Trade configurations in Asia: Assessing de facto and de jure regionalism

• Date: 01 April 2020
• Author: Sasidaran Gopalan,Ramkishen S. Rajan,Luu Nguyen Trieu Duong
• DOI: http://doi.org/10.1111/twec.12907
• Published date: 01 April 2020

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wileyonlinelibrary.com/journal/twec World Econ. 2020;43:1034–1058.

© 2019 John Wiley & Sons Ltd

Received: 26 November 2018

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Revised: 8 October 2019

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Accepted: 12 November 2019

DOI: 10.1111/twec.12907

ORIGINAL ARTICLE

Trade configurations in Asia: Assessing de facto and

de jure regionalism

SasidaranGopalan1

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LuuNguyen Trieu Duong2

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Ramkishen S.Rajan3

1Nanyang Business School, Nanyang Technological University, Singapore City, Singapore

2Department of Economics, University of Toronto, Toronto, ON, Canada

3Lee Kuan Yew School of Public Policy (LKYSPP), National University of Singapore (NUS), Singapore City, Singapore

Funding information

The authors are also thankful for the financial support provided by LKYSPP-NUS under the "Special Project Funding

Scheme."

KEYWORDS

Asia, deglobalisation, foreign market potential, regionalism, trade war

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INTRODUCTION

Over the last 15years between 2002 and 2017, economic growth in Asia1 averaged about 6%, far out-

pacing that of the global economy as a whole, which grew at about 4% on average during the corre-

sponding period (Figure 1).2 Consequently, Asia's share of global gross domestic product (GDP) in

nominal US$ terms rose from 25% in 2002 to about 35% in 2017. While China and India are important

contributors to the region's dynamism, Indonesia and the rest of the Association of Southeast Asian

Nations (ASEAN) have also grown rapidly during this period. Specifically, as Figure 2 shows, China

accounted for the bulk of Asia's rising significance in global GDP, with the country's share in global

output rising from about 4% in 2002 to 15% in 2017. While India doubled its share of global GDP

from about 1.5%–3% between 2002 and 2017, the ASEAN-10 group of countries improved their

shares of global output during this period from about 2% to over 3.5%. Thus, unlike in previous de-

cades, Asia's growth has not only been robust but also quite broad-based.

This growth in turn has been driven in no small part by the region having seized opportunities for global

trade and investment. In fact, Asia's share of global exports rose from about 29% in 2002 to 38% in 2017,

while the region's share of global imports also followed suit, climbing from about 22%–31% between 2002

1 "Asia" in this context refers to all Asian economies, including those in South-East Asia, East Asia, South Asia, Central Asia

and West Asia. The list of countries is provided in Table A1.

2 While the data used for the descriptive analysis of trends and patterns in trade flows are between 2002 and 2017, the exact

data coverage might vary across the figures and tables depending on data availability.

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and 2017 (Figure 3). China has played a notable role in Asia's rise as a global trading hub. Without the East

Asian giant, Asia's shares in global exports and imports averaged 21% and 17%, respectively, over the

2002–17 period. In terms of the region's trade as a proportion of its GDP, exports as well as imports as

shares of Asia's GDP averaged about 26% and 23%, respectively, during the 15-year period (Figure 3).3

Not surprising therefore, the possibility of trade deglobalisation and the threat of prolonged trade

wars are significant concerns for the Asian region. With the possible exception of China, the rest of

the region has little control over these factors and must take them as being largely exogenous. What

the region can do is attempt to offset any slowdown in extra-regional trade and investment flows by

enhancing intra-Asian economic interactions. Given the backdrop of significant uncertainties largely

propelled by the ongoing trade spat between the United States and China, to what degree can the Asian

region move forward in terms of de facto trade integration?

3 The corresponding shares excluding China still stood at 23% and 20%, respectively.

FIGURE 1 Real gross domestic product growth rates (%) 2002–17.

Source: IMF world economic outlook database

–4

–2

0

2

4

6

8

10

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Per cent

Asia Advanced Economies World

FIGURE 2 Asia's share of global gross domestic product (%).

Source: IMF world economic outlook database

0

5

10

15

20

25

30

35

40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

ASEAN-10 India China Asia