Endnotes

¹Merchandise exports as a % of GDP for Hong Kong, China; Korea; Singapore; and Taipei,China are 169%, 45%, 185%, and 65%, respectively.

²The overall ratios or percentages are obtained from the IMF which computes composites of ratios relating to the domestic economy weighted by GDP valued at purchasing power parities (PPPs) as a share of group GDP.

³We note that these cross-correlation coefficients are preliminary rough estimates as they are computed over a small number of time periods.

⁴The marginal propensity to import exceeds unity for Hong Kong, China and Singapore due to the high proportion of re-exports. The propensity to import goods for domestic production or consumption in Singapore is estimated to be around 0.8 (Peebles and Wilson, 2002), while the propensity to import in Hong Kong, China calculated from retained imports using more recent data is approximately 0.5.

⁵Demographic change in Singapore was supposed to produce one of the world's most rapidly aging populations. However, the transition towards an older population structure was slowed by large scale immigration and importation of foreign talents and workers.

⁶Data for Hong Kong, China; Korea; and Singapore are sourced from Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision. Due to unavailability of data for Taipei,China, we compute the old age dependency ratios from 1980 to 2009 based on data from the CEIC database.

⁷The volatile GDP growth rates over the past decade led the local media to dub Singapore a roller-coaster economy.

⁸The same study found that Asia's exports only account for approximately one-third of its GDP, far below the 50% dependence indicated by trade data. The exaggerated export dependence is due to the higher import content of exports that resulted from greater segmentation of the production process across the region.

⁹See OECD (2002) for a literature review of empirical studies that show the positive impact of foreign direct investment on economic growth.

¹⁰However, we are not advocating that the Asian tigers adopt a new growth model whereby domestic demand consistently grows faster than output, as this would in the long term lead to unsustainably large trade deficits.

¹¹According to a study by IMF (2006b), the Gini coefficient for Hong Kong, China; Korea; Singapore; and Taipei,China climbed 51.4, 33.1, 48.1, and 33.9 points, respectively, from 1995 to 2005.

¹²All the year-on-year growth rate figures are flattered by a low base effect.

¹³See Zhang et al. (2003) for a discussion of these linkages from a dynamic economic and political perspective.

¹⁴At the current juncture, China, Japan and Korea have each arranged FTA agreements with the whole of ASEAN; the proposal here is to merge these bilateral FTAs into a region-wide FTA.

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