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Moderator:  Calla Wiemer (calla.wiemer@acaes.us)

Geopolitical Fragmentation, Regional Cooperation, and Prospects for ASEAN Trade and Value Chains

ASEAN countries are characterized by considerable diversity but share an outward-oriented development strategy. While intra-regional economic cooperation over the past two decades has been important, global, not regional, interaction has been the key to ASEAN’s success story. Hence, the strong policy headwinds facing globalization in the post-Covid period threaten continued growth and prosperity in the region. Proposals in major markets to protect domestic industries by raising obstacles to trade vary from sectoral protection to more comprehensive “geopolitical” or “geoeconomic” approaches, such as: (1) re-shoring to encourage local production; (2) near-shoring to encourage trade with regional partners; and (3) friend-shoring to support trade with political and diplomatic allies at the expense of others. The result could be “geoeconomic fragmentation” (Aiyar, et. al., 2023).

These fragmentation scenarios would leave ASEAN economies particularly exposed. Re-shoring negatively affects small, open economies the most. The large share of extra-regional markets for its exports makes ASEAN vulnerable to near-shoring, and as a basically non-aligned region, its members could well be excluded as “friends” from key markets. One goal of the paper on which this post is based, Petri and Plummer (2023), is to estimate what effects these global scenarios would have on ASEAN incomes, trade, and participation in global value chains (GVCs).

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Fabrication vs Knowledge Activities in Global Value Chains: Contributions to Asian Development

Co-author: Elisabetta Gentile

This post draws on a paper presented at the Allied Social Science Association Annual Meeting in a session sponsored by the American Committee on Asian Economic Studies on "Economics of Innovation in Asia", 3 January 2021, video here.  

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