Recent Trends in Economic Integration in the Asia Pacific Region - Essay Example

Recent Trends in Economic Integration in the Asia Pacific Region and Their Impact on Economic Development Poverty, environment, agricultural protectionism are few of the problems encountered in the Asia-Pacific region. Eliminating these would be a very big goal, but with economic integration and with the help of the people and organizations, this plight will be made possible. The main focus of this paper is to identify the recent trends in Economic Integration in the Asia Pacific Region, discuss their impact on Economic Development and discuss the future development of the region. With the use of research and study of the different articles, it is therefore realized that ASEAN, APEC, ADB and World Trade Organization has been making plans and ways to fight Asia's problem areas and through these organizations, the region has improved and became the worlds largest economic region. INTRODUCTION Asia has been one of the world's economically promising continents. According to James Chan, during the Middle Ages, Asia was the most developed part of the world. (244) In Asia, you can find famous textiles, silverwares, spices, porcelains, silks. Today, however, the Asia Pacific region comprises developed, developing, and underdeveloped contact centre markets and as these markets progress, the demand for better customer service is expected to drive growth in this region. (Frost & Sullivan, 2005) Except for countries like USSR, Japan, Israel and other parts of Southwest Asia that is rich of oil, most Asian countries are now part of the developing world. Nowadays, most people living in Asian countries are so close to the survival limits. Developing countries in the Asia-Pacific region are facing three challenges, namely reducing poverty, addressing environmental degradation and promoting regional cooperation, said Tadao Chino, President of the Asian Development Bank (ADB), at the opening ceremony of ADB's annual meeting (here) Friday. (Xinhuanet, May 2002) Poverty and unemployment practically started when all Asian countries experienced urbanization. Through urbanization, residents of the countryside tend to flock into the cities to experience urban living where there are wonderful city lights, big buildings and amusement parks. This increased unemployment, congestion and various forms of social disorganization. The rapid urbanization of Asia presents some very significant challenges. The sheer scale of urban growth, the massive infrastructure needs, the plight of the urban poor, and pollution of the environment all present massive challenges. (Myoung-Ho Shin, September 2005) These events had contributed to the economic trends of the Asia-Pacific region as well as provide a great impact on Asia's Economic Development. AIMS to be able to identify the recent trends in Economic Integration in the Asia Pacific Region to discuss their impact on Economic Development to discuss the future development of the region ASIA-PACIFICS RECENT TRENDS IN ECONOMIC INTEGRATION The purpose of economic integration is to get the regions cooperation in terms of monetary, financial and fiscal areas, agriculture and industry, and other sectors. It is to prepare Asia's regions in globalization. According to Mario Lamberte, the roles and modalities of regional economic cooperation and integration in Asia focuses in three broad areas, namely, trade and investment, monetary and financial integration, and infrastructure and associated software. Regional integration, on the other hand, is de facto integration of economies within a geographic region. It may be market-driven integration, which means, there is no explicit agreement or coordinated action among countries within a region to integrate their economies; or policy-induced integration, that is, one that results from regional cooperation. (Lamberte, Page 4) Economic Integration in Asia Pacific is the sense of unity and cooperation of all the countries involved in the region. Cited from the New Asia Forum, some countries of the region have large excess capacity in sectors such as construction and IT and some others have large unmet demands in these areas. In such a scenario, regional pump-priming or regional Keynesianism could be quite effective in reviving demand for utilising the excess capacity. (no date) Though there are only few countries in Asia that is financially capacitated, almost all countries in Asia have an edge and different expertise in the field of technology. These are naturally complimentary and if combined together, and would therefore be mutually beneficial for the whole Asia Pacific Region. For instance, Korea in auto, consumer electronics, semiconductors, shipbuilding; China in consumer electronics and light engineering; India in biotechnology, pharmaceuticals and computer software, and so on. Within industries too, there are patterns of complementarities. For instance, in IT industry East Asia has huge hardware capacity and some countries like India, and the Philippines have the software capacity. A similar situation exists in chemicals, pharma, biotech, etc. (New Asia Forum, no date) There are also countries which lacks human personal and work skills such as Japan, Singapore and Malaysia of which Philippines China and Indonesia is well provided of. For over three decades, there are five dimensions of economic trends based on APEC's performance according to the Institute for International Economics. First, many countries in Asia have grown in exceptional rates causing it to be the world's largest economic region. Through economic integration and by becoming the largest economic region, the region has started to reduce poverty. During the speech of the Hon Alexander Downer, MP, Minister for Foreign Affairs, at the Crawford Fund conference Prosper or Perish: Asian Poverty and the Australian Economy, Canberra, last 28 June 2001, he said We have learned that economic growth is the most