ECONOMIC RELATIONS BETWEEN JAPAN AND THE EAST ASIAN NEWLY INDUSTRIALISING ECONOMIES

Abstract

The Asian economies have made remarkable advance in recent years. After Japan, the Asian Newly Industrialising Economies -- Hong Kong, Singapore. South Korea and Taiwan (hereafter named the ANIEs) have taken centre stage as the fastest growing economies in East Asia. As a result, the economic status of this region in world economy is rising sharply, with favourable prospects of high growth in the near future. Since the 1960s when the ANIEs exported light manufactures to the United States and Europe, a competitive aspect in the trade relations between Japan and the ANIEs has emerged. As they gain ground on Japan rapidly, they have even begun to challenge Japan in high technology manufactured goods. Now that the ASEAN countries have achieved fairly steady industrialisation, they have gained competitiveness in low value-added products, thereby 'chasing’ the ANIES. This exercise attempts to examine the following enquiries: (1) with Taiwan and South Korea registering growth in knowledge-intensive industries like electronics and computers, will they catch up with Japan at some point in future? (2) What is the so-called 'dynamic multiple chase process’ among Japan, the ANIEs and ASEAN? (3) How will Japan respond to competition from the ANIEs amidst other global problems that it is facing today? (4) More importantly, will there be further ground for Japan-ANIEs cooperation? (5) What global factors will affect the outcome? While it aims to investigate how economic growth of Japan and the ANIEs has affected the pattern of their economic relations. this exercise will examine where, if any, and to what extent, the principles of economic complementarity have had to be enhanced or compromised. The crux of the issue is how Japan manages its internal adjustments with changing international economic realities. As the adjustment problems in Japan and the ANIEs are assessed, it shall become obvious that while Japan recognises that its key bilateral relationship is still with the US, it has awakened to the importance of its ties with the ANIEs. It is the evolving and integrative importance of' these ties that the future economic development of the East Asian region in particular and the Pacific Basin in general worths examination.