World Trade: Emergence
Asia's journey from the 1997-98 financial crisis to being one of the world's
most dynamic regions in terms of trade, development and investment activity,
can best be termed as a 'Renaissance'. The world's centre of economic
gravity is shifting towards Asia, as it currently accounts for 27 percent
of international trade. This growth is mainly driven by the exemplary
performance of the emerging Asian countries, including China, India, Hong
Kong, Thailand, Malaysia, Singapore and Vietnam. The share of these emerging
Asian countries in world trade increased from 13 percent in 1990 to 20
percent in 2004.
The Asian region is gaining significance in merchandise as well as commercial
services trade. Asia's share in world merchandise exports and imports
stands at 26.8 percent and 24 percent, respectively. The value of Asia's
merchandise exports and imports shot up by 25 percent and 27 percent,
respectively, in 2004. The growth in exports from the region can be attributed
to strong demand from the US, and intra-Asian trade, stoked by a recovery
in electronics trade.
Exports of commercial services increased at a fast rate of 27 percent
in 2004, while imports were up 25 percent during the same period. Asian
countries, such as India, China and the Philippines, are the most preferred
destination today for outsourcing of business services, such as transaction
processing, customer care centers, medical transcription, IT services
and application development, high-end analytical services, R&D services,
etc. Other commercial services, such as transportation services were strong
in 2004, while travel receipts recovered by 31 percent during the year
from exceptionally low levels in 2003 (due to the spread of SARS).
Intra-regional trade as a share of total trade went up sharply to 41 percent
in 2004, primarily due to intra-industry trade as a result of greater
vertical specialisation and relocation of production processes. This is
evident in the electronics sector, where capital intensive processes (like
production of microchips) are carried out in high-income economies like
Singapore and Korea, and labour intensive processes (like assembly of
personal computers) are located in low income countries, such as China.
Asia has integrated into a global production chain with some cities like
Hong Kong and Singapore becoming the hub of manufacturing and trade.
The dynamics of growth and development in Asia is a perfect illustration
of how countries have used trade as a means of achieving greater degree
of integration with the international economy. Region-specific factors
have provided the stimulus for this growth.
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