Economist Stiglitz warns of winners and losers as Asia pursues greater economic integration

Nobel laureate and former World Bank chief economist Joseph Stiglitz has warned there will be winners and losers as Asia plunges headlong into an increasing number of trade agreements and economic integration programmes that connect the diverse and disparate economies of the region.

As countries pursue more such trade agreements, Stiglitz said policymakers should create trade assistance programmes to address the needs of those that stand to lose out, or Asia could repeat the US experience where economic losers banded together to become a substantial antiglobalisation political force.

Like the North American Free Trade Agreement (NAFTA) or the European Economic Community before it, Asian nations are currently in the throes of pursuing greater economic and financial integration - albeit without political or monetary union - through the Asean Economic Community framework, as well as the Regional Comprehensive Economic Partnership (RCEP) agreement.

When completed, proponents of RCEP say it will be the largest trade bloc in the world, covering some 45 per cent of the global population and accounting for a third of all economic output in terms of gross domestic product (GDP).

“One of the things we have learned is that even if trade agreements make participating countries better off, it doesn’t mean every citizen in the countries will be better off,” said Stiglitz. “Even if its the case of globalisation or trade agreements make the US as a whole better off, there are winners and losers.”

In Europe’s model of economic integration, Stiglitz’s research strongly distinguishes between growth of national GDP and GDP per capita. He concluded that poor policy design, together with the lack of unifying political institutions, particularly since the introduction of the euro, had led to more inequality and greater divergence in economic performance across the continent.