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  1. 1. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentTable of Content:Contents: Page No:1.0 Introduction 22.0 What is Globalisation 33.0 East Asian Economies 4-63.1 Member Countries of East Asia3.2 East Asian Business and Economic Context4.0 What is Free Trade 7-84.1 The Status of Free Trade in Eastern Asian5.0 GDP level in East Asia 86.0 Implications of Globalisation and Free Trade on East Asian Economy 9-136.1 Positive Impact of Globalisation and Free Trade on East Asian Economy6.2 Drawbacks of Globalisation and Free Trade on East Asian Economy7.0 Conclusion 148.0 References 14-178.1 Books and Journals8.2 Online Resources9.0 Appendix 18-21Asia Pacific University (A.P.U) 1
  2. 2. Chan CheeMang TP021569 BM002-3-3 Individual Assignment1.0 IntroductionAccording to Lau and Park (2003), stated that East Asia has been the fastest growing region inthe world for the pastseveral decades since the East Asian currency crisis of 1997-1998notwithstanding. On above average, theEast Asian developing economies as a group,including China, Hong Kong, Indonesia, SouthKorea, Malaysia, Philippines, Singapore,Taiwan and Thailand, has grown at almost 8% per year since the 1960s. The notableexception is Philippines, which has only beenable to grow at less than half the average rate.Also,Rothenberg (2003) stated that Globalisation is the acceleration and intensification ofinteraction and integration among the people, companies and governments of different nations.Nowadays going global has become a must for every organization due to theintensifiedcompetition going on in the world, globalisation philosophy has been adopted bymany firms andthey have successfully implemented it. For example Toy ‗R‘Us opening storein Shanghai, ChinaIn the journal year 2006, Alan Rose mentioned how Wal-Mart has targeted China, which haslong been a major supplier of its products, as a key region for its international store growth. Itnow has 56 stores inChina with 30,000 workers and now planning to open 20 more stores(China Daily,2006).Furthermore, Griswold (2003) provides Free trade agreement by definition lower barriers totrade between participants, and lowering or eliminating barriers altogether. For example,ASEAN- the Association of Southeast Asian Nations was created with the purpose of toaccelerate theeconomic growth, social progress and cultural development in the region(ASEAN, 2011).The relationship between the Globalisation and Free Trade Area is directly proportional toeach other, due to globalisation where by businesses going from one country to another tocontinue their operations profitably which has been assist by the Free Trade Agreementsbetween the countries, for example ASEAN members like Malaysia and Singapore, Malaysiaexporting water to Singapore (Segal, 2004), globalisation and free trade agreement occurringat the same time inthis case.Asia Pacific University (A.P.U) 2
  3. 3. Chan CheeMang TP021569 BM002-3-3 Individual Assignment2.0 What is Globalisation?According to Albrow (1990), Globalization refers to all those processes by which the peoplesof the world are incorporated into a single world society, global society. Angell (1991) statedthat Globalisation occurs when the world economy has become as highly interdependent as tomake national independence an anachronism, especially in financial markets. Theinterdependence is driven by science, technology and economics - the forces of modernity;and these forces, not governments, determined international relations. Thanks to thisinterdependence, war between modern nations is impossibility. The rise of globalinformationalism in this end of millennium is intertwined with rising inequality and socialexclusion throughout the world. Moreover, the process of social exclusion in the networksociety concerns both people and territories. So that, under certain conditions, entire countries,regions, cities and neighbourhoods become excluded, embracing in this exclusion most, or all,of their populations. This is different from the traditional process of spatial segregation(Castells, 1998). Globalisation may indeed mean the end of the nation-state if the nation-statefails to redefine itself to meet the new conditions it faces in the global environment (Carnoy,2001).According to Clarke and Newman (1997), the happy ending of the globalisation narrative isone in which both nations and companies become faster and more agile in developingresponses to new forms of competition. In relation to the public sector, this narrative ofglobalisation as a double purchase, not only must states enable business to become morecompetitive (by reducing the iron hand of regulations and excessive taxation), it must alsobecome more lean and agile itself. Both imply a reduction in the size and cost of the publicsector and being business-like is presented as the means of achieving these objectives.Thus, Globalisation is the name for the process of increasing the connectivity andinterdependence of the worlds markets and businesses. This process has speeded updramatically in the last two decades as technological advances make it easier for people totravel, communicate, and do business internationally. Two major recent driving forces areadvances in telecommunications infrastructure and the rise of the internet. In general, aseconomies become more connected to other economies, they have increased opportunity butalso increased competition. Thus, as globalization becomes a more and more common featureof world economics, powerful pro-globalization and anti-globalization lobbies have arisen.Asia Pacific University (A.P.U) 3
