Transcript Economic Globalization and cambodia

Center for Khmer Studies
The University of Cambodia
Public Lecture Series
on
“Economic Globalization and Economic Challenges Facing
Cambodia”
Dr. Benny Widyono, Professor of Economics
University of Connecticut
Phnom Penh, January 26, 2015, 8:30-10:30am
Venue: UC Conference Center
Defining Economic Globalization
Economic Globalization involves the
closer integration of national
economies into the international
economy through increased flows of
Defining Economic Globalization
GOODS AND
SERVICES
Defining Economic Globalization
GOODS AND
SERVICES
INVESTMENTS BY
MULTINATIONAL
CORPORATIONS
Defining Economic Globalization
GOODS AND
SERVCIES
INVESTMENTS BY
MULTINATIONAL
CORPORATIONS
FINANCIAL
CAPITAL
Defining Economic Globalization
GOODS AND
SERVICES
INVESTMENTS BY
MULTINATIONAL
CORPORATIONS
FINANCIAL
CAPITAL
LABOR
THE THREE TECTONIC SHIFTS IN
ECONOMIC GLOBALIZATION
I. The
Rise of
the West
2. The
rise of
the US
3. The
Rise of
China
THE FIRST TECTONIC
SHIFT: THE RISE OF THE
WEST
SINCE THE 15TH CENTURY AND ACCELERATED
DRAMATICALLY SINCE 1820s THROUGH INDUSTRIAL
REVOLUTION
COLONIALISM
The European colonial period was the era from 1492 to the
mid 1900s when several European powers, particularly, but
not exclusively, Portugal. Spain, Britain, the Netherlands, and
France established colonies in Asia, Africa and the Americas
Colonialism is the establishment, exploitation, maintenance,
acquisition and expansion of colonies in one territory by
people from another territory.
EUROPE AND THE COLONIES
Europe claimed vast natural
resources, including minerals and
vast woodlands and forced the
natives to grow cash crops for the
“motherland” and imposed a
head tax, compelling Africans and
Asians to work in plantations and
mines often hundreds of miles
from their homes.
THE INDUSTRIAL REVOLUTION
Rise of the West
accelerated
dramatically
around 1820 with
the industrial
revolution
THE SECOND TECTONIC
SHIFT: RISE OF THE US
Started at the closing years of the 19th century.
In the closing years of World War II its dominance is unrivaled
THE Bretton woods institutions
The IMF
The World
Bank
The
GATT/WTO
THE WORLD ECONOMIC ORDER DOMINATED BY THE USA
 ECONOMIC POWER
CONCENTRATED IN THE USA
AND WESTERN EUROPE: THE
GROUP OF SEVEN
 COMMUNIST EASTERN
EUROPE AND CHINA IN
ISOLATION
 THIRD WORLD WERE
INTEGRATED IN WORLD
ECONOMY THEY NEITHER
MANAGED NOR CONTROLLED
THIRD TECTONIC SHIFT: the
rise of china and the new
balance of power
SINCE THE 1980S UNTIL TODAY
THE THIRD TECTONIC SHIFT
THE END OF THE COLD WAR 1989: BREAKUP OF THE
SOVIET UNION AND REUNIFICATION OF GERMANY
INFORMATION AND TECHNOLOGICAL REVOLUTION
THE RISE OF CHINA AND OTHERS
RISE OF BRICS: GDP RANKING BY PPP IN BILLION US DOLLAR in 2013
CHINA OVERTOOK US AS LARGEST ECONOMY Of THE WORLD
When the history of 2014 is written,
it will take note of a large fact that
has received little attention
China enters 2015 in the top
position, where it will likely remain
for a very long time.
In doing so, it returns to the
position it held through most of
human history.
THE GIANT ASIAN DRAGON AWAKENED
 IN THE OLD DAYS CHINA WAS
VERY BIG BUT ALSO VERY POOR
 TODAY CHINA HAS AWAKENED
AND CHINA’S AWAKENING IS
RESHAPING THE GLOBAL
POLITICAL AND ECONOMIC
LANDSCAPE
 2015: Xi jin ping fighting
corruption relentlessly
USA VERSUS CHINA 2013
Foreign exchange reserves in millions of US dollars
DOMINATED BY ASIA
1
2
3
4
5
6
7
8
9
People's Republic of China 3,341,000 Dec 2012[1]
1,238,713 Jun 2013[2]
Japan
Eurozone
Saudi Arabia
Russia
808,192
May 2013[2]
656,900
518,431
Dec 2012[1]
May 2013[2]
517,622
May 2013[2]
Switzerland
Republic of China (Taiwan) 406,062
374,417
Brazil
328,095
Republic of Korea
305,713
Hong Kong
May 2013[3]
May 2013[2]
May 2013[2]
May 2013[2]
ASIAN INFRASTRUCTURE INVESTMENT BANK (AIIB )
On October 24, 2014, in Beijing China, the 21 following countries signed
the bill establishing the Asian Infrastructure Investment Bank ;
China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan,
Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar,
Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan, and Vietnam
The bank will initially be capitalized with $50 billion, most of it
contributed by China. The country is planning to increase authorized
capital to $100 billion. With that amount the AIIB would be two-thirds
the size of the $175 billion Asian Development Bank.
