About Ganeshan WignarajaGaneshan Wignaraja is Director of Research of the Asian Development Bank Institute (ADBI). Previously, he was a principal economist at the Asian Development Bank, a manager in a UK economics consulting firm, and has held research positions at Oxford University as well as the OECD. Dr. Wignaraja has published widely on trade and competitiveness, regional economic integration, industrial technology, and development strategy.
Regionalism in Asia led by global value chains (GVCs) and free trade agreements (FTAs) has increasingly put the spotlight on small and medium-sized enterprises (SMEs). As one of Asia’s success stories in internationalization, Malaysia offers interesting insights. Drawing on research on Malaysian enterprises, this article examines the characteristics of SMEs which have successfully internationalized by participating in GVCs and FTAs and explores their policy implications. It seeks to improve our understanding of the internationalization of SMEs in Asia and contribute to the scant literature. Read more.
In 2007, the 10-member Association of Southeast Asian Nations (ASEAN) bloc adopted the goal of creating an integrated economic region—termed the ASEAN Economic Community (AEC)—by December 2015. However, concerns have been expressed that the regional integration project’s 2015 deadline will be missed due to an overly ambitious timeline and too many ill-thought-out initiatives. With the AEC deadline looming, this article critically assesses the progress that has been made, charts some of the main challenges, and suggests the next steps for the AEC. Read more.
Small and medium-sized enterprises (SMEs) are a very important part of Asia’s economy. In this article, we explore SMEs and their financing issues with respect to the performance of SMEs in international trade, based on the sample of more than 8,000 companies across the People’s Republic of China (PRC) and Association of Southeast Asian Nations (ASEAN) member states. The discussion is derived from a recent Asian Development Bank Institute (ADBI) working paper (Jinjarak, Mutuc, and Wignaraja 2014). Read more.
After several days of grueling negotiations the Ninth WTO Ministerial Conference in Bali, Indonesia, in December 2013, adopted the Bali Package aimed at mainly streamlining global trade. However, this is only the first step toward a Doha deal and much work remains to re-formulate a post-Bali agenda, as well as reform of the WTO to restore its relevance as a key pillar of multilateral trade relations. Read more.
By Ganeshan Wignaraja. Posted July 11, 2013
Mega regional trade deals are in vogue in a fragile world economy as a means to spur trade and growth. Asia’s mega regional trade deal—the Regional Comprehensive Economic Partnership (RCEP), which includes India—is quietly being negotiated. But it deserves more press because the RCEP would create the world’s largest trading bloc and have major implications for Asian countries and the world economy. India is an important player in the RCEP negotiations but some Indian businesses are concerned about the prospect of further Indian trade with, particularly imports from, the People’s Republic of China (PRC). What would the RCEP cover and will Indian business benefit? What are the barriers to success and what should be done to overcome the hurdles? Read more.
Asian economies face important policy challenges regarding the use of free trade agreements (FTAs): primarily their scope and their impact on regionalization trends. These topics are the front line of contemporary negotiations and of interest to policymakers. This column examines these challenges based on new data on the business impacts of FTAs and contents of existing FTAs. It also discusses political economy considerations of FTA consolidation in Asia and its potential connection with North America and Europe. Asia’s rise as the “global factory” over the past several decades was underpinned by outward-oriented development strategies and multilateralism. FTAs, as trade-policy instruments in the region, were largely absent until the 1990s. Read more.
By Ganeshan Wignaraja. Posted March 7, 2013
Slowing growth and rising unemployment sometimes induce economies to become more inward-oriented with restrictive policies. Indonesia shows early signs of such tendencies and its future growth may be at risk. The experience of high performing East Asian economies, however, suggests that outward-oriented policies and infrastructure investment support sustainable growth. Indonesia’s growth slowed to 6.2% in 2012 from 6.5% in 2011. Its growth in the previous decade was below 6%. A slight dip notwithstanding, a turnaround seems to be continuing in this resource-rich economy once seen by the West as a basket case of crony capitalism during the 1997–1998 Asian financial crisis. Read more.
By Ganeshan Wignaraja. Posted October 24, 2012
Deep free trade agreements (FTAs) are key to trade-led growth in Asia. Deep FTAs can support a comprehensive regional agenda for liberalization covering reductions in barriers to goods and services trade as well as opening new areas beyond the current purview of WTO negotiations (like investment, trade facilitation, competition, government procurement and intellectual property). Deep agreements can also help lock in structural reforms at national-level and promote implementation of second generation reforms. Accordingly, deep FTAs are useful for opening markets and removing obstacles to the spread of production networks throughout Asia and the Pacific. The depth of FTAs among Asia’s developing giants—the People’s Republic of China (PRC) and India—is a topical issue. Read more.
By Ganeshan Wignaraja. Posted July 10, 2012
The escalating Eurozone crisis and signs of spluttering world growth have put Asia and its manufacturing enterprises into the spotlight again. Part of Asia’s rapid trade-led growth over several decades is associated with production networks and a regional division of labor. An expanding literature suggests that the region’s trade is increasingly made up of growing intraregional trade in intermediate inputs (Athukorala 2011). Production activities are increasingly being geographically fragmented across countries and linked by a dense network of trade in intermediate goods (Baldwin 2008). Small- and medium-sized enterprises (SMEs) are viewed as the backbone of national economic development in many Asian economies, accounting for the majority of firms and a large share of employment (Harvie 2010). Read more.
East Asia’s attitude toward free trade agreements (FTAs) has changed. Slow progress in global trade talks has led to a surge in FTAs across Asia. With the World Trade Organization (WTO) Doha Round trade talks stalled, Asian countries see FTAs as a way of liberalizing trade and investment and sustaining economic recovery. The number of signed and implemented FTAs in the region has increased from three in 2000 to more than 60 in 2012, sparking concerns about an Asian “noodle bowl” of agreements. Critics worry about overlapping rules of origin (ROOs) requirements, which may be costly to business, especially small and medium-sized enterprises (SMEs), and argue that this wave of agreements will undermine the multilateral liberalisation process. A search for pragmatic and innovative ways to untangle the noodle bowl of Asia’s free trade agreements is needed. Read more.
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