Research On Business Cycle Synchronization In ASEAN

Regional economic integration is the major trend of global economy nowadays. It promotes intra-regional trade and investment and consequently intensifies synchronization of business cycles in related countries. This dissertation adopts the well-established methodology of study on business cycle synchronization, and investigates the case of ASEAN. The study delves into minutia the contributions of trade integration, financial integration, FDI, exchange rate regime, etc. to business cycle synchronization, drawing a complete picture of the issue. Besides the intra-regional economic cooperation, this dissertation also creatively incorporates China, Japan, Republic of Korea and United States external factors and probes their impact on ASEAN business cycles. This perspective demonstrates the exogeneity of business cycle synchronization in ASEAN and enriches the theory. The main findings of this dissertation include: (1) there is increasing synchronization of business cycles in ASEAN, and also between ASEAN and external countries; (2) the relation between trade intensity and business cycle synchronization is insignificant. ASEAN's intraregional trade is mainly induced by external trade. A substantial part of intra-regional trade is intra-industry trade within East-Asian manufacture chain; (3) there is interaction in the financial sectors among ASEAN countries, inter alia in the recent decade. There is also a close connection between ASEAN and external financial markets; (4) External factors are also a remarkable force in ASEAN's FDI, exchange rate regime and coordination in fiscal and monetary policies. Based on the above arguments, the dissertation finally concludes the exogeneity of business cycle synchronization in ASEAN. Therefore, ASEAN should in no way limit themselves into regional integration, but instead merger into the wider Asia-Pacific rim and implement "open regionalism".