Asia-Pacific Development Journal - Volume 12, Issue 2, 2006

The paper undertakes a preliminary economic analysis of the recently proposed East Asian Economic Community. The proposal envisages that the core of the Economic Community would include the ten member countries of the ASEAN free trade area (AFTA) and the three North-East Asian economies, namely, Japan, Korea, and China. The Community is also expected to include subsidiary institutions relating to security and other regional concerns. A major motivation behind the proposal seems to be not only to increase mutual trade but also to construct a regional group of its own in a trading world increasingly dominated by large economic entities. The large volume of intra-trade in the Community can certainly sustain a free trade area. Currently, the region is in the grip of a trading agreement frenzy which can be curbed only by moving rapidly toward a unified trading community. The region’s substantial two-way trade with the West, however, raises some concerns about trade diversion but they do not seem insurmountable.

In the present study, we examine the issue of integration of financial markets in India. Given the growing movement of capital flows, particularly short-term capital, into the domestic financial markets, it is necessary to examine this issue so as to reap the positive benefits with having stable markets. For this purpose, the present study examines this issue in the post-1991 period by using monthly data on call money rates, 91 day Treasury Bill rates, Indian Rupee/US dollar exchange rates, and the London Inter Bank Offered Rate (LIBOR). By using a multiple co-integration approach, the study found that there is a strong integration of the domestic call money market with the LIBOR. Though, the study found that there is a long-term co-movement between domestic foreign exchange market and LIBOR, it is not robust. This may be due to frequent intervention by the Central Bank in the foreign exchange market. As the Government securities market in India is still in the developing stage, it was not found to be integrated with the international market. Policy measures (or reforms) are necessary to increase integration of financial markets. This would help in reducing the arbitrage advantage in some specific segment of the financial markets.

The Asia-Pacific region is confronted with several emerging healthrelated issues. The prevalence of diseases causing high rates of mortality and morbidity, and the lack of skilled health personnel, infrastructure, financial resources and health systems that are responsive to the needs of society, are among them. A pragmatic approach with a focus on issues of major health and socio-economic concern is vital for the development of successful public health services. Striking a balance between different service providers taking into account overall resource constraints, efficacy of service delivery and welfare gains is a key challenge for many countries in the region. While the governments of poor countries need to reinforce their involvement in public health service delivery, its role in other areas could be more of a policymaker and a regulator providing stewardship to different stakeholders. The paper proposes a dual track-approach to health intervention, and highlights the need for prioritization of interventions, better targeting, and effective pooling of both public and private resources in making public health systems efficient and sustainable. Policy reforms that encourage private sector participation in health service delivery and health insurance, and a regulatory framework to protect the environment could be important elements of a re-oriented health policy agenda.

The objectives of this paper are to test whether there are any significant trickling down effects of economic growth across the Indian states and to identify the factors influencing the existence of such effects. Using data from 1971 to 1998, and the standard statistical test of causality, this study suggests that the transmission of growth impulses across states have been limited. The results indicate that the structure of the economies, the growth rates of the states and the quality of state-specific institutions appear to raise the potential for significant trickle down growth effects across states.

The Indian economy provides a revealing contrast between how individuals react under a government-controlled environment and how they respond to a market-based environment. Evidence suggests that recent market reforms that encouraged individual enterprise have led to higher economic growth in that country.