Economic Globalization and Asia: Trade, Finance, and Taxation

By Rajan, Ramkishen S. | Journal of Southeast Asian Economies, April 2001 | Go to article overview
Save to active project

Economic Globalization and Asia: Trade, Finance, and Taxation

Rajan, Ramkishen S., Journal of Southeast Asian Economies

I. Introduction

Economic globalization, broadly defined as the shrinkage of economic distances (i.e. costs of doing business) between nations, is more accurately seen as consisting of two separate but not necessarily mutually exclusive trends: globalization of production and trade, and globalization of finance and capital flows. Both aspects of globalization have been aided and abetted by three factors. First are the innovations and advances in transportation, information, and communications technologies such as the Internet (Baldwin and Martin 1999). Second is the push by the various international institutions towards global economic liberalization (i.e. reduced policy barriers to trade and investment) through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) in the case of world trade in goods and services, and the International Monetary Fund (IMF) in the case of global finance and capital flows. Third is the shift in perceptions about the appropriate role of government and the near-global consensus on the need for extensive, albeit judicious use of market incentives for economic success.1

As we enter the new millennium, this special issue of the ASEAN Economic Bulletin brings together articles by various academics on specific aspects of economic globalization relating to trade, finance, and taxation, with reference to Southeast Asia and the larger Asian region.

The article, "Globalization, WTO, and ASEAN" by Kym Anderson, provides an overview of the general issue of economic globalization, a process that, though having intensified since World War II, is by no means unprecedented. In fact, the world economy is no more, and, in some instances, is actually less integrated than it was at its peak in 1913, at a time when cross-border transactions costs were significantly reduced by the advent of the railroad, steamship, and the telegraph in the nineteenth century, and by the automobile and airplane in the early twentieth century. However, while technological progress continued unabated, the "triple whammy" of World War 1 (1914 to 1918), the Great Depression (1929 to the mid1930s), and then World War 11 (1939 to 1945) effectively halted the initial upward trend in economic globalization that took place under the gold standard until the 1970s. In other words, an index of the intensity of globalization over the last century would reveal a U-shape, with a trough -- an elongated one - being the period from about 1914 to 1960. Anderson also discusses the GATT's/WTO's roles in facilitating the process of globalization of production and international trade.

II. Globalization of Production and Trade

An analysis of the globalization of production and trade should take into account not merely rising trade-to-GDP ratios - as the growth of world trade has consistently outpaced the growth of global output (Table 1) - but, more so, the type and rationale for this increased trade. Specifically, international trade is increasingly characterized by "intraproduct specialization", broadly defined as the fragmentation of the process of production of a good into its sub-component parts and processes, which in turn are distributed across countries on the basis of comparative advantage.2

In his article, "Production Networks in an Economically Integrated Region", Sven Arndt stresses how intraproduct specialization enables cross-border production networks to develop. He notes that the "basic idea is to think of the region rather than the nation as the production base and to spread component production around the region in accordance with comparative advantage". Arndt assesses the welfare gains from such production networks and parts and component specialization, and discusses the prerequisites needed to facilitate their development on a regional basis in Asia.

Continuing with the theme of globalization and trade, in the article, "Reintegration of Formerly Centrally Planned Economies into the Global Trading System", Richard Pomfret analyses the progress of the reintegration of the formerly centrally planned economies, following their transition to market-based economic systems, into a multilateral trading system.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Economic Globalization and Asia: Trade, Finance, and Taxation


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?