Korea-Japan Economic Cooperation Amid a New East Asian Integration

Sung Chun Jung () and Choong Yong Ahn
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Sung Chun Jung: Korea Institute for International Economic Policy
Choong Yong Ahn: Chung-Ang University

No 12-4, Policy Reference from Korea Institute for International Economic Policy

Abstract: The purpose of this paper is two-fold: First, to examine a) ongoing East Asian integration in terms of intra-regional financial cooperation, b) the proliferation of intra-regional free trade agreements with extra-regional economies and cross-border foreign direct investment flows c) and structural changes in the Japanese and Korean economies in the past two decades and subsequent challenges faced by the two countries. Second, to suggest that Japan and Korea, as the two most mature and closest market economies in East Asia, should not wait to push mutually collaborative FDI until a formal FTA between them is effective. Despite historical legacies, the geographical proximity and the presence of high-tech manufacturing capacities in the two countries could be combined for immediate mutual benefits through engaging in increasingly emerging cross-border value chains. For this purpose, the active promotion of cross-border FDI flows between Japan and Korea is critical for both countries to overcome serious challenges. For the Japanese MNCs hollowing out Japan to respond to the "six difficulties" domestically, Korea could be reassessed as one of the most favored outbound destinations.

Keywords: Economic Integration; Value Chains; Cross-Border FDI Flows; Japan-Korea Economic Cooperation (search for similar items in EconPapers)
JEL-codes: F10 F20 O50 (search for similar items in EconPapers)
Pages: 78 pages
Date: 2012-12-18
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Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepre:2012_004

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