Asian Economy and Finance: (eBook)

Dr. Dilip K. Das was educated at the Graduate Institute of International Studies, University of Geneva, Switzerland. A professor of international trade and international finance and banking, he was associated with Webster College Geneva; ESSEC, Paris; INSEAD, Fontainebleau, France; Australian National University, Canberra; Graduate School of Business, University of Sydney, Sydney. He has published extensively on international trade, international finance, international business, globalization related issues and the Asian economy in the recent past. He has worked as a consultant for the World Bank, Asian Development Bank and the USAID.

Preface
Acknowledgments
About the Author

1: ASIAN ECONOMY: THE HERITAGE
1.1 Past is Prelude to the Future
1.2 Alternative Historical Perspective on Asian Economy
1.3 Economic Linkages and Interactions in the Second Millennium
1.4 Quantitative Dimensions of Growth
1.5 Past Trends in Trade
1.6 Industrial Revolution and Its Aftermath
1.7 Asian Economic 'Miracle' of the Post-War II Era
1.8 Summary and Conclusion

2: ECONOMIC DIVERSITY IN ASIA
2.1 Heterogeneity
2.2 High-Performing Economic Sub-Groups
2.3 Regional Economies and Economic Groupings
2.4 Japan-the Domineering Regional Economy
2.5 Contrasting the Two Populous Giants
2.6 Newly Industrialized Asian Economies
2.7 Southeast Asian Economies
2.8 Post-Crisis Performance
2.9 Summary and Conclusions

3: MARKET-DRIVEN REGIONALIZATION IN ASIA
3.1 Introduction
3.2 Trends in Intra-Regional Trade and Investment
3.3 Impact of Other RIAs on the Asia-Pacific Economies
3.4 Need for Regional Co-operation in the Aftermath of the Crisis
3.5 Impediments to Regionalization
3.6 Conclusions and Summary

4: CONTEMPORARY INITIATIVES IN INSTITUTIONALIZED REGIONAL INTEGRATION
4.1 Regional Integration and the Global Economy
4.2 Agglomeration or Clustering Effect
4.3 Institutionalized Regional Economic Integration
4.4 ASEAN-Plus-Three Grouping
4.5 Asia-Pacific Economic Co-operation Forum
4.6 Bilateral Trade Agreements
4.7 Summary and Conclusion

5: TRADE, COMPETITIVENESS AND FOREIGN INVESTMENT AND THE LINKAGES AMONG THEM
5.1 Outer-Orientation: The Strategic Stance
5.2 Trade Performance
5.3 Growing Cohesion in Trading Pattern
5.4 Competitiveness in Global Market Place
5.5 Regional Trends in FDI
5.6 Integrated Production Networks and Refinement of Comparative Advantage
5.7 Outsourcing in ICT and Business-Process Services
5.8 China’s WTO Accession and its Regional Ramifications
5.9Summary and Conclusion

6: FINANCIAL SECTOR DEVELOPMENT: STRUCTURE, INSTITUTIONS AND MARKETS
6.1 Financial Sector: Chink in the Asian Armor
6.2 The Quality Continuum
6.3 Financial Market Structure and Country Classification
6.4 Carrying out Financial Market Development
6.5 Banking Sector
6.6 Intermediate Financial Structure
6.7 Bond Markets
6.8 Regional Bond Market
6.9 Equity Markets
6.10 Risk Management
6.11 Conclusions and Summary

7: POST-CRISIS REGIONAL ECONOMIC COOPERAT1ON AND THE EMERGING FINANCIAL ARCHITECTURE
7.1 Realistic Dimension of the Asian Crisis
7.2 Launching the Chiang Mai Initiative
7.3 Multilateral and Bilateral Swap Arrangements
7.4 Future Challenges for the Chiang Mai Initiative
7.5 Pros and Cons of Institutionalized Regional Cooperation
7.6 Predilection for a Regional Financial and Monetary Institution
7.7 Augmenting Foreign Exchange Reserves Holdings
7.8 Monetary and Central Banking Cooperation
7.9 Evolution of Exchange Rate Regimes
7.10 Lessons from the EU Experience
7.11 Monitoring and Surveillance
7.12 Summary and Conclusions

Bibliography
Index

Chapter 2 ECONOMIC DIVERSITY IN ASIA (p. 27-28)

2.1 HETEROGENEITY

Geographically, Asia stretches between Afghanistan in the west to the Korean peninsula in the east. This crescent-shaped region comprises several discernible, distinct, and dissimilar sub-regions and countries, which are at different stages of economic growth, and have widely differing economic characteristic attributes. While diversity is a universal feature, Asia represents an extreme form of it. Asia comprises some high-performing sub-groups of economies and those that have performed relatively poorly during the post-war era. Each economy has its idiosyncratic set of assets and liabilities.

Diversity exists not only in economic aspects of Asian life, but also in social, political, religious, cultural, ethnicity, linguistics, geographical features and systems of governments. Some eleven languages and eighty-seven dialects are spoken in the Philippines. Eight of these are native tongues for about 90 percent of the population. All eight belong to the Malay–Polynesian language family and are related to Indonesian and Malay, but no two languages are mutually comprehensible.

Indonesia, the most ethnically diverse country in the world has three hundred ethnic groups that follow four major religions, namely, Buddhism, Christianity, Hinduism and Islam. The Indonesian government takes pride in its pluralistic society and describes it as “unity in diversity.” The diversity on various frontswas, and continues to be, far greater than that in European Union (EU) of 1537 and in North American Free Trade Area (NAFTA). Compared to them, Asia has much greater diversity in terms of levels of economic development, sizes of GDP, economic and industrial structures, depth and sophistication in financial markets, and broad economic and financial institutional frameworks.

A statistical comparison of economic indicators of the Asian economies clearly brings home their inter-country diversity. Added to that is the intracountry diversity, which is also enormous. Many countries contain differing ethnic groups of different races,who followdifferent religions and social norms and practices. For instance, the Han people are the China’s largest ethnic group, but 56 ethic groups inhabit this vast country; 18 of them have population of one million or more. The largest of these minority ethnic groups is Zhuang, with a population of 16 million. Various ethnic minority groups live with the majority Han population, while some minorities prefer to live in separate compact groups. This diversity exists all over Asia. A small country like Myanmar has 135 different ethnic groups of eight races. Large Chinese, Indian and Malay populations are found in many East and Southeast Asian countries. In many countries they are minorities, and in some they are either large minorities or even majorities. These populations groups have maintained many of their native characteristics, yet have assimilated well in their societies of domicile. Families that are part of the Chinese Diaspora have earned a reputation for being astute business people and their business acumen is admired all over Asia. For instance, while the Chinese constitute less than three percent of the total population in Indonesia, they control as much as seventy percent of all private sector economic activity. The phenomenon has been attributed to a natural affinity the Chinese possess for business endeavors. This acumen is believed to be rooted in the Confucian work-ethic, the hierarchal structure of the family, which lent itself to effective creation of large businesses, even conglomerates.

Social indicators like literacy and life expectancy data for these countries also display extreme diversity in Asia. This heterogeneity reflects the economic diversity of the Asian economies. For instance, Korea was the most literate country having 1 percent illiteracy among male population and 4 percent among female. Cambodia was at the opposite extreme, with the corresponding proportions being at 41 percent and 79 percent, respectively. Likewise, life expectancy varies widely. In Hong Kong SAR and Japan it is more than 80 years, while in countries in Indochina (Cambodia, Lao PDR andVietnam) it is merely 54 years.