Summary

Summary of
the First Brainstorming Workshop of
the Network for East Asian Think Tanks (NEAT) Working Group on
"Promoting Economic Integration in Asia through
Resolving New Global Imbalances"
held in Tokyo on
14 December 2004

Masaru YOSHITOMI, RIETI
Li-Gang LIU, RIETI

1 February 2005

The first brainstorming workshop of the NEAT Working Group took place at RIETI on 14 December 2004. Its objectives were 1) to bring together a group of researchers from the major East Asian think tanks to exchange views on the current global imbalances arising from the unsustainable US twin-deficits and the massive foreign reserve accumulation in Asia and 2) to discuss ways to resolve these imbalances through enhanced policy dialogue and coordination among the East Asian authorities aimed at mitigating the adverse impacts of a large US dollar depreciation and the resulting exchange rate adjustments in Asia.

Participants from China, Korea, Indonesia, Malaysia, and Thailand as well as Japan attended the meeting. The workshop was structured around four issues: (1) the likely adjustment paths of the US current account deficit, (2) the likely impacts of the different US adjustment processes on individual economies in Asia and possible macroeconomic and structural policy responses to accommodate the necessary external adjustments, (3) the impacts of Asian currency adjustments on the on-going regional economic integration in Asia, characterized particularly by FDI-based-production networks and vertical intra-industry trade, and (4) the case for active policy dialogue and coordination among Asian authorities.

Participants at the close of the meeting also discussed the division of labor or each member's homework to promote further collaborative research. The working group intends to produce a set of policy recommendations based on this collaborative research for the first East Asian Summit scheduled for December 2005.

The second meeting of the NEAT Working Group is scheduled for April 11th, 2005 at RIETI.