wordpress-themes.org wordpress themes wordpress themes

EAST ASIAN REGIONALISM: THE NEED FOR ASEAN+3 FTA - RESULTS AND DISCUSSIONSFrom Table 3 we can see that, GDP and export relationship in the CJK yields stability in the long run. It is proven by the stationarity of the error term in each of the cases. The cointegration test that proves long run equilibrium describes that the model is not spurious. Export is proven to be the engine of economic advancement in these countries. It approves some previous research as the likes of Dorasami, Ekanayake and Fosu et al, of export and economic growth relationship. Equation 8 has shown that the long run relation between Export and GDP in Japan, China and Korea would be balanced by the previous error. Table 4 provides the short run output for CJK. China: The residuals for the relationship between China’s GDP with China’s Export to Japan and Korea are significant. These suggest that there is an equilibrium error in the short run. The negative signs put the Export for a constant rise to reach the long run equilibrium. In China’s case, the adjustment rate or the phase of acceleration for the long run equilibrium is very fast. It can be seen through the absolute value of the equilibrium error coefficients which are 1.09 and 1.33 for China’s relationship to Korea and Japan respectively.
Japan: In the short run, there is an equilibrium error for Japan’s Export to China with its relation to Japan’s GDP. The coefficient of residual gives negative sign (-0.18), which means that Japan’s Export to China is below the long run equilibrium. This will only lead to a rise of export for the following periods. But it is important to note that the absolute value of the coefficient (adjustment rate) is very small (0.18). This suggests that Japan’s Export to China is moving in a slow phase to reach the long run equilibrium.
As for the relationship between Japan and Korea, the equilibrium error of the export trend is not significant. These suggest that Japan’s GDP is adjusting to the change in Japan’s export to Korea in the same period of time. In other words, Japan and Korea relationship in terms of export has already reached steady state level.
Korea: Korea’s case is somewhat similar to China. The residuals for the relationship between Korea’s GDP with Korea’s Export to Japan and China are significant. It yields similar explanation with China’s case. However, the adjustment rate for the case of Korea is slower than China’s but it is still faster than Japan’s. It gives the absolute value of 0.23 and 0.48 for Korea’s trade relationship to Japan and China respectively.
From the ECM, we can conclude that North East Asian region is not moving at the same phase to reach the long run equilibrium, which in this case Japan is the slowest one. The insignificant value of acceleration rate for the case of Japan trade relationship with Korea is also important point to note since it can be interpreted as an exhausted Korean market for Japanese products (steady state condition). These facts are very crucial since it diminishes Japan’s role as the sole leader in the north East Asia.
Although whoever the leader is not to important, but the stalled effect of a country’s economic growth in these region will only serve as stumbling blocks in creating East Asian welfare. The rising growth of China and Korea will soon meet its end mimicking the pattern of Japan if no serious action is sited. Therefore, in order to strengthen regional welfare and accelerate the phase of adjusting, economic integration must take place.