The legacy of Bismarck

Many mechanisms (such as auctions) efficiently allocate an asset to the firm which values it most highly. But sometimes the asset’s owner may benefit from the transfer only if the asset is not too valuable to potential buyers. In this setting, we examine the efficiency of mechanisms when the potential buyers have private information about the asset’s value. We show that rent seeking, and lobbying, rather than merely wasting resources, can lead to allocations which are close to efficient.     

The challenge of institution-building in Asia and its implications for Asia-Europe relations

  East Asia, including Northeast Asia and Southeast Asia, has developed tightly-linked production/distribution networks through globalizing corporate activities. The vertical chain of production in East Asia has been even more sophisticated than economic integration in East Europe or Latin America. However, the political environment of East Asia for trade and investment has been far from borderless. The integration effort at the policy level has been very much limited so far, due to the historical background as well as geopolitics surrounding East Asia. The Asian currency/financial crisis provided these countries a historical turning point. After the burst of the crisis, East Asians realized that they have to take care of themselves in their difficulties, not depending on outside forces. A natural choice for them was to step into the realm of regionalism. In 1998, Japan and Korea officially announced that they would discard the long-lasting GATT/WTO-only approach and adapt the multi-layered approach, including both regionalism and multilateralism. The ultimate goal of regionalism would be a region-wide integration including ASEAN+3. As a steppingstone, Japan signed the Japan-Singapore Economic Partnership Agreement (JSEPA) in January 2002. In a parallel move, the ASEAN and China Leaders announced in November 2001 the establishment of an ASEAN-China Free Trade Area (ACFTA) within 10 years. This article will follow up the most recent advancement of regional institutional building in East Asia with the emphasis on peculiar characteristics of economic integration in the region and discuss its implications for Asia-Europe relations. This paper is heavily drawn from Kimura (2002, 2003).     

The emergence of regional economies in China and its implications,with special reference to Hong Kong and Guangdong

  China's continental physical expanse has been a dominant, shaping influence of its political, social and economic development throughout its modern history. Thanks to its relative ethnic homogeneity, as well as the absence of political reform, it has – unlike the former Soviet Union – preserved its unity as a state. Nevertheless, regionalism remains a powerful counterpoint to centralisation in China. In particular, under the impact of post-1978 economic reforms, differentials and tensions between provinces and regions have emerged as a potent force, threatening the authority and power of Beijing. This article begins by seeking to explore some of the regional forms in which economic change has manifested itself during the last two decades. It highlights the unique problems faced by an economy that is still in transition in a country as large as China. Brief consideration is also given to the wider regional context in which China is sometimes placed as the central player – namely, that of `Greater China'. At the heart of the article is a case study that examines the evolution of a particular kind of regionalism, captured in the economic integration – even symbiosis - between Hong Kong and Guangdong. The question is addressed whether the form of regionalism contained within the forging of an ever-closer economic relationship between these two areas of South China can be a model for the integration of other regions both within and across China's national boundaries. Hong Kong's transformation from a tiny, dependent, colonial enclave into one of the most successful economies in the world is one of the most remarkable stories of post-World War II economic history. During the 1960s and 1970s, Hong Kong's growth record was unmatched anywhere else in the world. But by the beginning of the 1980s, high land rents and spiralling wages started to erode the international competitiveness that had been the basis of Hong Kong's previous economic success. By a happy coincidence, however, the emergence of such pressures coincided with the opening of China to the outside world. China's `open door' policy thereby made available to Hong Kong entrepreneurs a huge, hitherto untapped reservoir of cheap labour and gave them access to inexpensive factory sites just across the border in Guangdong. It was a lifeline to which they responded eagerly and, through the relocation of their factories, provided the means whereby Hong Kong manufacturers discovered a new lease of life. The benefits associated with this process accrued not only to Hong Kong through the regeneration of its manufacturing industry. Rather, it was a two-way process that also facilitated economic growth, structural transformation and improvements in living standards in Guangdong (above all, in the Pearl River Delta). In short, the process became the basis of deepening integration between the economies of the two regions. Indeed, it was the key element in the emergence of a new regional economic grouping, known as `Greater China' – an informal triangular partnership between Hong Kong, Taiwan and two southern Chinese provinces (Guangdong and Fujian). The emergence of `Greater China' can be regarded as a particular manifestation of the coastal bias that has so strongly characterised China's economic trajectory under reform. To this day, the triangular economic nexus between Hong Kong, Taiwan and South China remains an important dimension of China's external economic relations, even if developments in other coastal provinces have caused it to weaken. To what extent recent and future developments have challenged and will continue to challenge the regionalism inherent in the original notion of Greater China is something that deserves close attention. Not least, the strategic initiative of opening up China's western regions poses interesting and important questions that touch on future developments of `trans-nationalism' and `trans-regionalism' affecting China.     

New regionalism(s) in the global political economy. Conceptual understanding in historical perspective

  This paper places the contemporary study of regionalism in historical context. It argues that the study of regionalism has occurred in two waves. The first gathered pace as a sub-field of International Relations from the late 1950s and the second emerged in the context of the globalisation of the late 1980s and the 1990s. RID="*" ID="*" This paper, originally presented as a lecture to the Asia Europe Foundation University, 7^th Summer School, Barcelona: November 11, 2002, represents an abbreviated and revised version of Shaun Breslin and Richard Higgott (2000) Studying Regions: Learning from the Old Constructing the New, New Political Economy 5 (3): 333–352. Permission of the Editors of New Political Economy to publish in this form is gratefully acknowledged. The support of the Economic and Social Research Council in the writing of this paper is also gratefully acknowledged.     

European perspectives towards the rise of Asia: contextualising the debate

To what extent can we speak of a distinctively ‘European’ security approach towards the Asia-Pacific region? In order to address that timely question, this article examines how Britain, France, Germany and the European Union (EU) are framing their evolving security roles in the Asia-Pacific region, and how those individual perspectives intersect with each other. The article identifies a number of important common features in Europe’s approaches towards security in the Asia-Pacific, namely the tendency of most European actors to emphasize the economic and diplomatic nature of their contribution to regional security, their promotion of regional multilateral security fora, their rejection of the notion that China’s rise is inherently challenging for regional and global security, and their willingness to signal their differences towards Washington’s emphasis on military power and alliance-based approach. However, and despite the existence of common traits, individual European actors show different degrees of closeness vis-à-vis the US and China and feature different perspectives regarding which security relationships they should prioritize in the region (if any), or the appropriate balance between diplomacy and security and defence cooperation. Such divergences prevent Europeans from developing a coherent security profile in the region and preclude us from speaking of a distinctively European security approach towards the Asia-Pacific.