as a stepping stone to greater integration with the global community. In this respect, the proliferation of free trade agreements in Asia poses a challenge, as well as an opportunity.
As of last year, there were more than 30 trade agreements under negotiation or under study in East Asia alone. Now is the time, as these deals are being struck and consistent with the multilateral trade liberalization under the World Trade Organization (WTO) framework.
Economic integration is a growing reality in Asia, and it is a fact.If there is any "fiction" about Asia today, it is the perception that because the region is doing well, there is little to worry about. Deepening and broadening integration is one important way to contribute to sustained rapid growth and greater poverty reduction. The end result of integration should be greater inclusiveness among Asian countries, and Asian peoples.
While the innate characteristics of the region pose challenges, these are not insuperable. I believe that leaders across Asia share a vision of a thriving regional economy, well integrated within itself, and with the world. By working together to build on common strengths and reduce shared vulnerabilities, this vision can come to fruition, bringing profound economic and social benefits for all.
Justin Antony
Country Manager
Raffles Movers International Pte Ltd
22/03A, 22nd Floor, Menara Hawpar, Jalan Sultan Ismail,
50250, Kuala Lumpur, Malaysia.
Tel: (603) 2031 4444 Fax: (603) 2031 4445
Email: justin@rafmover.com Website: www.rafmover.com
Home
