Comment on “Connectivity in East Asia”

• DOI: http://doi.org/10.1111/aepr.12134
• Date: 01 July 2016
• Published date: 01 July 2016
• Author: Jong‐Wha Lee

Comment on “Connectivity in East Asia”

Jong-Wha LEE†

Korea University

JEL codes: F15, F13, O14, O19

Brooks (2016) paper attempts to account for rising connectivity and integration in East

Asia. The paper explains how improvements in logistics and infrastructure services have

influenced Asia’s trade in goods and services. It also discusses the role of information and

communication technologies and cross-border direct investment on production networks

and intra-firm trade in East Asia. The paper is on an important topic, and provides

interesting analyses and conclusions.

The extent of connectivity and integration of East Asian economies has increased

significantly, both regionally and globally. Empirical findings suggest that economic

interdependence between emerging East Asian and major industrial countries continued

to increase in the recent decades. In addition, Asian economies have become increasingly

interdependent(Kim & Lee, 2012). Chinaplays a central role in Asian productionnetworks,

and segmented production for global supply chains has stimulated trade and direct

investment in the region, with China as a hub.

Linking locationsto enable the flow of goods, services, finance, technology, and people

are certainlybeneficial to the connected economies. As emphasizedin Brooks (2016), a high

degree of economic openness and integration was a vital ingredient of East Asia’ssuccess.

Outward-looking export-led industrialization helped Asian economies grow rapidly by

exploiting large external markets and imitating advanced technologies.

Nonetheless, Brooks seems too credulous with the benefits of connectivity and

integration. The global financial crisis of 2008–2009 highlights the risks of Asia’sexcessive

dependence on exports. The region took a hit from the sharpdecline in the demand for its

exports, and saw many of its economies shrink. While Asian emerging economies were

relatively resilient during the global recession, as strong and stable growth in China

supportedexport-led recovery for therest of Asia, the recent slowdownin Chinese economy

triggers worriesabout sustained growth of Asian economies.The growth rate of China was

6.8% in 2015, the slowest since 1990, and it is expected to continue slowing down, which

is a significant threat to the rest of Asia, in particular exporters of commodities and

capital goods.

It is debatable whether Asian economies should continue to promote integration and

pursue export-led growth. Under current uncertain global environments and downside

†Correspondence: Jong-Wha Lee, Asiatic Research Institute and Economics Department, Korea

University, Sungbuk-Ku, Anam-dong 5-1, Seoul 136-701, Korea. Email: jongwha@korea.ac.kr

doi: 10.1111/aepr.12134 Asian EconomicPolicy Review (2016) 11, 197–198

©2016 JapanCenter for EconomicResearch 197

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