asian integration
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INDIA - ASEAN ECONOMIC COPERATION IN
EMERGING GLOBAL ECONOMIC SCENARIO
Dr. Harish Anand
NATIONAL CONFERENCE ONEMERGING GLOBAL ECONOMIC SCENARIO: ASEAN
AND INDIA
Department of Economics,Kurukshetra University Kurukshetra
19th and 20th of March,2010
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Broad outlook of Global Economic Scenario
Consumption Vs Saving/investment driven economies
Cheap Money policy Vs(and) Saving Gut
Existing and emerging Global financial architecture
Slow Vs Fast growing economies
Growing Regionalism for balanced growth
High degree of complexities and uncertainty
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55% of world population will continue to stay in Asia
with 46 per cent in 7 Asian countries only
196 0 2009 205 0
Wo r l d 3 .02 6.83 9.1
Developed countries 0.71 1.02 1.1
Developing countries 2.06 5.5 7.8
e ve l o p i n g c o u n t r i e s 196 0 2009 205 0
Asia 1.6 3 .9 5.02
Africa 0.28 1 2
America 0.21 0.577 0.723
Oceania 0.003 0.09 0.07
196 0 2009 205 0
A s i a 3 .9 5
East Asia 1.4 1.5
South Asia 1.7 2.4
South East Asia 0.6 0.8
Western Asia 0.2 0.3
A s i a 2009 205 0
China 13 0 140
India 120 160
Indonesia 20 29
Phillipines 6.7 7.3
Thailand 18 3 3
Pakistan 16 22
Bangladesh 9 15
Total of above 3 20 406
n c r o r e
n bn
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With de eloped countries accounted for 7 % of world GDP,
Asia has hi hest share in de elopin economies GDP
1970 1990 2008
World GDP- USD trillion 3.3 12 60
Developed countries 70 79 69
Developing countries 17 17 28
Transition economies 13 4 3Asia developing countries( % share) 9 10 18
Asia developing countries share in world
developing countries( % share) 53 57 67
Percent shareinWorldGDP
1 8
3 9
1 5
1 11 2
8
1 6
1 3
2 0
1 4
0
5
1 0
1 5
2 0
2 5
3 0
3 5
40
Ch in a In d ia Ko r e a A S EA N S o u t h
A s i a
hare in Asia de elopin countriesGDP(%)
1 9 9 0
2 0 0 8
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Asia, ASEAN, China, India witnessing rising sharein world trade
1948 1983 1993 8
World trade-USD BN 59 1838 3 15717
North America 28 17 18 13South and Central America 11 4 3 4Europe 35 43 45 41
Africa 7 4 3 4
Middle East 2 7 4A
sia 14 19 26 28China 1 1 2 9Japan 0 8 10 5India 2 0.50 0.6 1.1Six East Asian traders 3 6 10 9
Australia and New Zealand 4 1 1 1
Re ionwise world merchandise exports % share)
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Though USA and EU remains largest importers, importsin Asian countries have been growing
W o r ld m e r c h a n d is e im p o r t s % s h a r e )
0 .0
5 .0
1 0 . 0
1 5 .0
2 0 . 0
2 5 .0
3 0 .03
5.0
4 0 .0
4 5 .0
5 0 .0
N orthA m e r i c a
E u r o p e A s i a C h in a J a p a n In d ia S i x E a s tA s i a n
t rade rs
1 9 4 8
1 9 8 3
1 9 9 3
2 0 0 8
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Across the world geographical proximity is visible ininter-regional trade flow
Ori i
rt
ri
t
tr l
ri r I fri
i l
t iWorld 17 4 43 3 3 4 25
North America 50 8 18 1 2 3 18South and
Central
America 28 26 20 1 3 2 17
Europe 7 1 73 4 3 3 8
Africa 22 3 39 0 10 3 20
Middle East 11 1 12 1 4 12 56
Asia 18 3 18 2 3 5 50
DESTINATION
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Emergence ofASEAN to its present status
Erosion of Japan manufacturin competiti eness
Unilateral tariff reduction to attract FDI by leading ASEAN economies
Later on Korea and leading ASEAN economies followed suit
Re ionalism delayed
APEC 1995 BY USA and East Asian Economic Cooperation
One agreement means 10 agreements
ASEAN-China FTA possi ility emer ed in
Arrival ofAFTA
ASEAN crisis and China joining WTO
Japan and Korea moved on Domino Theory
Hollowing out effects createdASIA MANUFACTURING MATRIX
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The genesis ofASEAN export led growth lies in FDI and theircountry of origin
7
4 3
5
5
5
3
E apan ASE AN USA AsiaNIE's ong
ong
+ orea+Taiwan
hina
Origin wise FDI flow in ASEAN 2000-08( % share)
5 % of U SD 34 bn FDI received in - 8 came in Singapore,Malaysia % , Thailand 8% Vietnam 8%
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ASEAN : Major Trading partners
.
