The Asia-Pacific region’s rapid growth since the 1950s had been supported by a favourable external economic environment and opportunities arising from globalization. This, however, has changed dramatically in the aftermath of the global financial crisis of 2008-2009. In the new global environment, sustaining the region’s growth and realizing the Asia-Pacific century critically depends on its ability to harness the potential of regional economic integration.
In light of the many complementarities arising from its diversity, the region, a late starter in regionalism, has many underexploited opportunities for mutually beneficial regional integration. Regional economic integration can also assist in making regional development more balanced, with the lagging economies receiving a boost through stronger connectivity and integration with economic growth poles, such as China and India. Besides fostering peace, such cooperation could also help the region address shared vulnerabilities and risks and exercise its influence in global economic governance in a way commensurate to its rising economic weight.
To harness the potential of regional economic integration, the study recommends a four-pronged scheme with a long-term vision of building an economic community of Asia and the Pacific:
Coalescing the numerous bilateral and subregional trading arrangements of the region into a broader regional trading and economic cooperation arrangement with built-in safeguards and flexibilities for poorer countries.
Seamless physical connectivity across the region to spread the benefits of economic integration to lagging subregions through transport, energy and ICT links, and the adoption of best practices in trade and transport facilitation.
Financial cooperation for closing development gaps and to ensure the optimal use of the region’s resources for mutual benefit. Economic cooperation for addressing shared vulnerabilities and risks, such as energy and food insecurity, natural disasters, pressures on natural resources, social exclusion and rising inequalities – towards an inclusive and sustainable Asia-Pacific century.