  4. 4. Chan CheeMang TP021569 BM002-3-3 Individual Assignment3.0 East Asian Economies(Sources from: )3.1 Member Countries of East AsiaEast Asia consists of six main members of the countries which include Mongolia, China,South Korea, North Korea, Japan and Taiwan. East Asia also known as Eastern Asia preferredby the United Nations is a sub region of Asia that can be defined in either geographical orcultural terms. Geographically and geopolitically, it covers about 12,000,000 km2 or about 28%of the Asian continent, which is about 15% bigger than the area of Europe. (See 9.1 East AsiaPopulations and 9.2 Brief History of East Asia in Appendix)3.2 East Asian Business and Economic ContextIn business and economics, East Asia has been used to refer to a wide geographical areacovering ten countries in ASEAN, Peoples Republic of China, Japan, South Korea, andTaiwan for the purpose of economic and political regionalism and integration. United Statesforeign policy under the Obama administration considers Southeast Asia a part of East Asia.The tendency of this usage, perhaps, started especially since the publication of World Bank onAsia Pacific University (A.P.U) 4
  5. 5. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentThe East Asian Miracle in 1993 explaining the economic success of the Asian Tiger andemerging Southeast Asian economies (Indonesia, Malaysia, the Philippines and Thailand).In addition, this usage has also been driven by Asia-wide economic interconnectedness sincethe co-operation between ASEAN and its three dialogue partners was institutionalized underthe ASEAN plus Three Process (ASEAN+3 or APT) in 1997. The idea of East AsianCommunity arising from ASEAN+3 frameworks is also gradually shaping the term East Asiato cover more than China, Korea, Japan and Taiwan. This usage however, is unstable: the EastAsian Summit, for instance, includes India and Australia.East Asia is considered to be a part of the Far East, which describes the regions geographicalposition in relation to Europe rather than its location within Asia. However, in contrast to theUnited Nations definition, East Asia commonly is used to refer to the eastern part of Asia, asthe term implies. Observers preferring a broader definition of East Asia often use the termNortheast Asia to refer to the greater China area, the Korean Peninsula, Taiwan, and Japan,with Southeast Asia covering the ten ASEAN countries. This usage, which is increasinglywidespread in economic and diplomatic discussion, is at odds with the historical meanings ofboth "East Asia" and "Northeast Asia". The Council on Foreign Relations defines NortheastAsia as Japan and Korea.East Asian economies, which are highly dependent on international trade, were not only hithard by the Asian financial crisis in 1997-1998, but also vulnerable to the worldwide high-tech crisis in 2001. Confronted with such economic crises, many Asian governmentsrecognized the importance of education for sustaining high economic growth. In particular,education would increase the number of competent workers and enable the creation of newtechnologies domestically and facilitate the absorption of advanced technologies fromoverseas, and hence economies with more educated human capital would grow faster thanother countries.Some researchers have shown the productivity and rapid economic growth for five East Asianeconomies. Productivity in Hong Kong was found to have bidirectional causal relations witheconomic growth, perhaps due to the fact that Hong Kong is a small but highly open economyfocusing mainly on service sectors such as trading, financial services, and tourism to name afew. Thus, Hong Kong may have an immediate effect on service-related technology such asAsia Pacific University (A.P.U) 5
  6. 6. Chan CheeMang TP021569 BM002-3-3 Individual Assignmentmanagement and marketing skills, and the improved economy. However, for Japan, a one-way causal relationship from economic growth to productivity appeared to be non-trivialwhen longer lags are used. The results are, in general, consistent with the observation thatJapan, which experienced fast growth in the 1960s and 1970s, was a relatively closedeconomy, and hence its increase in investment domestically has long been believed to be theprimary cause for a subsequent rise in productivity.Unlike in Japan, Korea and Taiwan tend to cause the growth of the two economies. Thisfinding is a bit surprising given their shorter experiences but the results are generallyconsistent with their recent trends of purchasing overseas to compete with foreign investors.In this case, causality may run to economic growth but the growth effect of publications isdebatable because the past imported from overseas may not have a direct influence on a homecountry‘s past economic activities. Moreover, in Singapore no longer show significant causaleffects on economic growth. The insignificant causal effects are, perhaps, linked to the smallnumber of population in Singapore.Asia Pacific University (A.P.U) 6