1995 2008 1995 2008
ASEAN 24 25 17 29
Major tradin partners 76 79 83 74
Japan 15 12 25 13
European Union- 5 15 10 14 14
China 2 12 2 10
USA 19 9 14 12
Repu lic of Korea 3 5 3 4India 1 2 1 4
Taiwan 3 1.6 3 1
TOTAL -USD BN 296 879 318 831
EXPORTS % SHARE) IMPORTS % SHARE)
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With different tariff structures, low MOP, East Asiaespecially ASEAN becoming Noodle owl of FTAs
K O R E A C H I N A
A S IA N C H I N A F T A
J A P A N A S E A N A S E A N + 3
A F T A A S E A N + 6In d o n esia E A S T A S IA F T A
M alay sia A P E C
Thai land E A E C
Singapore
Phi l ipp ines JA PA N -K O RE A
Vie tnam JA PA N -A S E A NC a m b o d i a K O R E A -A S E A N
L a o P D R
M yanm ar
B r u n e i
I N D I A
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Is future ofASEAN hinge on fragile trade arrangements
High level of vertical integration in ASEAN countries
Trade agreements based on private sector initiatives
ASEAN lack WTO type commitment- Article-2
Top level commitment is missing-Continuum of Supranationality
Overlapping FTAs and different tariff reduction schedules in
member countries in same FTA
ASEAN has not discrimination in tariff due to RTAs etc
The largest trade flow in East
Asia is not covered under any FT
A/RT
A/P
TA
Japan and China and Japan and Korea
Global crisis of 2008 endorse resilience and maturity
and mutual understanding
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Fact sheet: India-ASEAN Trade
India-ASEAN trade increased from $4 bn to $47 bn during 1995-2008
India exports to ASEAN and imports from ASEAN has increased by
about 20% CAGR during 1995-2008
Indias negative trade balance increased from less than USD one
billion to about USD 13 bn during the same period.
During the same period,A
SEAN
-China Trade increased by 23% fromUSD 13 bn to USD 192 bn and ASEAN Balance of Trade with China turnednegative from less than USD one bn to more than USD 21 bn
China share in ASEAN trade with world including intra ASEAN tradeincreased from 11% to 42% during 1995-2008
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India-ASEAN Free Trade Agreement: Key Issues
Immediate gains in terms of positive BOT are not visible in near
future
Japan and Korea presence in ASEAN and FDI in India
China-ASEAN FTA is already operational
Existing geo-political scene in ASEAN and East Asia not very
conducive for India
India face serious supply chain constraints
Low share of manufacturing in India GDP
High cost economy
Complementarities based on service sector strengths need validation
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From Regional Integration towards Multilateral TradingSystem: Framing India Strategy 2050
APECOR
EAEC
APECOR
EAEC
ASEANPLUS 3JAPANKOREACHINA
ASEAN
TransAtlanticEconomic
Cooperation
ASEANPLUS 3+
India+Oceaniccountries
Economic Cooperation has been an instrument to achieve widersocial-political objectives as well as a strategic intent in itself
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India ASEAN economic cooperation:Way to Asian Integration
( Impro in Connecti ity with ASEAN
( : Physical and Soft
(
Trade in oods and ser ices and In estment promotion
( Financial sta ility in the world especially Asia
( Promotin economic and social welfare
Environment, Health and Education
Orderly growth of the World economy and world tradeAddressing China factor
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India ASEAN economic cooperation:Internal policy imperatives
Streamline FTAs signed and in process of signing
SAFTA, BIMSTEC, India-Thailand
Standardized Rules ofOrigin
Increase the share of manufacturing sector in Indias GDP
Inorganic growth through FDI
Infrastructure development
(China strengths lies in China only)
Develop resources for FTA negotiations
Data collection and dissemination should be speed up
More focused research on impact of FTAs on different sectors of theeconomy industry, agriculture sector and services
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Need to create centers in Uni ersities for
trackin India-ASEAN and other re ional
economic co-operation related de elopments
THANK YOU
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