powerful force for sustained poverty reduction. There is no doubt that growth was the driving force behind Asia's success over the last three decades in going some way towards meeting the challenge of poverty. But we now know that growth reduces poverty much faster where governments ensure that the benefits are invested broadly in human capital, where natural resources are managed in a sustainable way and where income inequalities are not allowed to become excessive. Second, the dramatic growth is accompanied by the fastest rise of income for the greatest number of people. Although the absolute number of poor people in the region has declined considerably, there are still over 800 million living on an income of less than $US1 per day in this part of the world. The impact of the Asian financial crisis and political instability in some countries has compounded the challenge. ( Downer, June 2001) Third, as the APEC's economies have grown, their industrial composition has typically changed from resource and agriculture based industries to basic manufacturing and heavy industry and then to high tech manufacturing, finance and service industries. According to Downer, launching a new round of WTO negotiations, at Doha in November 2001 remains our number one trade priority. Australia believes that open markets, underpinned by a strong transparent and rules based multilateral trading system, are vital for achieving economic prosperity, particularly for developing countries. These countries have much to gain from a successful round, particularly through progress on breaking down agricultural barriers and subsidies that confront overseas primary producers in the markets of some developed countries. Although agricultural protectionism is known to worsen the global poverty by imposing high import tariffs for small or developing countries and the European Union takes many guises, such as "domestic support policies, import barriers, and export subsidies (Hussein Haeri, 2001), the Doha Development Round aims to improve the agricultural market access, internal and export aids. It also aims to give a special treatment for developing countries as well as give a market access for non-agricultural products. Aside from that, Doha Development Round aims to liberalise the trade in services and focus on Singapore issues with regards to trade facilitation, investments, government procurement contracts, conditions governing competition. The agenda also includes new trade talks; an action program to resolve developing countries' complaints about the implementation of Uruguay Round agreements; and, in a major breakthrough, an accord on TRIPS ensuring that patent protection does not block developing countries' access to affordable medicines. The conference also paved the way for China and Taiwan Province of China to get full membership in the WTO. (Mc Guirk, 2002) Fourth is the impressive expansion of rates of the volume of international flow for both trade and investment. The Australian Government has been able to increase its financial commitment towards the work of the Fund, to $650,000 per year for the next four years, principally to establish a Northern Territory chapter of the Crawford Fund. ( Downer, June 2001) The ADB on the other hand, together with more than 100 people including Ministers and high-level delegations from the seven member countries of the Central Asia Regional Economic Cooperation (CAREC) Program acknowledges the need for improved infrastructure, particularly energy, power, road, rail, civil aviation and telecommunications systems; upgraded basic services such as education and health care; continuation of the transition from central planning to market-based economic systems that support private sector development; modernization of agriculture; the removal of tariff and non-tariff barriers to trade; and, the effective use of the region's water and energy resources in ways that are mutually beneficial. (November 2004) The fifth and last dimension of economic trend is, the economic success of the region has been, marked by the increasing economic integration. This economic success is manifested not only in the high end countries in the region but also those who are in the evolution of the border-spanning economic regions and APEC itself. (no date) IMPORTANCE OF ECONOMIC INTEGRATION ON ECONOMIC DEVELOPMENT Eliminating poverty has always been a goal in every government in every country. Many international organizations in participation of all countries, including countries from Asia Pacific have conducted programs in reducing poverty. In Asia Pacific, examples of such are the APEC the Asian Development Bank, ASEAN and World Trade Organization. According to Myoung-Ho Shin (2005), the region's future economic growth and prosperity and the fight against poverty are directly linked to our ability to address the complex pressures and problems facing cities across Asia. Cities are, in many ways, engines of economic growth and social progress. Relative to population, cities generate higher-than-average proportions of each country's output of goods and services; the ADB estimates that some 80 percent of new growth in the region has been generated in its urban economies. However, without adequate public and private sector investments in urban infrastructure, municipal services and housing, the productivity and competitiveness of Asia's cities in the world economy may be over time be seriously impeded. The importance of economic integration is seen by the efforts of different organizations in making a way to reduce poverty, provide jobs for the jobless, building homes for the homeless and combining the Asia Pacific regions assets such as manpower skills and technology to be able to make it as the largest economic region in the whole world. TO DISCUSS THE FUTURE DEVELOPMENT OF THE REGION Asia Pacific has already been identified as the world's largest economic region in the whole world but the mission of the