Comparative advantage, trade and trade policy of East Asian countries

Abstract

1. INTRODUCTION

The objective of this paper is to examine the changes in the comparative advantage, trade policy and the pattern of trade of the East Asian countries. We will, in particular, examine the changing pattern of trade of the East Asian NICS, the ASEAN countries, and China between each other as well as with advanced countries such as the U.S., Japan and EC.

In this paper, countries in the world are classified into eight groups:(1) NICS 4, representing the resource-poor East Asian newly industrializing countries consisting of Korea, Taiwan, Hongkong and Singapore, (2) ASEAN 4, consisting of Thailand, Malaysia, Indonesia, and Philippines, (3) China, (4) Japan, (5) the U.S., (6) CNA, representing the resource-rich advanced countries consisting of Canada, New Zealand and Australia, and (7) EAC, representing the European advanced countries, and (8) ODC, representing all other developing countries in the world.

During the thirty year period of 1961-91, the volume of total world exports increased by thirty times in nominal dollar prices (i.e., nearly 8 times in 1961-76 and nearly 4 times in 1976-91). The share of the NICS 4 in total world exports expanded from 0.9 percent in 1961, to 3.3 percent in 1976 and to 8.5 percent in 1991. Japan's share doubled during 1961-76, from 3.6 percent to 7.2 percent, but its share increased only by about 22 percent (i.e., from 7.2 to 8.8 percent) during 1976-91. The share of the ASEAN 4 and China in total world exports almost did not change during 1961-76 but, following their export-oriented growth, expanded from 2.7 percent to 4.8 percent during 1976-91.¹ The shares of the U.S. and CNA in total world exports steadily declined throughout the last three decades. The share of EAC, however, stayed constant at about 47 percent.