BRICS OR NEW DEVELOPMENT BANK
On 15 July 2014, the first day of the 6th summit of BRICS held
in Fortaleza Brazil, five BRICS countries signed the long-anticipated
document to create the $100 billion BRICS Development Bank and a
reserve currency pool worth over another $100 billion.
Both will counter the influence of Western-based lending institutions
the World Bank and the Asian Develoment Bank and the dollar.
OBAMA’S RECENT NOVEMBER 2014 TRIP TO ASIA
a. The Asia
Pacific
Economic
Cooperation
(APEC) summit
in Beijing,
China
ASEAN Summit
and the East
Asia Summit
(EAS) in
NAYPYITAW
Myanmar
c. The Group of
Twenty (G20)
summit in
Brisbane,
Australiia
 FTAAP: Free Trade Area of the
Asia Pacific : 21 members. Pushed
by China during tehe APEC
summit
 TPP: Trans Pacific Partnerships :
12 members. Pushed by the USA
and excluding China
 RCEP: Regional Comprehensive
Economic Partnership: 16
members pushed by ASEAN and
six dialogue partners excluding
USA
RCEP iS ASEAN Plus 6= 16 countries
 Regional Comprehensive
Economic Partnership
(RCEP) is a Free Trade
Agreement scheme of the
10 ASEAN Member States and its
FTA Partners (Australia, China.
India, Japan, Korea and New
Zealand to be concluded by the
end of 2015
TOWARDS AN ASEAN ECONOMIC COMMUNITY IN 2015
TOWARDS AN ASEAN ECONOMIC COMMUNITY IN 2015
Objective of AEC: to
transform ASEAN into a
single market of 607 million
people with free movement
of goods, services,
investment, skilled labor,
and freer flow of capital
CLVM VERSUS asean Six
The Myanmar ASEAN
summit in November
2014 stated that ASEAN
has implemented 80%
of measures under the
AEC blueprint
DEVELOPMENT DIVIDE BETWEEN CLVM AND ASEAN SIX
While much has been achieved in reducing trade barriers, much needs to be done in
the area of trade facilitation, and cutting the “red tape” in CLVM countries. For
example, procedures for trading are relatively easy to complete in Singapore,
Thailand, and Malaysia, but very difficult in Laos and Cambodia.
The quality of logistics services also varies among the two categories of ASEAN
members, such as customs brokerage, freight forwarding, and express
delivery. Logistics services are world-class in Singapore but poor in Laos, Cambodia,
and Myanmar. In many ASEAN countries, restrictive regulations hamper the
delivery of high-quality logistics services.
WILL THE TARGET DATE OF 2015 FOR AEC BE ACHIEVED?
THE TARGET DATE OF 2015
MUST BE SEEN AS A
MILESTONE RATHER THAN
THE END IN THE CONTINUING
PROCESS OF INTEGRATION.
In textiles China’s factory pay has
soared by 14% annually, to $700 a
month today, compared to $250 in
Vietnam, $130 in Cambodia, $110
in Myanmar, and $140 in Laos
CHALLENCES FACING THE
CAMBODIAN ECONOMY
CAMBODIA TODAY
Population 14.9 million
Population growth 1.8 percent
GDP (PPP, int’l US$) 37.1 billion
GDP per capita (PPP, int’l US$) 2,494
 During 1998 and 2013 rapid
growth for Cambodia, and during
that period its growth was the sixth
highest in the world.
 This growth has transformed the
population, and Cambodia’s poor
dropped from 53% to 20% of its
total population between 2004 and
2011
THE THREE ENGINES OF GROWTH IN CAMBODIA
CHINA TOP INVESTOR AND AID GIVER TO CAMBODIA
Loans and grants from China during the period 1992 to 2013 have
amounted to $2.7 billion.
From 1994 to 2012, total Chinese investment in Cambodia has reached $
9.17 billion.
China is also one of the leading trading partners of Cambodia. Last year,
bilateral trade volume accounted for $2.9 billion U.S. dollars and it is
expected to reach $5 billion by 2017.
ANY QUESTIONS?