  7. 7. Chan CheeMang TP021569 BM002-3-3 Individual Assignment4.0 What is Free Trade?According to David M. Driesen (2000), free trade is a system in which goods, capital, andlabour flow freely between nations, without barriers which could hinder the trade process.Many nations have free trade agreements, and several international organizations promotefree trade between their members. There are a number of arguments both for and against thispractice, from a range of economists, politicians, industries, and social scientists.A number of barriers to trade are struck down in a free trade agreement. Taxes, tariffs, andimport quotas are all eliminated, as are subsidies, tax breaks, and other forms of support todomestic producers. Restrictions on the flow of currency are also lifted, as are regulationswhich could be considered a barrier to free trade. Put simply, free trade enables foreigncompanies to trade just as efficiently, easily, and effectively as domestic producers.The idea behind free trade is that it will lower prices for goods and services by promotingcompetition. Domestic producers will no longer be able to rely on government subsidies andother forms of assistance, including quotas which essentially force citizens to buy fromdomestic producers, while foreign companies can make inroads on new markets when barriersto trade are lifted. In addition to reducing prices, free trade is also supposed to encourageinnovation, since competition between companies sparks a need to come up with innovativeproducts and solutions to capture market share.In short, Free Trade is the trade between various countries of the world has taken place formany hundreds, perhaps thousands, of years. Originally trade enabled people to obtain foodand materials that they could not produce for themselves. For example, the Malaysia does nothave a climate suitable for growing apples, and therefore needs to import these from abroad.More recently, it has been recognised that some countries are better at producing certaintypes of product than others. It seems to make sense then, for countries to specialise inproducing the goods that they can produce most efficiently, and to trade their surpluses ofthose goods for the products they cannot produce, or are less efficient at producing. This isknown as the principle of free trade.Asia Pacific University (A.P.U) 7
  8. 8. Chan CheeMang TP021569 BM002-3-3 Individual Assignment4.1 The Status of Free Trade in Eastern AsianFree trade agreements (FTAs) have become a prominent feature of the multilateral tradingsystem and an important instrument of trade policy for members of the World TradeOrganization (WTO). The proliferation of FTAs is the result of a number of factors, from theeconomic to the political. East Asia is with no exception involved in the process andwitnessing the establishment of multi-layered FTAs. Pioneered by the Association ofSoutheast Asian Nations (ASEAN) in 1992 when it initiated the ASEAN FTA (AFTA), andencouraged by ASEAN+1 (ASEAN plus one country) FTAs, more and more economies ineast Asia are involved in FTAs, although the characteristics of these FTAs differ according totheir background and circumstances. When the proliferation of FTAs in East Asia benefits theregional trade and economic growth, questions have been raised about ―Asian noodle bowl‖effect; pointing out multi-layered FTAs in East Asia have created new trade barriers andraised the cost of business in the region. To this end, East Asia needs to progress from theproliferation of multi-layered FTAs to a region-wide FTA with wider participation andbroader coverage.5.0 GDP level in East AsiaThe macroeconomic performance and prospects of the East Asian region have changeddramatically since the onset of the Asian crisis in mid-1997. East Asia plunged from being theregion that exhibited the highest average rate of growth of real gross domestic product (GDP)or GDP per capita of all regions in the world economy to the region in which several countriesregistered negative growth in GDP per capita in 1998: Hong Kong, Korea, Singapore,Cambodia, Indonesia, Malaysia, Philippines and Thailand (Asian Development Bank, 1999).Three of these countries had to go to the International Monetary Fund (IMF) for large bailoutloan programs (Korea, Thailand and Indonesia). All eight countries resumed positive growthin the last quarter of 1998 or in 1999, but there is a question as to how fast they can grow afterthe Asian crisis and what policies are needed to resume fast growth. (See 9.3The East Asianperformance in Appendix)Asia Pacific University (A.P.U) 8
  9. 9. Chan CheeMang TP021569 BM002-3-3 Individual Assignment6.0 Implications of Globalisation and Free Trade on East Asian EconomyKnowledge regards to the deep extent of Globalization and Free trade agreement become theresponsibility of manager of a firm in its expansion to compete on a global level. A mangermust do a depth analysis along with right knowledge on the political, economic, social andtechnological factors (PEST factors) before putting their firm to compete in the internationallevel relating to the respective countries‘ free trade agreement. Take an example for aMalaysian firm to start trading their business in Thailand, the firm will get benefits under thepolicy of AFTA (ASEAN Free Trade Agreement). As both of these two countries are themembers of AFTA. With the effective insights on Globalisation and Free Trade would help amanager to strategise the best to serve the firm in achieving their goals and thus successfullyoperates in foreign countries. According