VOL. 4, NO. 4, PGS. 10–15


The Asian Path of Regional Integration
A conversation with Françoise Nicolas

This interview was conducted by Javier Toro.

Françoise Nicolas is a Senior Research Fellow and the Director of the Center for Asian Studies at the French Institute of International Relations. She is the editor of Korea in the New Asia: East Asian Integration and the China Factor.

What kick-started regional integration in Asia? What was it that was sought to be solved?

It depends on what you have in mind. If you are thinking of institution-based regional integration, the Association of Southeast Asian Nations (ASEAN) is the first attempt. ASEAN had multiple objectives back in 1967 when it was created. One objective, which I guess was the main objective at the time, was to fight Communism. Singapore, Malaysia, Indonesia, Thailand and the Philippines, the founding countries of ASEAN, were close to the United States and for obvious reasons were not favourable to Communism. This is the time of the Vietnam War, and these countries didn’t want Communism to take over. Another objective was to pacify the region. All these five countries were fighting against each other. They had territorial disputes and wanted to put them aside in order to develop economically. They recognized that by creating this association, they would be in a better position to promote economic development individually and to put aside standing disputes. Now, if you are thinking of market-led regional integration, it all started out, I would say, in the mid-1980s with Japanese companies investing and relocating part of their production in other countries in East Asia —particularly in ASEAN countries, but not only there— where production costs were much lower. Japanese companies were basically looking for ways to produce more effectively and efficiently to stay competitive after the very sharp appreciation of the Japanese yen at the time. So that led to a huge wave of Japanese investment in the region that involved the relocation of commodity production from Japan to other countries in the region. In this way, an organization of production, led by Japanese companies, emerged in the region.

What has driven regional integration in Asia to this day? Has it been internal political processes? Has it been external events?

It is actually a combination of both. Institution-based integration at the ASEAN level was very much driven by external factors, mainly the expansion of Communism and also competitive pressures from the outside. Market-led integration was also driven by external factors, namely the involvement of Japanese companies in the region. This has changed over time. Now, for example, China plays a major role in market-led regional integration. China is not only a major player today, but its involvement is also a bit different from that of Japan in the early days. Japanese-affiliated companies in the region sourced from Japan and then exported back to Japan. With China, production is organized into different stages across different countries. So with China you have what is called “fragmentation of production”. Less sophisticated products are processed in parts of the regions where it is cheaper to do so, intermediate products are processed somewhere else in the region, and more sophisticated products are processed in the most advanced countries in the region, such as Japan and South Korea. So the production process has many more steps, and these steps happen in one country or another depending on the competitive advantages of each country. This fragmentation has been made possible by advances in Information and Communication Technologies, lower transportation costs, etc., etc.

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