European Trade with the Far East and its Future

Abstract

The purpose of this paper is to analyze mutual trade relations between Europe and Far Eastern developing countries in the 1970s and to discuss trade prospects for the 1980s. The term "Europe" basically includes all European OECD countries but the empirical analysis is largely focussed on the member countries of the European Community. The term "Far East" describes a heterogenous group of developing Asian countries, i.e. the member countries of the ASEAN group (Indonesia, Malaysia, Philippines, Singapore, Thailand), the "Newly Industrializing Countries" (NICs) Hong Kong, Republic of Korea, and Republic of China (Taiwan) as well as the People's Republic of China. All these Far Eastern countries have two important characteristics in common. First, they belonged to the group of countries which experienced the highest rates of economic growth in the 1970s. Westem Industrial Economies grew at an average annual rate of 3. 2 per cent in the 1970s while these rates were between roughly 6 and 10 per cent in Far Eastern developing countriesl. Hence, the first stylized fact of trade with the Far East is that of rapidly expanding markets for both domestically produced and imported goods. In the 1970s imports from all OECD countries grew at an average annual rate of 23. 2 per cent in nominal terms^. The expansion of trade with the Far East was significantly larger than the expansion of world trade which grew at an annual rate of 20.4 per cent during the same period.