Rise of Intra-Regional Trade and Investment in East Asia

East Asian economies have become progressively integrated as a trading bloc through increasing intra-regional trade and investment. This phenomenon is not new, but reappeared and accelerated again from the beginning of the 1990s. Until the end of the 1980s, the trade integration in East Asia has mainly generated by Japanese investment which swept through the region. But the trade integration in the 1990s can be explained by some new factors. First, the NIEs are playing as the most important integrator replacing Japan in intra-regional trade. This shift represents an expansion of the trade spectrum between developed countries and developing in the region. Second, concentration of FDI flows into East Asian developing countries has contributed to regionalization of production network that induce the trade integration in East Asia. Third, increased regionalism in Europe and especially in North America made East Asian countries rely on the Asian market itself for their export. Lastly, opening of China and the rise of ethnic Chinese networks have played as special channel for intra-regional trade and investment in the last decade.