organizations that is working hard to achieve their goals has not yet stopped. These organizations still continued their quest to eliminate poverty and improve the economic status of the Asia Pacific region. Downer said that they working to develop the Closer Economic Partnership between Australia, New Zealand and ASEAN countries. The object of the CEP is to promote closer economic integration, and to improve the climate for business and trading activities in ASEAN. (2001) The Australian aid program had also developed a new framework of a new poverty reduction strategy and $200 million each year in rural development, most of which is in the Asia-Pacific region. The focus of this work is on income generation for the rural poor. The ASEAN also calls for cooperation in areas such as environment, social development, science and technology, culture and information and transnational crime. (no date) CONCLUSION In order for the companies in the Asia-Pacific region to be globally competitive, Beddows & Company's thinking on the exciting future developments in steelmaking in the Pacific Rim, (Mark Bell) IP systems in the Asia Pacific region are being reformed to comply with international standards, (no date) developing of the tourism industry in the Asia Pacific region (Amrik Singh) and many others. The projects being made by ASEAN, APEC, ADB and World Trade Organization in response to the call for economic integration has been painstakingly difficult from the start, especially for the DOHA round which has been slowed down by agricultural protectionism applied in countries which has not been so cooperative in the quest to eliminate poverty. The fruits of their labour however, were seen by the investments of foreign companies in Asia-Pacific, the increasing number of tourists touring and migrating within the countries of the region and most especially, the rise of Asia-Pacific from its depression since the time of crisis. Though many organizations have been helping Asia-Pacific to excel economically, it is somehow important that the citizens of the countries of Asia-Pacific will develop a sense of ownership. The will of helping themselves for the help of the organizations may not be useful if people wouldn't change its attitude. However, the site of countries, helping each other to succeed, sharing and providing its assets to be utilized is such a wonderful site of which, its results would be seen to the rising economy and the reduction of poverty. REFERENCE Bell, Mark (November 1998) "Future Developments in the Pacific Rim". Beddows Company [online] Accesed from: http://www.hatch.ca/consulting/Knowledge_Base/Articles/Future%20Developments%20in%20the%20Pacific%20Rim.pdf#search='Future%20Developments%20of%20Asia%20Pacific%20Region' [Accessed 8 May 2006] Chan, James. (no date) Asia. Economic Development. Grolier Academic Encyclopedia. Downer, Alexander (28 June 2001) Overcoming Asian Poverty: What Australia is doing. Australian Government: Department of Foreign Affairs and Trade [online] Available from: http://www.dfat.gov.au/media/speeches/foreign/2001/010628_asia_poverty.html [Accessed 6 May, 2006] Haeri, Hussei, (2001) Agricultural protectionism in the European Union. Industry and Economy [online] Available from: http://www.pakistaneconomist.com/issue2001/issue20/i&e3.htm [ April 21, 2006] Lamberte, Mario (no date) An Overview of Economic Cooperation and Integration in Asia. ADB.org [online] Available from: http://www.adb.org/Documents/Books/Asian-Economic-Cooperation Integration/chap1.pdf#search='Economic%20integration%20groupings%20in%20Asia' [Accessed 6 May, 2006] Lamberte, Mario (no date) Conceptual Definitions and Waves of Regionalism. ADB.org [online] Available from: http://www.adb.org/Documents/Books/Asian-Economic-Cooperation Integration/chap1.pdf#search='Economic%20integration%20groupings%20in%20Asia' [Accessed 6 May, 2006] Mc Guirk, Anne (2002) The DOHA Development Agenda. Finance and Development [online] Available from: http://www.imf.org/external/pubs/ft/fandd/2002/09/mcguirk.htm [April 22, 2006] Myoung-Ho Shin (September 2005) Enabling Urbanization: How is Asia Building Effective Megacities Asian Development Bank [online] Available from: http://www.adb.org/Documents/Speeches/2000/ms2000044.asp [Accessed 5 May 2006) Frost & Sullivan (20 Dec 2005) Assessment of the Asia-Pacific Contact Centre Markets. Market Research.com [online] Available from: http://www.marketresearch.com/map/prod/1204469.html [Accessed 5 May 2006] Singh, Amrik (no date) Asia Pacific Tourism Industry: Current Trends and Future Outlook. Ideas and Trends: Hotel [online] Accessed from: http://www.hotel-online.com/Neo/Trends/AsiaPacificJournal/AsiaPacificTourismOutlook_1997.html [Accessed 8 May 2006] (10 May 2005) Asia-Pacific Developing Countries Face Three Challenges: ADB President. Xinhuanet.com [online] Available from: http://news.xinhuanet.com/english/2002-05/10/content_388221.htm [Accessed 6 May 2006] (2 November 2004) Accelerate Regional Cooperation in Central Asia, Ministers Urge. Adb.org [online] Available from: http://www.adb.org/Documents/News/URM/urm-200406.asp [Accessed 6 May 2006] (no date) What should be the Scope of Asian Economic Community New Asia Forum [online] Accessed from: http://www.newasiaforum.org/Areas_of_Regional_Economic_Integration.htm [Accessed 6 May 2006] (no date) APEC's Economic Performance. Institute for International Economics [online] Accessed from: http://www.iie.com/publications/chapters_preview/37/search='trends%20of%20economic%20integration%20in%20Asia%20Pacific [Accessed 5 May 2006] (no date) THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS. Association of South East Asian Nation [online] Accessed from: http://www.aseansec.org/10374.htm [Accessed 6 May 2006] (no date) Access my library [online] Accessed from: http://www.accessmylibrary.com/comsite5/bin/pdinventory.plpdlanding=1&referid=2930&purchase_type=ITM&item_id=0286-2686499&word=Charting_Way_Future [Accessed 8 May 2006] Read More