Spillover and Cycle Effects of Regional Integration : Growth and Business Cycles in East Asia and Enlarged EU

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In East Asia, expanding production networks through intermediate goods trade and foreign direct investment have promoted regional integration. This accompanies hollowing-out of manufacturing in advanced economies and nurtures engines of industrialization in developing economies, drawing up a new industrial map in the region. On the other hand, against financial business cycles caused by ballooning capital flows, East Asia has pursued exchange rate stability, lengthened capital compositions and constrained external financing along with production networking, thereby building up unique macro-financial regimes more robust against growing financial risks. East Asian regional integration may constitute a new 21century type development model.