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Part - VII
Firstly, Table 1, 2 and 3 show the correlation coefficients of per capita GDP in China, Hong Kong and Taiwan for three periods from 1983 to 2000. The results are highly positive correlated except in Table 2 which Hong Kong with Taiwan and China are negative correlated in 1998 to 2000 period. Table 3 shows an obvious trend of high correlation. (Check Appendix for tables)
Next, the correlation coefficients of money supply (M2) indicator in Table 4, Table 5 and Table 6 show highly positive correlation in the three different time periods. And the coefficients are greater than 0.9. (Check Appendix for tables)
Finally, in the interest rate respect although the results are not significant than the previous two indicators (Table 7, 8, 9). But generally they are positive correlated. Therefore, from the results of three major economic indicators, the external shocks should be symmetric for the three economies. That implies the necessity for respective country to practice independent monetary policy would be lower and the economic problems can be solved effectively by implementing identical monetary policy. (Check Appendix for tables)
Steps in the Direction
The Hanoi Plan of Action, a key vision statement issued by ASEAN in December 1998, called for a study of the feasibility of an ASEAN currency and exchange rate system. At the June 1999 Fifth International Conference on the Future of Asia, sponsored by Nihon Keizai Shimbun, Japan's leading business daily, both Malaysian Prime Minister Mahathir Mohamad and Mr. Estrada sang the praises of economic integration and even broached the idea of forming a regional currency bloc. Soon afterward, Malaysia sponsored a forum on East Asian monetary union, which spurred the establishment of an International Monetary Fund panel to study the issue.
Expanded information exchange and policy dialogue will be central to substantive moves toward regional monetary and financial integration. Countries can only make confident and informed policy choices if they have access to appropriate and reliable information. Frequent and detailed policy dialogue will help build the mutual trust that will allow the formulation of common positions on key policy and development issues.
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* Contributed by -
Vipul Mittal,
First Year, MBA (Global),
IMT, Nagpur.
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