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BUSINESS IN EAST AND SOUTHEAST ASIA Market areas and regionalism: Key concepts

BUSINESS IN EAST AND SOUTHEAST ASIA Market areas and regionalism: Key concepts . Dr. Erja Kettunen-Matilainen Helsinki School of Economics, Center for Markets in Transition. Background. The international operations of multinational companies (MNC)

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BUSINESS IN EAST AND SOUTHEAST ASIA Market areas and regionalism: Key concepts

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  1. BUSINESS IN EAST AND SOUTHEAST ASIAMarket areas and regionalism: Key concepts Dr. Erja Kettunen-Matilainen Helsinki School of Economics, Center for Markets in Transition

  2. Background • The international operations of multinational companies (MNC) • MNCs are seeking new markets and/or moving production through foreign direct investments (FDI) • This ‘global shift’ has regional effects: economic activity may move away, stay, or move into a particular locale

  3. In China, MNCs are located e.g. in Pudong, Shanghai

  4. Market areas • Formation of market areas: concentration of economic activity • Prerequisites: economic, political and cultural similarities • Geographical scales: global, regional, national, local • Core and periphery • Market area and country analysis • Sector and industry-specific analysis

  5. Regionalization vs. regionalism • Regionalization • Increase in foreign trade and investments within a region • Global Triad: North America, Western Europe, East Asia • Regionalism: forming of regional trade blocs • Regional economic integration: combining the economies of several sovereign states in one entity

  6. Global triad:North America, Western Europe, East Asia(Map source: Nations Online Project)

  7. Regionalism • Regional liberalizing and harmonizing of trade policies • E.g. the European Union’s common trade policy • Potential for increased trade and FDI • Balassa (1966): Stages of economic integration • Examples: European Union (EU), North American Free Trade Agreement (NAFTA), ASEAN Free Trade Area (AFTA)

  8. East Asian regionalization • Operations of MNCs especially from Japan and USA • Economic growth of the Newly industrialized economies (NIE) • ‘Second tier’ of industrializing economies East Asian regionalism • Association of Southeast Asian Nations (ASEAN) 1967 • ASEAN Free Trade Area (AFTA) 1992: liberalization of trade among ASEAN member countries

  9. With its MNCs, Japan is in the core of East Asian regionalization. However, Japan does not belong to major regional trade blocs.

  10. Trade policies • Rationale and goals of trade policies • Protection of domestic industries • Export possibilities for domestic firms • Types of trade policies • Import restrictions + import promotion • Export promotion + export restrictions

  11. How do states negotiate trade policies? • Bilateral trade negotiations • e.g. United States - Singapore • Regional trade negotiations • e.g. within NAFTA or within the European Union • Multilateral trade negotiations (MTN) • General Agreement on Tariffs and Trade (GATT) 1948-1994 • World Trade Organization (WTO) 1995-

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