Invisible linkages: A regional perspective of East Asian political economy

Abstract

This article studies East Asian political economy from a regional perspective. The Asian financial crisis showed that East Asian economies are highly regionalized. However, the linkages among Asian economies, mostly informal in nature, often appear "invisible" to many in the West, who focus more on the states and formal institutions. Drawing on a broad set of literature mostly in Asian languages, this paper provides a systematic study of informal integration in East Asia, which consists of not only regional production networks, but also ethnic Chinese business networks and subregional economic zones. It finds that the three informal mechanisms have formed an interrelated pattern of regional integration in East Asia. The nature of the economic networks is very useful in explaining the Asian crisis and the different performances of east Asian economies in the crisis. The crisis has also resulted in profound changes in informal integration. While the Japanese-led production networks have been greatly weakened, the Chinese Economic Area is rising, driven by the ethnic Chinese business networks and subregional economic zones. As a result, the Japan-dominated "flying geese pattern" has been broken. The connections between Greater China and the United States have also been enhanced and are out-competing the Japanese production networks. Many of the new developments have been ignored in the West but they are key factors that will shape the future of Asian and World political economy.