to Jung Sik Kim and Yonghyup (2007), in recentyears, East Asian on the rise of the regional economic trade blocs has been reducing the tradebarriers which has led to the attraction of FDI as China has signed agreement with the WorldTrade Organisation (WTO) shifting from a close economy policy to an open economy. Thishas brought in many foreign multinational companies like Apple Inc. to invest and operates inChina by entering the huge population market segment (Yamin, Moad Pervez N. Ghauri,2004) in the articles on Rethinking MNE-Emerging Market Relationships:Some Insights fromEast Asia´ said that Malaysia, Singapore, Indonesia, Korea and other EastAsian countries areall having favourable FDI policies has led to fasteconomic growth with the encouragementfrom their government.6.1 Positive Impact of Globalization and Free trade on East Asian EconomyGlobalisation and Free Trade ensured the huge amount of domestic capital, production leveland employment opportunities in the developing countries which became the major steptowards the economic growth of East Asian. For example, Globalisation has been thebooming factor that has bolstered the economic life of China giving the biggest advantages tocountries in East Asia while incorporating with Free Trading Agreements.According to Mo and Ghauri (2004), Globalization and Free trade has contributed to thedevelopment of East Asian economy as it promotes economic integration like reduction ininfrastructure cost (transport and communication), the lowering of trade barriers, andincreased mobility of capital andlabour, along with the signing of free trade agreements ofAsia Pacific University (A.P.U) 9
  10. 10. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentEast Asian countries with WTO and the forming the Association of Southeast Asian NationsASEAN , had given the progress of economic integration with increasing number of globalimportation and exportation especially in East Asia (Fujita et al, 2008).Globalisation assumes the creation of new jobs as investors build new corporations in thesecountries creating new job openings and opportunities. This leads to an increment in incomeand the development of competition with new jobs offer more buying power to the populationof that country which leads to economic boosts and yet higher living of standards. Companieslike Intel, Shell, and Google have been able tocreate more new job opportunities within thecountries, pay taxes to the government, variety of goodsand services being experienced by thepublic in East Asian countries which has led them to highstandard of living and also havecontributed an increase in Gross domestic Product of these countries relatively.Furthermore, AnishaSabhlok (2001) in her pilot micro study of Corporate SocialResponsibility on some companies based in Singapore, noted that Multinational Corporationsin Singapore contributed to the society by adopting the best practices, driving innovation,developing green products and attaining eco-efficiencytargets, enlightens MNCs contribute tothe country‘s economic and social development. Globalisation and Free Trade apparentlyhelps in the outsourcing of environment knowledge from East Asia especially in Japan oftheir Green Computing for Information and Technology sector. It helps them in developingthe know-how process in Japan in terms of enhancing the green technological advancement.According to the researcher Thomas Sowell (2005) all the people of the world cancontributeand those who keep themselves isolated from others will be left behind. This is dueto the problem of not being in any kind of trade agreements with other countries or not havingto be involved in globalisation. Globalisation has also made the domestic producers producemore efficiently due to their international specialisation and the pressure that comes fromforeign competition, which benefits both the economy of the country and the customers asthey are able to consume a wide variety of domestic and imported goods at lower prices,taking an example of Malaysia fast food industry where by people can enjoy KFC orMcDonalds and at the same time enjoy their local fast foodsas well. Also, free tradeagreement increases in environmental protection for example in ChinaMNCs have pledged toGovernment to bring about more environmental friendly policies in response shown byXinhua, (2011) in an news report on Chinadaily the Chinese President HuJin Tao said thatAsia Pacific University (A.P.U) 10
  11. 11. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentChina hopes to balance economic and social development with population,resources and theenvironment, and embark on a path of sustainable development also China will play aconstructive role in resolving regional hotspot issues and take an active part in variousformsof regional security dialogue and cooperation in order to preserve a regionalenvironmentconducive to peace and development in Asia.According to AbhayBurande in his articles on Advantages of globalization claimed thatglobalisation increases the economic prosperity and opportunity in the developing world.Thecivil liberties are enhanced and there is a more efficient use of resources. All thecountriesinvolved in the free trade are at a profit. Resulting in lower prices, more employmentand a better standard of life in East Asian region, it is feared that some developing regionsprogress at theexpense of other