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2018 | OriginalPaper | Buchkapitel

4. Comparative Analysis of Regional Trade Imbalance in East Asia and the Eurozone

verfasst von : Hiroyuki Uni

Erschienen in: Evolving Diversity and Interdependence of Capitalisms

Verlag: Springer Japan

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Abstract

The purpose of this chapter is to analyze the structure and the causes of intra-regional trade imbalances in East Asia and the eurozone since 1995. The current account imbalance expanded globally in the 2000s. This global current account imbalance is one of the important factors of the global financial crisis in 2008 and the Euro crisis from 2010. In this paper, I want to clarify the mechanism behind this expanding trade imbalance by analyzing mainly the international input-output tables created by the World Input-Output Database (WIOD) project. The main cause of expanding trade imbalance in East Asia is the export-led growth regime in China, Korea, and Taiwan. Today, however, some of the conditions that supported export-led growth are collapsing. Transformation to domestic demand-led growth has become a policy agenda in these countries to some degree, although there are some issues for this transformation. The main cause of expanding trade imbalance in the eurozone is the present system of monetary integration without fiscal integration. Therefore, development toward fiscal integration is needed despite strong objection in some member countries.

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Vorheriges Kapitel Transformation of the World Economy and Institutionalization of East Asian Region

Nächstes Kapitel The Evolving Diversity and Interdependence of Growth Regimes and De-industrialization in European Countries and Japan

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See Timmer et al. (2015) and http://www.wiod.org/

Although Fig. 4.3 shows only products of the primary industry and the secondary industry, only these products cover 80–90% of the trade balance.

“Textile and leather products” are the sum of “Textiles and Textile Products” and “Leather, Leather and Footwear” in the industry classification in WIOD, Release 2013.

“Machinery products” are the sum of “Machinery, Nec,” “Electrical and Optical Equipment,” and “Transport Equipment” in the industry classification in WIOD, Release 2013.

Because of difference in the number of sectors, etc. between Release 2013 data and Release 2016 data, numerical values in 2010 differ slightly.

In Spain, the trade of final goods of machinery products has nearly balanced since 2010. This is because imports of final goods of transportation machinery from Germany and France abruptly declined to less than half due to import restraints from austerity policies, not due to an increase in exports.

In most previous studies (Canzoneri et al. 1999; Égart 2002; Kovács 2004; Kawai et al. 2003), the manufacturing and service sectors are, respectively, considered as the tradable and non-tradable goods sectors. It is evident that this dichotomy is not satisfactory.

The ratio of the imported resource costs in the total costs (α) in the East Asian countries is about 0.1 to 0.4.

Malaysia also devalued the ringgit, maintaining the dollar peg system.

The IMF definition of “managed floating with no predetermined path for the exchange rate” is as follows: “The monetary authority attempts to influence the exchange rate without having a specific exchange rate path or target. Indicators for managing the rate are broadly judgmental (e.g., balance of payments position, international reserves, parallel market developments), and adjustments may not be automatic. Intervention may be direct or indirect.” The IMF definition of “independently floating” is as follows: “The exchange rate is market-determined, with any official foreign exchange market intervention aimed at moderating the rate of change and preventing undue fluctuations in the exchange rate, rather than at establishing a level for it.”

According to the IMF classification in 1999, the exchange rate regimes in Korea, Indonesia, Thailand , and the Philippines were “independently floating,” similar to Japan’s case. However, as the monetary authorities in these countries frequently and discretionally intervened in the market, their exchange rate regimes were similar in practice to managed floating (Corden 2002).

Calculated by the author from nominal wages and CPIs in IMF, International Financial Statistics, China Statistical Yearbook, and The Directorate General of Budget, Accounting and Statistics (DGBAS).

Sources: China Statistical Yearbook (number of cases accepted by arbitration committees) and The Directorate General of Budget, Accounting and Statistics (DGBAS).

The public financial support by the “Troika ” (EU, IMF, and ECB) also played a role in financing these countries’ current account deficits. But, quantitatively, the change in TARGET balances is much larger.

TARGET balances, Statistical Data Warehouse, European Central Bank, (http://sdw.ecb.europa.eu/reports.do?node=1000004859)

In the World Input-Output Database , I used National Input-Output Tables Analytical in current prices (with 35 sectors; unit, the US dollar). As they are noncompetitive import type tables, the input coefficient matrix of domestic products is obtained directly. However, for China, data of “Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of fuel” sector is missing.

Regarding labor input by sector, I used “Total hours worked by persons engaged” in the socioeconomic accounts included in the World Input-Output Database.

For example, in the United Nations’ National Accounts, domestic demand is the sum of “Final consumption expenditure” and “Gross capital formation.”

Except for Taiwan, deflators are derived from the table of GDP by type of expenditure at current prices (US dollars) and that at constant prices (US dollars) in the United Nations, National Accounts Main Aggregates Database (http://unstats.un.org/), and for Taiwan, from Republic of China, National Statistics (http://eng.stat.gov.tw/).

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Égart B (2002) Estimating the impact of the Balassa-Samuelson effect on inflation and the real exchange rate during the transition. Econ Syst 26:1–16CrossRef

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Titel: Comparative Analysis of Regional Trade Imbalance in East Asia and the Eurozone
verfasst von: Hiroyuki Uni
Verlag: Springer Japan
Buch: Evolving Diversity and Interdependence of Capitalisms
Print ISBN: 978-4-431-55000-6

Electronic ISBN: 978-4-431-55001-3

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-4-431-55001-3_4

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