In this paradigm, a country first industrializes on the basis of a low-technology product, which at first it imports and later goes on to export. Then it abandons this product for one with higher value added, and thus allows another country, taking up the same type of production, to begin its own process of industrialization.
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After Japan, the same technique was used by Singapore, South Korea, Hong Kong and Taiwan to start their industrialization in the s. In the s a second generation of new industrialized countries appeared: Thailand, Malaysia, the Philippines and Indonesia.
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However, according to Boyer, Uemura and Isogai, the emergence of China is not following the old flying geese paradigm, so it is no longer the main mechanism of Asian economic integration. A broad network of production has been created throughout East and Southeast Asia by means of product standardization and modularity, with parts being made in various countries prior to being assembled; and by means of an unprecedented mobility of foreign direct investment.
China has played a central role in this, being itself the source of the foreign direct investments, and not being content to manufacture low-technology products. This process has largely been led and organized by the multinationals, in particular Japanese multinationals, as shown by Jiang Wang, Nagendra Shrestha and Hiroyasu Uemura, but governments have also taken part in it, through their industrial and trade policies. However, this economic interdependence does not necessarily lead to an institutionalization of regional integration, which, because of a complex history, has never been easy to bring off.
Moreover, a significant part of the financial intermediation of excessive savings in East Asia that generates international trade imbalances takes place in Wall Street or in other centres supporting speculative behaviour that is the source of financial instability and recurrent crises. Boyer, Uemura and Isogai also note that virtually all these economies suffer adverse consequences from growth policies relying on exports.
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What appeared as an advantage in the previous phase of development could become a burden, given the uncertainty surrounding growth in North America and Europe and exchange rate volatility. Using their own currencies will enable Chinese and Japanese firms to lower their costs and to protect themselves from currency fluctuations connected with changes in the American currency. However, according to Boyer, Uemura and Isogai, there remain large productivity differences between these two Asian economies, as well as a lack of policy coordination between their governments.
The contributors conclude that a number of reforms are necessary to reduce regional imbalances that threaten the stability of Asian growth strategies. One of the most important issues at the nation state level is the emergence of a basic compromise in the employment relationship and of a more ambitious social policy. Indexing real wages to productivity and an amelioration of living conditions more generally could help establish a consumption-led domestic market. That would contribute to stopping the downward spiral of wages and the growth of inequalities, make the domestic market as attractive as exports, and facilitate the coordination of exchange rate policies, especially by making Chinese growth less dependent on the undervaluation of the yuan.
In the regulationist perspective which is the one taken by these two books , there should be corresponding institutional reforms covering the nature of competition, the credit and monetary system, relations between the states and their economies, and integration into the global economy. Thus, to organize the international division of labour and international production networks, effective rules need to be established at the regional level to govern trade and foreign direct investment.
Similarly, effective coordination and ultimately the creation of a regional financial centre would be important steps towards a more efficient allocation of capital in terms of the welfare and the growth of countries in the region. Programs with common infrastructures, technical standards and an alternative concept of development could also be considered. As can be seen, the path indicated by these efforts towards a more complete and stable regional integration is still a long one. The social accords that it involves depend on further political developments that remain very uncertain, and the improvement of cooperation among the different states that it requires is more than ever threatened by diplomatic tensions and military budget increases.
Previously published in French in laviedesidees. If you want to discuss this essay further, you can send a proposal to the editorial team redaction at laviedesidees. We will get back to you as soon as possible.
Hall and David Soskice eds. Berthelier, A.
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