developed regions. However, such doubts are futile asglobalization is a positive-sum chance in which the skills and technologies enable to increasethe living standardsthroughout the world. Liberals look at globalization as an efficient tool toeliminate penury andallow the poor people a firm foothold in the global economy. In twodecades from 1981 to 2001,the number of people surviving on $1 or less per day decreasedfrom 1.5 billion to 1.1 billion.Simultaneously, the world population also increased. Thus, thepercentage of such peopledecreased from 40% to 20% in such developing countries like EastAsia.Most of the East Asian economies have also benefited from outsourcing done bymostlyAmerican companies hence more job opportunity is created. For example ³Malaysia isone of thehosts of Call centres for American and other European companies, leading to adevelopment of Malaysian service sector, as they learn how to communicate, tackle situation,and handlecustomers also their skill level is developed and polished by foreigncompaniesGlobalization advocates such as Jeffrey Sachs points to the above average drop inpoverty ratesin countries, such as China, where globalization has taken a strong foothold,compared to areasless affected by globalization, such as Sub-Saharan Africa, where povertyrates have remainedstagnant.Supporters of free trade claims it increases economic prosperityas well as opportunity,especially among developing nations of East Asia, enhances civilliberties and leads to a moreefficient allocation of resources. Economic theories ofcomparative advantage suggest that free trade leads to a more efficientallocation of resources,with all countries involved in the trade benefiting. In general, this leadsto lower prices, moreemployment, higher output and a higher standard of living for those indeveloping countries.Asia Pacific University (A.P.U) 11
  12. 12. Chan CheeMang TP021569 BM002-3-3 Individual Assignment6.2 Drawbacks of Globalisation and Free Trade on East Asian EconomyGlobalisation and Free Trade are being blamed for their negative effects which heavily impacton some countries of the East Asia. Authors such as Marxist analysis, Sheikh Baten, Lim andPaul argued that globalisation had made poorer countries are to suffer, countries like Vietnamand Laos in East Asia try to save their national markets. The common main export productfrom poorer countries is usually their agriculture, andGlobalisation and Free Trade increaseddifficulties for them to compete with stronger countries. The balance of trading seems to beunfavourableand unfair to country depends on agricultural industry. This is because import ismostly greater than export even the value of goods imported are much higher than that ofexported. Therefore,Globalisation and Free Trade does not really provide a win-win situation.In addition, exploitation of resources becomes another issue which the stronger industrialisedpowershas resulted in the exploitation of the people in those nations to have cheap labouronly.A very good example would be foreign businesses shifted to China or Vietnam forcheaper human resource. However, host countries labour suffered as being paid lower andwork overtime. Globalisation has alsoled to spread of a materialistic social lifestyle andattitude that sees consumption as the path to prosperity in the East Asian countries. East Asiahas not been able to decouple from developed economies.According to the Andy Yee (2010), during the year 2000-2007, exports as the mainproportion of Asia‘s GDP increased from 35% to 47%, with three-fifths going to Europe andthe US with most intraregional trade inintermediate goods used to manufacture exportproducts. As Stephen Roach (2010), a well-known economistand Chairman of MorganStanley Asia, pointed out in his latest book, Asia‘s explosive growth has been based on upondeep integration with the global economy, which proved unsustainable in face of the globalrecession. East Asia need to focus on promoting moreintraregional trade in final goods byencouraging local demand, East Asia‘s stellar growth performance has led to the decline ofabsolute poverty since the 1990s. However, inequality of income and consumption hasincreased significantly since then. About 3 quarters of inequality in the region are attributed toinequality within countries. The export-led growth hasintegrated littoral regions, specialeconomic zones and cities with the global supply chains. In the process, many fault lines, suchas the urban-rural divide, regional-ethnic divide and skilled-unskilled labour wage gapsdeveloped which may threaten social stability. For example, the phenomenon of migrantAsia Pacific University (A.P.U) 12
