Michael G. Plummer

“Natural” economic blocs: an alternative formulation

This article offers an alternative to what has become a conventional definition of “natural” regional grouping. Instead of focusing on the total value of intraregional trade or its share in the regions total trade, it focuses on the pattern of trade prior to integration. It formulates a method for assessing the degree to which joining a regional bloc would distort the ranking of a countrys industries by comparative advantage. A “natural” grouping is one that would largely preserve the comparative advantage of the constituent countries. It occurs if each of the constituent countries’ exports to the world as a whole has a commodity mix similar to its exports to the integrating region.

Motives for Japanese DFI Survey, analysis, and implications in light of the Asian crisis

Abstract This paper assesses the motives for Japanese outward direct foreign investment (DFI), drawing on a comprehensive private-sector survey (Toyo Keizai) of parent companies of foreign subsidiaries. It shows that the motivations behind Japanese DFI outflows are many and varied, with “securing market share” constituting the most salient motivation. DFI as a means of avoiding trade frictions is relevant only in developed countries in five industries, including transportation equipment, machinery, and electronics. Motivations are found to differ between developed and developing host economies, as expected.JEL classification: F2

An analytical survey of Vietnam's external policy challenges

Abstract Economic reform in Vietnam, or doi moi, has placed the country firmly in the camp of transitional economies working to build “market socialism.” An integral part of doi moi has been reform of external commercial policies. In particular, Vietnam has embraced policy changes designed to stimulate international trade and financial flows, such as, direct foreign investment. Vietnams joining the Association of Southeast Asian Nations (ASEAN) was a milestone in this regard. The lions share of Vietnams trade and investment is conducted with Asian economies, and given its tremendous growth and extensive liberalization programs, the economic importance of Asia to Vietnam will likely increase. Vietnam will be able to use ASEAN as a “springboard” to regional and global markets, as well as a first step in moving closer to other Asia-Pacific and global institutions, such as the Asia-Pacific Economic Cooperation (APEC) forum and the World Trade Organization. While Vietnam continues to be a relatively poor and closed economy, the reform program has made great progress; it is beginning to resemble increasingly its Asian neighbors in terms of macroeconomic and microeconomic indicators. This paper considers the external challenges facing Vietnam in the 1990s and beyond as its reform program continues apace, using both qualitative and quantitative analysis.