The Dynamics of APEC Interdependency and the Global Welfare Distribution

This paper applies Matrix of International Trade (MIT) model to analyze the dynamics of interdependencies within APEC member and between Europe, Africa and Middle East. The quarterly portrait for the last ten years (2003Q1-3012Q4) provides interesting dynamics; first, Indonesia, Malaysia, and Thailand gain constant benefit from international trade. Almost reaching its full capacity, Singapore is relatively unable to gain much from the increase of its trading partner's outlays. India does experience increasing capability to gain from its international trade, and also a better trade polarization, particularly to Middle East and Africa. Second, measured with the increment of net foreign balance (NFB), the average welfare distributed to developed countries (US, Japan, Australia and China) is 20 times higher than the developing ones. Third, China took over and dominates United States on trading with Europe and even Australia since 2007. Fourth, the dependency of developing country group to developed one is averagely 13 times than otherwise. Only Japan and Middle East and Africa have increasing trade dependency on developing country in APEC; Australia and Europe are constant; while United States and China experience declining dependency. Fifth, within APEC, the total trade multiplier of Indonesia with his all trading partners declines; showing its weakening global position