Trade Policy and Growth in Asia

Masahiro Kawai () and Ganeshan Wignaraja

No 495, ADBI Working Papers from Asian Development Bank Institute

Abstract: This paper examines the changing relationship between trade policy, production networks, and economic growth in Asia. It traces East Asia’s rise to the coveted “Factory Asia” league with rapid growth over several decades through trade policy anchored on outward-oriented industrialization strategies, including a voluntary liberalization approach under the Asia-Pacific Economic Cooperation (APEC) and a multilateral approach under the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) system. It explores the implications of various stresses to the performance of Factory Asia such as the consequences of the global financial crisis, the risk of protectionism, the persistence of residual behind-the-border regulatory barriers, the failure to conclude ambitious WTO multilateral trade negotiations, and the relative exclusion of small and medium-sized enterprises (SMEs). Next, it examines the evolving trade policy response in major East Asian economies centered on free trade agreements (FTAs) to support the functioning of Factory Asia and key policy challenges posed by FTAs, including the insufficient depth of FTAs, the risk of an Asian noodle bowl of multiple rules of origin, the potential for raising use of FTA preferences, and the emergence of mega-regional FTA negotiations. Finally, it considers policy implications at the national, regional, and global levels for supporting Factory Asia and growth in Asia.

Keywords: Trade policy; FTAs; WTO; regional integration; production networks; Factory Asia (search for similar items in EconPapers)
JEL-codes: F13 L23 O19 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014-08-17
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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