  13. 13. Chan CheeMang TP021569 BM002-3-3 Individual Assignmentworkers in China and the associated debate of hukou reform.TheBangkok-rural divide inThailand, which has paralysed Thailand‘s political system, is another.Globalization has widenthe gap of inequality in recent years as unrestricted free trade benefitsthose with morefinancial leverage, and has also promote depending on other country to supplyfor necessaryneeds for example Singapore depends on Malaysia to supply Water, if in futurethe twocountries go on war Singapore will be heavily affected with no water supply eventhoughMalaysia has signed up contract of providing Singapore water for 100 years, but war isindeed is a war.According to PoushaliGanguly, there is immense pressure on the employed workers in theMultinational Corporations who are uncertain as to business might close and go back toparent country or a 3rdcountry due to uncertainty in the environment of most of the East Asiancountries, for example Indonesia and Thailand unstable political system, high corruption ratein Malaysia. AlassaneOuattara (1998) also stated that globalisation and free trade along withinconsistent of macroeconomic policies were the reason for Asian financial crisis in 1997-1998 as in Thailand,where the East Asian crisis was ignited was due to the internationalinvestors lost confidencewhen domestic financial management failed to address the increasingobvious problems of anoverheated economy and a consequently weakening external currentaccount. The economy should not be too dependent on FDI of globalisation and free trade toavoid financial crisis from happening again.Asia Pacific University (A.P.U) 13
  14. 14. Chan CheeMang TP021569 BM002-3-3 Individual Assignment7.0 ConclusionIn this era, the world has seems to bepolarised by the developing countries in the last half-century which is one groupwhich succeeded in poverty reduction through sustained growth,and another group didn‘t. The majority of East Asian countries belong to the first group.Viewing from a long perspective and as a regional phenomenon, there is no denythat EastAsia has madeimpressive strides in income levels, economic equity and social indicatorsdespite frequent wars, crisis and stagnation. On the balance, for nearly all the countries ofEast Asia, globalization hasmeant faster growth and more prosperity for a larger share of itspopulation than at any other time in their histories. The gross national product (GNP) ofAPEC economies over the past decade has increased by a 3rd, the number of people living inpoverty has fallen by a 3rd, andliteracy rates are among the highest in the world, thanks toeducation expenditures that have risenfaster than GNP. The citizens of the emergingeconomies of the Asia-Pacific region are amongthe most literate, healthy and prosperous inthe developing world.8.0 References8.1 Books and JournalsA Dictionary of Marxist Thought., Oxford: Oxford University Press.Anderson, J. E. &Neary, P. J. (1994).Measuring the restrictiveness of trade policy.WorldBank Economic Review 8, 151–169.Anderson, J. E. &Neary, P. J. (1996).A new approach to evaluating trade policy.Review ofEconomic Studies 63, 107–125.APEC Economic Committee.(1995). Foreign Direct Investment and APEC EconomicIntegration. Singapore: APEC Secretariat.Asian Development Bank (ADB). (1992). Asian Development Outlook 1992. Manila: AsianDevelopment Bank.Asian Development Bank (ADB). (1997). Emerging Asia: Changes and Challenges. Manila:Asian Development Bank.Asia Pacific University (A.P.U) 14
  15. 15. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentAsian Development Bank (ADB). (1999). Asian Development Outlook 1999. Manila: AsianDevelopment Bank.Bank for International Settlements (BIS).(1997). 67th Annual Report. Basle: BIS.Bank for International Settlements (BIS).(1999). 69th Annual Report. Basle: BIS.Bhagwati, J. N. (2000). Relaxed Reciprocity: Historical and Modern Experience withUnilateral Trade Liberalization.Cambridge, MA: MIT Press.Dowling, M. & Summers, P. (1998). Total factor productivity and economic growth—issuesfor Asia. Economic Record 74 (June) 170–185.Drabek, Z. & Laird, S. (1998). The new liberalism—trade policy developments in emergingmarkets. Journal of World Trade 32 (October), 241–269.Findlay, C. & Warren, T. (Eds.). (in press). Impediments to Trade in Services: Measurementand Policy Implications. Sydney: Routledge.Harrison, A. (1996). Openness and growth: a time-series, cross-country analysis fordeveloping countries. Journalof Developing Economies 48, 419–47.Hoekman, B. & Braga, C. A. P. (1996). Trade in services, the GATS and Asia. Asia-PacificEconomic Review 2 (April) 5–20.Hughes, H. (1995). Why have East Asian countries led economic development.EconomicRecord 71 (March) 88–104.Institute of Developing Economies. (1997). Economic Outlook for East Asian EconomiesOver the Next Decade: Is Continuous Growth Possible? Tokyo: Institute of DevelopingEconomies.Jung Sik Kim and Yonghyup Oh. (2007). Determinants of Intra-FDI Inflows inEast Asia:Does Regional Economic Integration Affect Intra-FDI?,1(02), pp 25-35Krueger, A. O. (1984). Trade policies in developing countries.In R. W. Jones & P. B.Kenen(Eds.), Handbook of International Economics. Amsterdam: North-Holland.Lim, Paul J. (2001). "Stay Home, Investor, If You Want to Keep Your Money" , U.S. News&World Report, 130:20Lloyd, P. J. &MacLaren, D. (1999).Measures of Openness Using CGE Analysis.University ofMelbourne Economics Department Research Paper 659.Lloyd, P. J. &Toguchi, H. (1996).East Asian export competitiveness.Asia-Pacific EconomicLiterature November 1–15.Low, P. & A. Mattoo. (1999). Is there a better way? Alternative approaches to liberalizationunder GATS. WTO, mimeo.Asia Pacific University (A.P.U) 15
