Call for an Asian Economic Community

The Delhi Consensus

The Asian Economic Community is an idea whose time has come. Voices for more intensive economic cooperation among Asian countries are emanating from different places. It is also evident from the importance that is being attached by different Asian countries to regional economic integration at the bilateral or sub-regional levels. Formation of a broader pan-Asian economic community could enable the region to resume its rapid growth despite the uncertain global economic outlook and emerge as the centre of gravity in the world economy. It could also do away with the need for concluding multiple pairs of bilateral or sub-regional agreements. Regional trade liberalization accompanied by freer movements of investment, technology and skills among the Asian countries would generate substantial efficiency gains by enabling the participating countries to exploit their complementarities to mutual advantage. Furthermore, regional Keynesianism based on cooperation in finance and monetary policy including the Asian bonds has the potential to help the region recover hundreds of billions of dollars of potential output lost due to underutilization of capacity and pull the major economies such as Japan out of prolonged recession besides helping the region in achieving the exchange rate stability. However, an important precondition for the integration to be successful would be a common minimum agenda of reforms undertaken in different economies. Asian countries could also benefit from exchange of experiences with respect to reforms, financial restructuring and corporate governance and strengthen their leverage in international negotiations by greater coordination. In particular, agriculture is an area for a major interest for most of the countries in the region.

An ambitious programme of Asian economic integration has to be implemented in a gradual or evolutionary manner. First of all, there could be a phasing of the participation of countries, taking cue from the experience of successful groupings of the world. A beginning could be made with a core group combining the major economies that have already made some attempts at regional economic integration such as ASEAN+3 and ASEAN+1. This core group of major economies, viz. Japan, ASEAN, China, India and Korea (JACIK) alone accounts for half of the world’s population, a GDP larger than EU’s, exports larger than NAFTA’s and foreign reserves larger than those of EU’s and NAFTA combined. Once the programmes of economic integration have consolidated and have produced some results, other interested countries in Asia could be admitted. Similarly, a phasing of the areas of cooperation could be advisable with cooperation in finance and money taking the lead and trade and investment liberalization following it closely. The sectoral areas of cooperation need to be identified. Some sectors that have a great deal of potential include joint R&D and technology generation in new and high technologies, shipping and maritime cooperation, tourism, among many other sectors. Technology including ICT is a strength of Asian countries which could be a key to successful cooperation. Given the expanding demand of oil and gas in the region, a consideration of cooperation in energy sector was also of paramount importance.

A study of Asian history shows that in the pre-colonial period, a virtual Asian economic community existed as evident by vibrant intra-regional exchanges of goods, cultures and values. One should not underestimate the political, social and institutional challenges to getting an ambitious programme such as this off-the-ground. Political or strategic implications of an Asian Economic Community also need to be studied. The economic logic of cooperation could overcome the challenges posed by reservations, if any, on political or strategic grounds.

The think-tank community of Asia has a critical role to play in realizing the dream of building a New Asia by showing the way forward to the policy makers with specific proposals for implementation. We agree to keep the informal network of think-tanks created at this Conference alive and active as a springboard for generating new ideas. This Network (or New Asia Network) should conduct research on different aspects of Asian economic integration to follow-up and further refine the ideas generated at this Conference. It should regularly exchange ideas among the participants and others interested in the subject and launch a Newsletter to serve as a forum of exchange of views and research. Having taken the initiative to organize the Conference and assemble these think-tanks under one roof, RIS could serve as a nodal point of the New Asia Network and coordinate its work until alternative arrangements are made.

We strongly urge the Governments of the region to consider the recommendations made by the New Asia Network. We  could meet again in fall 2004 at a location in Japan and again in New Delhi in 2005 and make presentations based on our work till then. At these Conferences, participation of representatives of the JACIK Governments would help in taking the ideas generated by the Network to their logical conclusion.