Academic journal article East Asian Economic Review

The Index of Asia-Pacific Regional Integration Effort

Academic journal article East Asian Economic Review

The Index of Asia-Pacific Regional Integration Effort

Article excerpt


For the past decade, the EU and, in particular, the Eurozone has pursued the concept of integration as a development goal (Molle, 2006; Crowley, 2006). In the European perspective, this goal is driven by both political and economic need: a currency union cannot be sustainable if its members are socially and economically disparate. Recent research quantifying nation-level integration efforts in the EU shows large discrepancies in both the degree and pace of integration between countries (König, 2015).

The concept of integration in the Asia-Pacific is evidently different from that in Europe. The region does not have unified monetary and trade systems or aligned regional targets of development. Regional barriers to trade and human capital flows are considerably higher in the Asia-Pacific, as are discrepancies between most and least developed nations. However, at its most fundamental level the benefits of integration equally apply to both regions: a country tightly bonded with its neighbors should enjoy gains from lower transaction costs, greater access to commodity and resource markets, information, and varied sources of education and investment. Therefore, while there are no formal policies or institutions for pan-Asia-Pacific integration, such integration could still be desirable from the viewpoint of both individual nations and the region as a whole, and hence merits in-depth investigation.

Using a variety of social-economic metrics designed to gauge the closeness of an economy to Asia-Pacific as a whole, we create an "Index of Asia-Pacific integration effort" covering all regional economies with available data (37 out of 58). We first obtain an "integration index" for the degree of achieved integration of these Asia-Pacific economies. Then, we employ a residual analysis approach based on a Generalized Estimating Equations (GEE) model to approximate their levels of integration effort, defined as the extent to which an economy, given its endowed conditions, has made social, economic and policy efforts to integrate with the region.

Section two begins by reviewing stylized facts and existing modes of investigation of the level of current Asia-Pacific integration. Section three outlines data sources of the integration index inputs and discusses the choices of inputs. Section four details the procedure of index construction and determining of input weights, and presents the full integration index. To measure integration effort, section five provides a residual analysis of the factors facilitating regional integration and the resulting index of integration effort. Section six concludes and discusses integration effort in a macro-policy context.


Given the lack of a single set of political and economic regulatory institutions, the strongest common and enforceable modality for a pursuit of cooperation and integration for the majority of Asia-pacific economies is found in bilateral or plurilateral (sub-regional) agreements. These are mostly present in the following areas: Preferential Trade Agreements (PTAs), Bilateral Investment Treaties (BITs) and other International Investment Agreements (IIAs), as well as bilateral provisions related to labour mobility in inter-governmental agreements. As of 2015, the total number of PTAs involving at least one Asia-Pacific economy is estimated at 231, of which 155 are in force (ESCAP, 2015). Out of those, 67 bilateral PTAs are currently in force between ESCAP members, accounting for more than half of the 124 bilateral trade agreements that are both currently in force and involve at least one Asia-Pacific economy.

The relatively large number of regional bilateral PTAs is not necessarily a good sign: multiple bilateral trade rules may increase the overall cost of preferential trade, leading to what is commonly referred to as the "noodle bowl" effect (Petri, 2008). In addition, the current situation of PTAs still presents a highly fragmented view of the Asia-Pacific region. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.