Wednesday, January 17, 2018

The Asian Convergence

Koichi Hamada and Lee Jong-Wha

Is European-style integration viable in Asia? Will “Abenomics” revive Japan’s long-stagnant economy? How can China and Asia’s second-generation “tigers” avoid the “middle-income trap”? Can Asia’s emerging economies build social-welfare systems that preserve their economic dynamism?

Interdependence now tops the agenda whenever thoughtful Asian policymakers meet. Multi-national supply chains, cross-border investment flows, and currency-swap arrangements have all served to bring about greater integration in the region than at any time in history. Moreover, the spread of prosperity into Asia’s hinterlands, following decades of booming growth, has made Asian integration appealing even to once-isolated states.

Yet Asian countries, many still embittered by imperialism’s legacy, are often loath to cede sovereignty in order to foster integration. With Asia riven by multiple intractable disputes, meaningful integration may still be a long way off, even as its countries face many of the same problems: the need to boost consumption, address demographic challenges, and improve social safety nets, to name only a few.

Koichi Hamada and Lee Jong-Wha are able like few others to decipher the forces simultaneously pushing Asia together and pulling it apart. Hamada is Professor of Economics at Yale University and, as Chief Economic Adviser to Japanese Prime Minister Shinzo Abe, is the intellectual architect of “Abenomics.” His analysis of Japan’s “bubble economy” has long been required reading for Asian policymakers. Lee was Chief Economic Adviser to South Korean President Lee Myung-bak, a former Chief Economist at the Asian Development Bank, and is Professor of Economics at Korea University. His book Costs and Benefits of Economic Integration in Asia (co-authored with Harvard University’s Robert Barro) was one of the first to set out a coherent vision for Asian economic integration in the wake of China’s rise.

In The Asian Convergence, written exclusively for Project Syndicate, Koichi Hamada and Lee Jong-Wha alternate monthly in examining the factors facilitating and impeding regional integration. The stakes of understanding the forces at work across Asia, including the thinking of senior policymakers, have never been higher.

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