Endnotes

¹ For an introduction to international trade theory there are many textbooks; see for example Krugman and Obstfeld (2003) for an excellent introduction. Kawai (2005) charts the growing interdependence between economies in the region and the moves towards trade and other forms of co-operation.

² For example for the second half of the 1990’s a ‘demand decomposition analysis’ by the author shows strong negative import substitution in most categories of manufactures in PRC; in other words import shave grown much more rapidly than domestic production most particularly in ‘medium and high technology’ products; for details see Weiss and Jalilian (2004) table 5.

³ Examples of such approaches based on the widely-used GTAP model are Roland Holst (2002), McKibbin and Woo (2003), Ianchovina and Martin (2003) and Chirathivat and Mallikamas (2005). A more general discussion of the benefits of closer regional co-operation is Pangestu and Gooptu (2004).

⁴ The data on the technology content of exports come from Lall and Albaladejo (2004) and refer to 2000. The same authors have a simple test of similarity of export structure by regressing data on the structure of exports at the 3 digit level for PRC on the same data for its neighbors. The correlation coefficient derived in this way is a test of similarity.

⁵ Intra-industry competitiveness is defined for product i as (Xi – Mi)/ (Xi + Mi), where X refers to exports and M to imports. In Table 5 [ PDF 51.7KB | 1 page ] a negative sign indicates imports exceed exports for PRC. A zero indicates exact balance of imports and exports.

⁶ East and South East Asia as a region has already witnessed a substantial growth in intra-industry trade, particularly in the exchange of electronics products between countries as part of global production networks; see the data in Chantasasawat et al (2004) table 4.

⁷ This may be partially a problem with the level of aggregation used, but is also likely to reflect the logic of the model. In the model the ASEAN sectors that expand most rapidly are by definition those that face the highest Chinese import tariffs prior to the scenario of PRC joining ASEAN. Hence tariff reductions drive trade flows. More dynamic considerations, for example related to FDI flows, that are more likely to stimulate intraindustry trade in parts and components are not fully incorporated in the model. This is also a point that can be made in connection with the model used in Roland Holst (2003).

⁸ Ianchovichina and Martin (2003) focus principally in their model on the short-run impact (1995-2007) on PRC of WTO accession. They do include some estimates for other economies and find a negative short-run impact on the rest of ASEAN. This is most significant for Viet Nam and arises due to the impact of the removal of textile and clothing quotas for WTO members in 2005. As a WTO member PRC benefits from this at the expense of the textile and clothing sector in the rest of the region.

⁹ McKibbin and Woo (2003) cite a survey of Japanese firms in the period immediately prior to PRC’s WTO accession as evidence of an intention to shift to PRC.

¹⁰ The UNCTAD index of FDI performance which compares a country’s share of global FDI with its share of global GDP provides a simple measure of FDI dependence (see UNCTAD 2002 table 2.1 for example).

¹¹ Xiao Geng (2004) discusses these issues in detail and presents some approximate estimates of the amount of so-called ‘round-tripping’ funds.

¹² It is well known that econometric exercises may not produce robust results as changes in data, time period or model specification may lead to different results. An alternative approach by Xing and Wan (2004) finds support for the diversion case. They model Japanese FDI to four ASEAN countries relative to PRC as a function of the relative real exchange rates of the countries and PRC. Increased competitiveness as measured by a relative depreciation in the real exchange rate for an individual country leads to more Japanese FDI, suggesting a diversionary effect.

¹³ Lall and Weiss (2004) discuss issues of international competitiveness in the context of a country casestudy for Pakistan.

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1. Kazi Iqbal Sayeed
   (posted 03 September 2005 / 07:09:19 PM)
   
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   - Kazi I.S.