The APEC Region in the World Economy
The Asia-Pacific region is already the world's largest and most dynamic in terms of combined Gross Domestic Product (GDP) and has fast assumed a major role in world trade. APEC includes several of the world's biggest existing markets; 11 individual APEC economies together constitute 4 of the 10 so-called Big Emerging Markets identified by the Commerce Department as posing the best future prospects for U.S. exporters.[1] Indeed, some 2 million American jobs already depend on trade with the East Asian members of APEC.[2]
APEC's dominance of world merchandise trade is suggested by regional aggregations prepared by the WTO. When intra-EU trade is netted out, the Asian region [3] accounted for 34 percent of world merchandise trade in 1994, compared with North America's 21 percent and the EU's 22 percent shares (table 7). According to estimates prepared by the World Bank,[4] the East Asian developing economies [5] -most of which are APEC members-were the world's fastest growing exporters and importers from 1981-1993, as figure 2 illustrates. East Asian developing economies are projected to remain so during 1995-2004.
Economic Performance
Behind APEC's dynamism lies complex and disparate economies. The industrialized members of APEC grew, on average, more slowly than developing APEC members during 1981-93 (figure 2). Although there is some variance in the forecasts, developing APEC economies are expected to continue to grow twice as fast as industrial APEC economies over the next 5 years (table 8).
At the same time, the industrial economies continue to account for the
majority of APEC economic activity. The United States and Japan make up
over 78.4 percent of APEC GDP (exchange rate basis), with the U.S. GDP alone
comprising nearly half of APEC GDP. Table 9 shows that GDP per capita ranges
from under $450 a year in China to over $36,000 in Japan. The 13-year average
annual GDP growth rates also vary significantly, from -0.6 percent by the
Philippines to China and Korea's impressive 8.2 percent. Although nominal
1994 inflation rates differ, all economies except China had single-digit
inflation rates. Over one-half of the population in APEC is concentrated
in China. The next most populated economy, the United States, is merely
one-fifth of China's size. Other evidence of APEC economies' heterogeneity
is found when comparing the sectors that dominate economically. Papua New
Guinea and the Philippines remain largely agricultural, whereas others,
such as Hong Kong and Singapore, have no significant agricultural sector.
Export, Import and Investment Trends
APEC economies have experienced rapid increases in trade and investment, especially since 1980 (table 10). Linkages among the economies in the region, largely driven by private commercial considerations, have expanded greatly in recent years. Evidence of integration among member economies is found in data from the Pacific Economic Cooperation Council (PECC) for APEC, showing that 71 percent of 1993 total imports and exports of APEC economies were accounted for by other APEC members.7
Since 1980, average annual export growth rates have been highest in Hong Kong, China, Thailand, Singapore, and Malaysia (table 10). At just over 5 percent per annum, the United States experienced a relatively low rate of growth in exports since 1980. The Philippines had the lowest export growth rate at 3.4 percent. Import growth rates have also been strong, particularly for Thailand, Hong Kong, Korea, Taiwan, China, Malaysia, and Singapore. The rate of growth for imports over 1980-93 has been lower than that for exports for all APEC economies except for the United States, Japan, Mexico, the Philippines, and Taiwan.
Trade in services as a share of the total trade of APEC economies increased from 18 percent in 1985 to 20 percent in 1993. All but four members-Malaysia, New Zealand, Singapore, and the Philippines-have experienced greater growth in services trade than in goods trade during the 1985 to 1993. [7]
Direct foreign investment by multinational firms in APEC has grown rapidly in recent years, with the stock growing from approximately $288 billion in 1980 to $1.076 trillion in 1992, an annual rate of increase of nearly 12 percent.[8] During the same period, the stock of U.S. direct foreign investment in the Asian members of APEC [9] increased from over $14 billion to nearly $59 billion, an annual increase of nearly 13 percent; while the stock of direct foreign investment by the Asian members of APEC in the United States increased from approximately $5 billion to nearly $103 billion, an annual increase of nearly 29 percent. The share of worldwide U.S. direct foreign investment located in Asian APEC has increased from 6 to 12 percent of the total, while the share of foreign direct investment in the United States from all sources originating in Asian APEC has increased from 6 percent to over 24 percent of the total.[10] The pattern of U.S. investment links with Asia has expanded from a focus on Japan to include increasing inward and outward linkages with most economies in the region. Growth rates of domestic investment in APEC economies vary, as illustrated in table 10. Korea, Thailand, and China recorded high double-digit annual investment growth. Australia, Papua New Guinea, and Mexico have experienced stagnant gross domestic investment growth, but the worst showing is by far the Philippines, which on average has experienced disinvestment at the rate of 0.1 percent per year.
[1] The ten Big Emerging Markets identified by Commerce are: Argentina, Brazil, Mexico, ASEAN (Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), Chinese Economic Area (China, Hong Kong, and Taiwan), India, Korea, Poland, South Africa, and Turkey. For extensive analysis, see U.S. Department of Commerce, International Trade Administration, The Big Emerging Markets: 1996 Outlook and Sourcebook (Lanham, MD: Bernana Press, Sept. 1995).
[2] USTR calculations based on Commerce Department estimates of the jobs supported by U.S. exports.
[3] The WTO's "Asia" grouping includes two subgroups, South Asia and East Asia (including Oceania). The second subgroup includes all APEC-14 economies (i.e., all APEC members except the three NAFTA partners and Chile). Of the non-APEC economies included in the WTO Asia grouping, only India, Pakistan, and Vietnam had appreciable exports, but their exports together were less than those of Indonesia alone ($40.0 billion versus $40.9 billion).
[4] The World Bank, Global Economic Prospects and the Developing Countries (Washington, DC: Apr. 1995), pp. 5 and 7. 6 Also included in the World Bank "East Asian" group of developing economies are Cambodia, Vietnam, and various smaller countries and territories.
[5] Also included in the World Bank "East Asian" groupof developing economies are Cambodia, Vietnam, and various smaller countries and territories.
[6] PECC, Survey of Impediments to Trade and Investment, (Singapore: APEC Secretariat, Nov. 1995), pp. 21-22.
[7] PECC, Survey of Impediments to Trade and Investment (Singapore: APEC Secretariat, Nov. 1995), pp. 65-67.
[8] Based on data compiled by Industry Canada, cited in APEC Economic Committee, 1995 APEC Economic Outlook (Singapore: APEC Secretariat, Nov. 1995), attachment table 9.
[9] Data include China, Hong Kong, Japan, Taiwan, Indonesia, Malaysia, the Philippines, Singapore and Thailand.
[10] APEC Economic Committee, 1995 APEC Economic Outlook (Singapore: APEC Secretariat, 1995), USITC staff calculations from data in attachment table 9.