The Politics and the Economics of Integration in Asia and the Pacific (review)

This is another valuable addition to the books in the Pacific Trade and Development Conference (PAFTAD) series. Like its related publications, the Politics and the Economics of Integration is another well-edited contribution to the ongoing discourse on the Asia-Pacific region. Based on the conference held in 2009, the chapters in the volume collectively address how the interaction of politics and economics affect the structure and scale of economic integration in the region. B oth domestic and external political cum economic variables that affect the integration process are given detailed emphasis in the chapters. It is also heartening to see the role of politics as influencing economic integration, conveniently neglected by most mainstream economists. Thus, several chapters in the volume bring a measure of realism in understanding the process and level of integration in Asia-Pacific.

Shiro Armstrong, as the editor, has provided a readable and interconnected collection of eight chapters that address the major themes of politics and economics, reminding the readers that one cannot overlook the "political elements that are involved in shaping all forms of regional and international economic integration". In addition to Armstrong, other leading economists/political economists, namely Peter Petri, Razeen Sally, Peter Drysdale, Ralph Paprzyski, Keiko Ito, Xinpeng Xu, Yu Sheng, Helen Nesadurai and Haryo Aswicahyono have contributed to the volume. The Asia-Pacific is not short of structures or processes in integrative attempts; since the late 1970s when five member ASEAN group initiated a modest PTA (Preferential Trade Arrangement) and later in the 90s when APEC promoted a voluntary-based open regionalism to facilitate greater economic cooperation, more serious initiatives have been floated, some seriously considered and implemented, while others still waiting for fruition.

As Petri has reminded us in his chapter, integration is now much more complex than just removing barriers to trade. A greater sense of interdependence and urgency has to be injected so that the various players, be they at the bilateral, regional, or global levels seek new ways of meeting the challenges of international economic relations. New approaches are needed, as Petri points out, coming in the wake of the 2008-09 crises when this book-based conference was held. Sally, on the other hand, provides an interesting argument based on his overview of the various institutional attempts; he is convinced that economic integration processes will remain weak, given the great diversity in the economies of the Asia Pacific and the high level of political considerations. He asserts that "economic integration will work bottom-up only if policies and institutions improve in its individual members, particularly the leading ones". As he points out, "regional institutions such as APEC, ASEAN, SAFTA and APT can be useful at the margin. They can be chat forums, gradually improve mutual surveillance and transparency, promote trade facilitation and 'best-practice' measures, and (at best) cement unilateral liberalization and help to prevent its reversal in difficult times." He feels that only institutions with realistic goals and instruments will be of some success given the intra-Asian political and economic divisions. Realism is always a good testing pad for 'feel-good' proposals by government leaders.

Armstrong and Drysdale, in their contribution, analyse the influence of economics and politics on the structure of world trade and investment flows by utilizing indices of political distance/closeness between countries on trade and investment. Their data analyses show interesting conclusions and implications for the future. They found that multilateral institutions reduce economic and political distance between trading partners; while political relations did affect economic relations, it had relevance for export activities and less so for import activities. However, they found that international investment was a more important indicator than international trade when it comes to political impacts; thus, the significance of FDI cannot be discounted in regional relationships. The writers offer another important conclusion: that East Asian economies are leaders in trade and economic integration, measured in terms of their trade and investment performance. They are...