  16. 16. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentMcGuire, G. &Schuele, M. (1999).Restrictiveness of International Trade in Banking Services.Paper presented at the Pacific Economic Cooperation Council Trade Policy Forum, Auckland,New Zealand, 3–4 June 1999.Organisation for Economic Cooperation and Development (OECD).(1997). Indicators ofTariff and Non-tariff Trade Barriers. Paris: OECD.Petri, P. A. (1995). The interdependence of trade and investment in the Pacific.In E. H. Y.Chen & P. Drysdale(Eds.).Foreign Direct Investment in Asia and the Pacific. Sydney: HarperEducational.Sabhlok, Anisha.(2001). The Evolution of Singapore Business: A Case Study Approach.IPSWorking Paper No. 10 (Volume 1 and 2).Sachs, J. D., and Warner, A. (1995).Economic reform and the process of globalintegration.Brookings Papers on Economic Activity I:95, 1–118.Singh, A. (1995). How Did East Asia Grow So Fast? UNCTAD Discussion Paper 97, Geneva.Taylor, M. S. (1999). Trade and trade policy in endogenous growth models.In J. Piggott & A.Woodland (Eds.).International Trade Policy and the Pacific Rim.Houndsmill: Macmillan.United Nations Conference on Trade and Development (UNCTAD).(1998). World InvestmentReport 1998 Trends and Determinants. Geneva: UNCTAD.World Bank (1993).The East Asian Miracle: Economic Growth and Public Policy. Oxford,UK: Oxford University Press.World Trade Organization (WTO). (1998). Annual Report 1998: International TradeStatistics. Geneva: WTO.Xu, X. & Song, L. (2000). Export similarity and pattern of East Asia development. In P. J.Lloyd & X. Zhang (Eds.), China in the Global Economy. Cheltenham, UK: Edward Elgar.Yamin, Mo and Pervez N. Ghauri.(2004). Rethinking MNE-Emerging Market,Relationships:Some Insights from East Asia,´ in Global Firms and Emerging Markets in theAge of Anxiety.Westport, CT. Praegar Publishers, 251-2668.2 Online ResourcesLaurence E. Rotenberg., 2003, Globalization 101 the Three Tensions of Globalization[online],America, The America Forum for Global Education, Available from: th [Accessed on 10 September 2012]Asia Pacific University (A.P.U) 16
  17. 17. Chan CheeMang TP021569 BM002-3-3 Individual AssignmentLawrence J. Lau and Jungsoo Park., 2003,The Sources of East Asian Economic GrowthRevisited [online], America, Stanford University, Availablefrom: [Accessed on 10thSeptember 2012]PoushaliGanguly., N.D, Pros and Cons of Globalization, 2011, [online], Available from:[Accessed on 10thSeptember 2012]ShiekhBaten., N.D,Globalization and the Resistance against It, 2011, [online], Availablefrom: [Accessed on 10th September 2012]Stepehn Roach., 2010, Asian economic integration? Address domestic inequalities[online],London, University of London, Availablefrom:[Accessed on 10th September 2012]Steven Radelet, Jeffrey Sachs and Jong-Wha Lee., 1997,Economic Growth inAsia[online]Available from:[Accessed on 20thSeptember 2012]Thomas Sowell., 2005, in defense of globalization, free-trade and free-market[online],Available from:[Accessed on10th September 2012]Xinhua., 2011,Full text of Chinese President Hu Jintaos speech at opening ceremony of BoaoForum (Part 2)[online], Available from:[Accessed on 27thSeptember 2012]Asia Pacific University (A.P.U) 17
  18. 18. Chan CheeMang TP021569 BM002-3-3 Individual Assignment9.0 Appendixes9.1 East Asia PopulationThe population is now more than 1.5 billion people, about 38% of the population of Asia or22% of all the people in the world, live in East Asia, about twice Europes population size.The region is one of the worlds most populated places, with a population density of 133inhabitants per square kilometre (340 /sq mi), being about three times the world average of 45/km2 (120 /sq mi). Mongolia has the lowest population density of a sovereign state. Using theUN sub region definitions, it ranks second in population only to Southern Asia.9.2 Brief History of East AsiaHistorically, many societies in East Asia have been part of the Chinese cultural sphere, andEast Asian vocabulary and scripts are often derived from Classical Chinese and Chinese script.Sometimes Northeast Asia is used to denote Japan and Korea. Major religions includeBuddhism (mostly Mahayana), Confucianism or Neo-Confucianism, Taoism, Chinese folkreligion in China, Shinto in Japan, Taoism in Taiwan, Shamanism in Korea, Mongolia andother indigenous populations of northern East Asia, and recently Christianity in South Korea.The Chinese calendar is the root from which many other East Asian calendars are derived.9.3 The East Asian performanceThe fact is well documented stating that before the financial crisis in 1997, the average rate ofgrowth of real GDP per capita in East Asia was above average, whether one compares EastAsian statistics with those for the world as a whole or with those for other developingcountries. It was reported in the much-publicised World Bank study, The East Asian Miracle(World Bank, 1993), to the 25-year period 1965 to 1990 and to the eight countries the WorldBank termed high-performing Asian economies (HPAEs), namely, Japan, the ―Four Tigers‖(Hong Kong, the Republic of Korea, Singapore and Taiwan) and the three newlyindustrialising economies (NIEs) of Indonesia, Malaysia and Thailand. Their average rate ofgrowth of real GDP per capita which is 5.5% was more than twice that of any otherdeveloping country region. Japan should be omitted from this list, as it was a high-incometechnologically advanced country throughout the period and is commonly regarded as quitedistinct. China and Vietnam should be added, as they too have had an average annual growthrate in excess of 5% in the last two or more decades. This makes nine East Asian countriesAsia Pacific University (A.P.U) 18
