Japan—ASEAN relations in the context of globalization

International Journal of Business Research, Nov, 2007 by Ana Monica Pop, Dana Pop

ABSTRACT

In this paper we will try to make an analysis of the evolution of the relations, mainly from an economic point of view, between Japan and the ASEAN countries in the context of globalization.

ASEAN--the Association of Southeast Asian Nations--was formed in August 1967 in Bangkok. The Bangkok Declaration (1967) stipulated that the Association was open to all Southeast Asian countries. Today, ASEAN region has a population of approximately 500 million, an area of 4.5 million square kilometres, a combined GDP of around USD 737 billion and a total trade of approximately USD 720 billion.

The dialogue between Japan and ASEAN covers a wide range of meetings at summit, ministerial and official level. After the establishment of ADB--Asian Development Bank--in 1966 by Tokyo, the framework for entering in economic affairs was settled. After introducing the new Japanese policy in 1977, Japan has been the largest provider of economic assistance for ASEAN.

Recently, some analysts considered that Japan's pre-eminence in the ASEAN region has been eroded due to the economic rise of China. However, we believe that ASEAN countries will still welcome Japan as a counterweight to China and a major economic player.

Keywords: Globalization, regional integration, trade

1. CONCEPTS OF INEQUALITY IN THE CONTEXT OF GLOBALIZATION

"Globalization is a bit like gravity. We may discuss whether it is good or bad, but the question of not having it does not seriously arise. We have to live with it ... [and] a world like the one we have today but without globalization is difficult to imagine". (Basu, 2003)

When talking about globalization 3 differences in the value judgements about distributive justice underlie current debates:

1. Distinction between 2 different concepts of inequality--one depends on proportionate differences in incomes, the other on absolute differences; common empirical finding in the literature on development economics are showing that changes in inequality at country level are not correlated with rates of economic growth; the finding that growth tends not to be associated with rising inequality rests on a specific concept of , known as relative inequality in the literature. Relative inequality depends on the ratios of individual incomes to the mean. If all incomes are rising by the same proportion, relative inequality rests unchanged. This is contrasting with the concept of absolute inequality, which depends on the absolute differences in level of living, rather than on relative differences;

2. How the average gains from growth, policy reform etc. vary with income (vertical vs. horizontal inequality); since growth does not change income shares on average, absolute poverty measures will tend to fall with growth;

3. Inequality between countries rose in the period of globalization, suggesting that the gains have been unfairly distributed (interpersonal vs. inter-country inequality); the disparity in average incomes between rich and poor countries has been rising over time--globalization's contribution to this apparent increase in inequality between countries is questionable. An alternative concept could be the between-country component of total interpersonal inequality. By this concept, all individuals at a given real income level should get equal weight in assessing between-country inequality, no matter where they live.

2 ASEAN AND JAPAN TODAY

ASEAN (the Association of Southeast Asian Nations) was established in 1967 by the original members Indonesia, Malaysia, the Philippines, Singapore and Thailand. Afterwards, other countries joined the association as follows: Brunei Darussalam (1984), Vietnam (1995), Laos and Myanmar (1997), Cambodia (1999). The objectives of ASEAN are:

* Accelerating the economic growth, social progress and cultural development in the region;

* Promoting political and economic stability in the region;

* Resolving various issues in the region.

Japan has a population of 127.2 million and an area of 387.000 squares kilometres. Its post-war economy developed becoming from a "less-developed country" in 1952 a high-developed one, plunging in and escaping from recession since the 1990s.

The ASEAN-Japan Centre was established in 1981 and nowadays it comprises ASEAN-10 and Japan. Initially, it was based on the Agreement establishing the SEAPCENTRE (Southeast Asia Promotion Centre for Trade, Investment and Tourism). Japan created also the ASEAN Cultural Fund in order to enhance not only economic but also the cultural relations with the ASEAN countries.

At the Fourth ASEAN Summit in Singapore in 1992 a scheme was launched in order to establish an ASEAN Free Trade Area or AFTA. As a consequence, within three years, exports among ASEAN countries almost doubled and the tourism registered an important increase.

In November 2002 Japan and ASEAN signed a joint declaration to draw up the framework for an FTA to be established within 10 years, including measures to promote and facilitate trade and investment in financial services, human resources development, transportation etc. Despite this, Japan still appears to be more actively pursuing bilateral agreements with individual ASEAN countries.