2 - EVOLUTION OF THE ASIA-PACIFIC ECONOMIC ORDER DURING THE 1980S

Summary

The decade of the 1980s saw a quantum increase in the size of the Asia-Pacific economies and the growth of intra-regional trade. Intra-Asian trade is growing rapidly in response to new patterns of offshore investment by Japan and the NIEs and the resultant growth of export-oriented manufacturing and incomes. With Japan and the NIEs accounting for 69 per cent of the total, intra-Asian exports totalled US$270 billion in 1989, compared with Asian exports of US$206 million to North America and US$182 billion to Europe. Led by manufactured goods, intra-Asian exports grew at nearly 30 per cent per year during the period 1986-88, then slipped to 12.1 per cent growth in 1989. Trade among the NIEs alone totalled US$28 billion in 1989, up 17 per cent over 1988. Intra-ASEAN trade totalled US$50 billion in 1990, a five-fold increase over the level of the mid-1970s.

Japan, the United States, and the Asian countries themselves have all played important roles in bringing about this rapid growth of intra-Asian and trans-Pacific economic ties. Although Japan has emerged as the main catalyst of regional integration, the role of the U.S. economy as a seemingly insatiable consumer of Asian manufactured goods has given the region its main export dynamism. Both the NIEs and the ASEAN countries have played their parts through economic reforms emphasizing free markets, privatization of state-owned enterprises, export-led growth and favourable terms for foreign investment.

Significantly different interpretations can be given to these changes in the structure of regional economic ties. One perspective emphasizes that “both the United States and Japan have come to dominate the trade of these [Asia-Pacific] nations to a greater degree than in the past.” Another view stresses the asymmetry of the U.S. and Japanese roles, especially the large U.S. trade deficit, on the one hand, and the large Japanese surplus, on the other.