Conclusions

How should we interpret this story? In general it is fair to say that PRC’s regional effect both through its trade and FDI impact appears on balance positive rather than negative. The generalization that it is better to have a large, fast growing and open neighbour than not, seems borne out by the evidence we have at hand.

Nothing is totally clear-cut however. In a globalized world adaptation and flexibility are essential at the enterprise and economy levels, since more open trade and investment flows will inevitably create losers as well as winners. If resources from contracting sectors can flow readily to sectors where returns and growth prospects are better all will benefit, but where they do not problems will emerge. The short-run difficulties of clothing exporters in Viet Nam and Cambodia that now face the full force of Chinese competition with the ending of the international textile and clothing regime are an obvious and important example.

It is misleading to deny that the PRC effect poses challenges for regional producers both in selling in their own domestic markets and in exporting to third countries. Meeting these challenges requires responsiveness on the part of producers, but governments also have a role to play. Governments in the region that talk of the need for national competitiveness strategies in the face of global challenges (including the effect of PRC) are not repeating obsolete mantras. Such strategies may differ from the industrial policy of earlier decades but if implemented effectively can be important in terms of positioning an economy to take account global and regional trends. Quite what the supportive role of governments should be is a big issue that deserves considerable discussion in its own right.¹³

Here we simply conclude with the observation that success in coping with the re-emergence of PRC requires in large part that producers in the region successfully upgrade their technological base and move up the ladder of comparative advantage from the technologically simple to the technologically more sophisticated products. This will ensure that the positive side of the PRC effect (a large and growing market in the region) is not outweighed by the negative impact of growing competition in similar product lines and for FDI inflows.

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Comment(s)

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1. Kazi Iqbal Sayeed
   (posted 03 September 2005 / 07:09:19 PM)
   
   Just define the way exactly you want to fetch results from and proceed it with 100 %. That's all that makes a pattern of success. Thank you.
   - Kazi I.S.