Exploring dimensions of regional economic integration in East Asia: More than the sum of its parts?

No single measure of real or financial integration sufficiently captures all of the salient characteristics of the extent of integration between individual economies and of economies within particular regional groups. This paper introduces the idea of utilising and combining the effects of a number of individual measures of integration and, in doing so, presents an assessment of the stylised facts around bilateral and regional real and financial integration for the ASEAN5 and the large industrial Asian countries for the period 2000–2009. By using many measures, one should be able to achieve two objectives. The first is to capture many of the main attributes of integration in order to further provide insight into the integration landscape in East Asia. The second is to investigate which individual (if any) measure drives the overall level of integration and, as such, address the question of what might be the possible sources of integration between countries in the region. This has significant policy implications about how to best target policies of liberalisation in both goods and financial markets as well as informing the ongoing debate about optimal currency areas (OCA) and a possible monetary union in Asia.