Eastern Europe and Asia
Prof. Dr. Paul J.J. Welfens Dr. Martin Keim
Lehrstuhl für Makroökonomische Theorie und Politik Lehrstuhl für Makroökonomische Theorie und Politik
Bergische Universität Wuppertal Winter Term 2010/2011
Winter Term 2010/2011 Basics
Basics and and Part Part Asia Asia, Part 1 , Part 1
Regional Integration: A Matter of Economic Opening Up
• Globalization and Regional Integration in the 21st century
the 21st century
• The role of ICT
• OECD Countries / BRIC and others/ LDC
• High potentials for Catching up Economies
• High potentials for Catching up-Economies
• Locational factors
The G-20
Share of World's GDP Population in Mio. Debts in %/GDP
USA 25,3 304,0 70,5
Japan 8,0 127,2 196,3
Germany 6,1 82,4 67,2
China 6 0 1 330 0 17 7
China 6,0 1.330,0 17,7
Great Britain 5,1 61,0 51,9
France 4,7 64,0 67,3
Italy 3,9 58,1 105,8
Canada 2,6 33,2 63,6
Brazil 2,4 196,4 64,5
Russia 2,4 140,7 5,8
India 2 0 1 148 0 81 9
India 2,0 1.148,0 81,9
South Korea 1,8 48,4 33,6
Australia 1,7 21,0 8,9
Mexico 1,6 110,0 43,3
Turkey 1,2 71,9 39,5
Indonesia 0,8 237,5 32,3
Saudi‐Arabia 0,7 28,1 15,8
South Afrika 0 5 48 8 27 3
3
South Afrika 0,5 48,8 27,3
Argentina 0,5 40,5 57,7
Total 77,3 4.151,2
EU 31,0 500,0
Basic Concepts of Economic and Political Integration
• Globalization and Regional Integration
G l I
• General Issues:
– Why Regional Integration?
– First Trade Integration, followed by Monetary Integration g
– The Role of Political Integration What about Enlargement?
– What about Enlargement?
– The EU: a role model (normative power) for R i l I t ti ?
Regional Integration?
Regional Integration - Steps
• Prefential Zone
• Free Trade Area
• Customs Union
• Common Market / Single Market / Internal Market incl Harmonization of Economic Conditions – incl. Harmonization of Economic Conditions
• Common Market Regulations
– identical economic conditions: installation of supranational institutions p
• Economic Union
– Harmonization of economic policy fields: common competition policy,
i l li i f t t li t
social policy, infrastructure policy etc.
• Economic and Monetary Union
– Monetary Union
≠Currency Union
5
Monetary Union ≠ Currency Union
• Political Union
Source: Ohr/Theurl: Europäische Wirtschaftspolitik
Integrationsstufe der EU
egration Free Trade Area
Customs Union
Single EU Market
Economic Union
Economic and Monetary Union
onomic InteEcal
EUROPEAN UNION
Institutiona ration ?
olitical and Integr
Intergouvernemental Cooperation (EU Council)
Supranational Cooperation (EU Commission)
Political Union
P
Elements of the EU Single Market: The Four Freedoms
• Free Movement of Goods
F M t f S i
• Free Movement of Services
• Freedom of Establishment
• Free Movement of People (and Labour) Free Movement of Capital and Payments
• Free Movement of Capital and Payments
• What is the optimal level of regional integration?
7
integration?
Effects of Regional Integration (1)
• Trade creation and diversion (Viner, 1950)
• Optimization of the allocation of production Optimization of the allocation of production factors
• Increase of economic efficiency Increase of economic efficiency
(eg. economies of scale, technical progress)
• Increase of wealth / welfare Increase of wealth / welfare
(eg. higher diversity of products and services)
• Law of one price
• Law of one price
• Higher level of competition -> consolidation ->
concentration > lower level of competiton in the
concentration -> lower level of competiton in the
Effects of Regional Integration (2)
• Higher degree of regulation -> less market?
• Competition within the regional bloc -> p g
• Zero-Sum-Game or
• Win-win-situation? Win win situation?
• Convergence vs. Divergence
• Increasing danger of contagion effects? Increasing danger of contagion effects?
• Higher level of policy coordination is needed
• Danger of inner conflicts Danger of inner conflicts
• Competiton of all regional blocs?
• Global outlook
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Global outlook
Integration of Financial Markets (in the EU)
• Aspect of non-discrimination
• Baele et al (2004): All market participants Baele et al (2004): All market participants
– “face a single set of rules when they decide to deal with financial products and/or services;
– have equal access to these financial products and/or services and
t t d ll h th ti i th k t ”
– are treated equally when they are active in the market.”
• Lemmen (1998) distinguishes between „perfect
financial integration“ and no integration“; a matter
financial integration and „no integration ; a matter
of degree
Costs and Benefits of Enlargements
• What about „ins“ and outs“?
Wh t i th ti i f l b?
• What is the optimum size of a club?
• Marginal revenues > marginal costs? g g
• A matter of the „quality“ of members and future potential enlargement candidates future potential enlargement candidates
11
The Problem of Multilevel Governance
• A problem of rule setting
WTO etc. (international level)
rule setting and forcing:
Soft law of
Bloc I (supranational level) Bloc II
Soft law of international
Country I Country II Country III
organizations
Regional Level
Local Level g
Asia: The world‘s largest continent
Central Asia
East Asia South Asia
Southeast Asia
Source: CIA Factbook 13
Asia: The world‘s largest continent
Developing Asia refers to 44 developing member countries of the Asian
Development Bank and Brunei Darussalam, an unclassified regional member;
• East Asia : People’s Republic of China; Hong Kong China; Republic of Korea;
• East Asia : People s Republic of China; Hong Kong, China; Republic of Korea;
Mongolia; and Taipei,China;
• Southeast Asia: Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic Malaysia Myanmar Philippines Singapore Thailand Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam;
• South Asia: Islamic Republic of Afghanistan, Bangladesh, Bhutan, India, Maldives Nepal Pakistan and Sri Lanka;
Maldives, Nepal, Pakistan, and Sri Lanka;
• Central Asia: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan;
• The Pacific: Cook Islands, Fiji Islands, Kiribati, Republic of the Marshall
Islands, Federated States of Micronesia, Nauru, Papua New Guinea, Republic of Palau, Samoa, Solomon Islands, Democratic Republic of Timor-Leste,
T T l d V t
Tonga, Tuvalu, and Vanuatu.
Asia has the most populated countries in the World
Approximately 4.03 billion people live in these ten countries, representing 15
58.7% of the world's population as of November 2010. (Source: Wikipedia)
Distribution of Population, 2009
World‘s Richest Countries
17
Wealth: Today and Tomorrow
Human Development Index (07): Asia and Pacific Economies
19
Global GDP in 2004 and 2020
Global GDP in 2008
21
GDP (at PPP) in the Asia and Pacific Region (2009)
Richest Asian Countries (GDP p.c. in PPP), 2000 vs. 2009
23
Growth Rates of Real GDP
Agriculture Value Added
25
Industry Value Added
Services Value Added
27
Exports of Goods and Services (in % of GDP)
Imports of Goods and Services (in % of GDP)
29
Gross Domestic Savings (in % of GDP)
Percentage Distribution of Merchandise Imports, 96 vs. 09
31
Destination of Merchandise Exports, 2009 (in %)
Annual Growth in Merchandise Exports, 07-09 (in %)
33
Origin of Merchandise Imports, 2009 (in %)
Net Inflows of FDI, 2007 vs. 2009 (in % of GDP)
35
Stock Market Capitalizations (2000 =100)
Corruption Perception Index
37
