Intra-Regional Trade in East Asia: The Decoupling Fallacy, Crisis, and Policy Challenges
Prema-chandra Athukorala () and
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Archanun Kohpaiboon: Asian Development Bank Institute
No 177, ADBI Working Papers from Asian Development Bank Institute
This paper examines the export experience of East Asian economies in the aftermaths of the crisis against the backdrop of a systematic analysis of precrisis trade patterns. The analysis is motivated by the “decoupling” thesis, which was a popular theme in Asian policy circles in the lead-up to the onset of the recent financial crisis, and aims to probe three key issues: Was the East Asian trade integration story that underpinned the decoupling thesis simply a statistical artifact or the massive export contraction caused by an overreaction of traders to the global economic crisis and/or by the drying up of trade credit, which overpowered the cushion provided by intra-regional trade? What are the new policy challenges faced by the East Asian economies? Is there room for an integrated policy response that marks a clear departure from the precrisis policy stance favoring export-oriented growth? The findings serve to caution against a possible costly backlash against openness to foreign trade arising from the newfound enthusiasm for rebalancing growth (redressing the strong bias for exports in development policy), and make a strong case for a well-coordinated strategy to fight new protectionism, as part of a long-term commitment to nondiscriminatory multilateral and unilateral trade liberalization.
Keywords: decoupling; intra-regional trade; growth rebalancing; asia (search for similar items in EconPapers)
JEL-codes: F14 F15 O19 (search for similar items in EconPapers)
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Working Paper: Intra-Regional Trade in East Asia: The Decoupling Fallacy, Crisis, and Policy Challenges (2009)
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