  19. 19. Chan CheeMang TP021569 BM002-3-3 Individual Assignmentwhich are Hong Kong, Singapore, Taiwan, Korea, Malaysia, Indonesia, Thailand, China andVietnam have sustained high growth for two or more decades.These nine East Asian countries continued to grow relatively fast in the 1990s up to the timeof the Asian crisis (1991 to 1996). During this period, all experienced an average annualgrowth rate of real GDP in excess of 5%, and all had an average annual growth rate of realGDP per capita in excess of 5% except Hong Kong which had a higher rate of populationgrowth.Other East Asian countries have experienced these growth rates in some decades but have notsustained them for more than one decade: Philippines in the 1970s, Mongolia in the 1980s andCambodia, Laos and Myanmar in the 1990s. Several South Asian economies haveexperienced annual growth rates in excess of 5% in some years, but their periods of rapidgrowth have not been sustained. It was really the countries of Northeast and Southeast Asiathat had performed so well.Given this record over more than 25 years, it is not surprising that economists became moreinterested in the region. The relatively fast growth of these countries was first noted byeconomists in the 1970s, when a number of reports commented on the outstandingperformances of the Four Tigers (Hong Kong, Taiwan, Korea and Singapore), as they werethen known. Later analyses related to the broader group of high-performing East Asianeconomies, as in for example, the World Bank report The East Asian Miracle, or to all of EastAsia. The praise for the group of fast-growing economies became even more fulsome. Thus,Singh (1995) concluded, ―It is no exaggeration to say that the post-World War II developmentof East Asia is the most successful story of sustained economic growth in the history ofhumankind.‖ Of more interest to us now is the pre-crisis analysis of the reasons for this fastgrowth. This is a complex issue. Studies on total factor productivity growth in Asian countriesby Alwyn Young and others have consistently found that high rates of growth are due, in aproximate statistical sense, to high rates of factor accumulation rather than to high rates ofgrowth of total factor productivity (Dowling and Summers, 1998).Asian countries have exceptionally high rates of capital formation when compared to otherdeveloped and developing countries, and these rates peaked just before the onset of the Asiancrisis. In 1996 gross domestic investment as a percentage of GDP was 42% in Thailand, 42%in Malaysia, 40% in China and above or around 30% for most of the fast-growing economies;Asia Pacific University (A.P.U) 19
  20. 20. Chan CheeMang TP021569 BM002-3-3 Individual Assignmentthe exception was Taiwan with only 21.2% (Asian Development Bank (ADB), 1999). It isless clear what private behaviour or government policies promoted factor accumulation andtotal factor productivity growth. One of the themes of this literature on which most analystsagree is the importance of international trade. Commentators in the 1970s and 1980s tended toexpress this idea by contrasting the export promotion strategies of the East Asian Tigers withthe import substitution strategies of many developing countries in Latin America and Africaand some in Asia especially India. The former give rise to the export-led hypothesis of EastAsian rapid growth. A survey of this literature is provided by Krueger (1984).There is a strong statistical correlation between the rate of growth of exports and that of realGDP (ADB, 1999). This is not, however, proof of export-led growth. The causation could runin the other direction; some economists have argued that in countries such as Korea andTaiwan, it was an investment boom that led to an increased demand for imports of capitalgoods, which in turn required increased exports (World Bank, 1993; Hughes, 1995; ADB,1999).1.1 Table shows East Asian Gross and Net Capital inflows in the form of private FDICountries Foreign Direct Investment (FDI, %)China 24.7Indonesia 25Malaysia 48.6Singapore 72.4Korea 2.6Taiwan 7.3Thailand 11.6This provides another caution that the patterns of factor accumulation and productivity growthare not uniform among fast-growing countries. Several authors have linked the rapid growthof Asian exports and output to the rapid growth of Asian foreign investment flows and arguedthat the exports and FDI are complementary (ADB, 1992; Petri, 1995; Asian PacificEconomic Cooperation (APEC) Economic Committee, 1995). At least for countries that havea high rate of FDI inflow of an export- and FDI-ledgrowth pattern. FDI may boost exportcompetitiveness by improving the technology, management and marketing of exportAsia Pacific University (A.P.U) 20
  21. 21. Chan CheeMang TP021569 BM002-3-3 Individual Assignmentindustries. Increased imports of fixed capital equipment that embody new technologies maybe a source of embodied technological change. There is a link here to the high rate of capitalformation in these countries. Multivariate analyses of economic growth have confirmed thatincreased trade and FDI have been central to rapid growth in East Asia (Harrison, 1996). Theexistence of a positive marginal link between openness and growth suffices to indicate thedirection of trade policies required for the promotion of growth, even if the precisemechanisms by which opening international trade has increased factor accumulation and totalfactor productivity growth are not known.Asia Pacific University (A.P.U) 21