Economic Dynamics and Integration in Eastern Europe … · • Trade intensity is the ratio of the trading partner j‘s share to a country/region i, and the share of world trade

Economic Dynamics and Integration in Eastern Europe and

Asia

LectureWinter semester 2017/18

Chair for Macroeconomic Theory and PoliticsSchumpeter School of Business and Economics

Bergische Universität Wuppertal

Prof. Paul J.J. Welfens

• Office: M-12.08

• Email: [email protected]

• Office hours: Monday 12:00-13:00 (During Semester)

Thursday 11:00-12:00 (During Semester break) at EIIW

• Chair for Macroeconomic Theory and Politics:

https://welfens.wiwi.uni-wuppertal.de/index.php?id=3314&L=0

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David Hanrahan

• Office: M-12.10

• Email: [email protected]

• Office hours: by appointment

• Chair for Macroeconomic Theory and Politics:

https://welfens.wiwi.uni-wuppertal.de/index.php?id=6194

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Tian Xiong

• Office: M-12.11

• Email: [email protected]

• Office hours: Tuesday 14:00-15:00

• Chair for Macroeconomic Theory and Politics:

https://welfens.wiwi.uni-wuppertal.de/index.php?id=6011

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•Economic Integration of Asia

▪Trade and investment

▪Money and Finance

▪ Infrastructure and Connectivity

▪Movement of People

▪ Institutional and Social Integration

Content

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Economic Integration of Asia

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Notes: For each region, maximum (upper line), average (dot), and minimum (lower line) values of

the overall index are reported. The horizontal line denotes global average of 0.484.

Source: ADB calculations using updated data from Huh and Park (2017)

RCI in Asia is behind the European Union, ranks above both Africa and Latin America.

Asia-Pacific Regional Cooperation and

Integration by Sub-regions

Within the region, RCI is most advanced in East Asia and Southeast Asia, drawing on the expansion of regional trade and FDI networks linked to global supply chains.

Economic Integration of Asia

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Notes: For each region, maximum (upper line), average (dot), and minimum (lower line) values of

the overall index are reported. The horizontal line denotes global average of 0.484.

Source: ADB calculations using updated data from Huh and Park (2017)

Regional Integration Indicators—Asia

Illustration

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Economic Integration of Asia

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Regional Integration Indicators—Asia

Source: ADB calculations using data from ASEAN Secretariat; Asia Regional Integration Centre,

Asian Development Bank; CEIC; International Monetary Fund

Trade

1011. 12. 2017PRC = People’s Republic of China

Source: ADB calculations using data from WTOs

Asia’s Trade Volume Growth

Trade

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The Trade Value of Asia and the World

Source: ADB calculations using data from WTOs

Trade

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Intraregional Trade Share_ Asia, European Union, North America (%)

Asia Trade Value Growth, Intraregional and Extraregional (%)

Source: ADB calculations using data from IMF

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Asia Trade Value Growth, Intraregional and Extraregional (%)

Source: ADB calculations using data from IMF

• Trade intensity is the ratio of the trading partner j‘s share to a country/region i, and the share of world trade with the same trading partner.

• Trade intensity (AND trade bias) is an alternative to measure the level of trade integration.

• An intra-regional trade share is a common indicator that measures the level of trade integration.

• However, this indicator is not appropriate for trend analysis or cross-regionals comparison.

• WHY ?

• Because intra-regional share tend to be higher for a region that consists of large economies

Illustration

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• How to calculate trade intensity?

• Region i‘s intraregional trade share = Tii / Ti

• Region i‘s intraregional trade intensity = (Tii / Ti)/(Ti / TW)

• Region i‘s trade bias toward region j = (Tij / Ti)/(Tj / TW)

• Where:

• Tii : exports of region i to region i plus import of region i from region i

• Tij : exports of region i to region j plus export of region j from region iplus imports of region i from region j plus import of region j from region i

• Ti : total exports of region i to the world plus total import of region ifrom the world Tj : total exports of region j to the world plus total import of region j from the world Tw: total world exports plus imports

Illustration

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Trade

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Gravity Model Estimation of Bilateral Exports

2011-2015

Source: ADB calculations using data from CEPII

Trade

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Gravity Model Estimation of Bilateral Exports

2012-2016

Source: ADB calculations using data from CEPII

Trade

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Gravity Model Estimation Results, 2012-2016:

Intra- and Inter-subregional Trade (All Goods)

Source: ADB calculations using data from CEPII

Notes: Base category (benchmark) is the subregion’s trade with economies outside Asia. The usual gravity model variables and

time-varying economy dummies are included but not shown for brevity. Heckman sample selection estimation was used to account

for missing bilateral economy-pair data.

Regional Trade Policy

1911. 12. 2017 Source: ADB. Asia Regional Integration Centre FAT database

Number of Newly Effective FTAs

Asia and World

Regional Trade Policy

2011. 12. 2017 Source: ADB. Asia Regional Integration Centre FAT database

Number of Signed FTAs, Intraregional and

Extraregional (cumulative since 2000)

Regional Trade Policy

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Number of FTAs Proposed and Signed by Years

Asia

Source: ADB. Asia Regional Integration Centre FAT database

Investment

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Asia’s FDI flows ($ billion)

Source: ADB calculations using data from Financial Times. fDi Markets; and Bureau van Dijk. Zephyr M&A Database

Investment

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Global Outward FDI by Source ($ trillion)

Source: ADB calculations using data from Financial Times. fDi Markets; and Bureau van Dijk. Zephyr M&A Database

Investment

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Regional FDI Flows Share (%)

Source: ADB calculations using data from Association of Southeast Nations Secretariat;

CEIC; Eurostat. Balance of Payments.

Investment

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Intraregional FDI Inflows

Investment

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Asian Outward FDI Flows by Source ($billion)

Source: ADB calculations using data from Association of Southeast Nations Secretariat;

CEIC; Eurostat. Balance of Payments.

Investment

2711. 12. 2017 Source: ADB calculations using data from Financial Times. fDi Markets; and Bureau van Dijk. Zephyr M&A Database

Intra-Asia FDI by Sector ($ billion)

Investment

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Inter-Asia FDI by Sector ($ billion)

Source: ADB calculations using data from Financial Times. fDi Markets; and Bureau van Dijk. Zephyr M&A Database

Thank You

for

Your Attention!

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