Truly honored to have written a joint research with Joshua Aizenman titled Openness and Comparative Advantages: Asian Successes and Failures. The paper will be presented by Joshua Aizenman at the ADBI Annual Conference on Wednesday 19th November 2025. Stay tuned for more information. The program is available here.
Openness and Comparative Advantages: Asian Successes and Failures
This study relies on data covering 65 years (1960-2024) to decipher the role of openness and comparative advantages in accounting the Asian successes and failures. We find that structural heterogeneity matters. The growth process in Asia is conditional on institutional capacity, effective investment in human capital, and external positioning. Commodity dependence dampens persistence but magnifies investment’s impact, consistent with procyclical capital flows. Post-GFC economies show more efficient investment–growth transmission, likely reflecting reforms and learning effects. We utilize the GeoC index, which measures geoeconomic connectedness that reflects how a country’s trade partners are balanced along the geopolitical divide to derive pertinent inferences about rising Geo-Political dynamics. Specifically, we investigate how balance in trade along geopolitical divides is associated with macroeconomic stability and sustained growth. Although this impact is small and positive; it is statistically significant only in the high-human-capital situations, which means that integration leads to more vigorous advantages where it comes with education and skills. Economies with more geopolitically well-balanced geographic trade relations among blocs have higher persistence of growth and more robust effects on investment. This means diversification of partners on an ideological basis enhances resilience and long-term performance, presumably through a reduction in one’s exposure to shocks from a single geopolitical bloc. While the record of growth across most of the nations of Asia in the past 30 years is high, it conceals major issues. A fair share of Asian countries under-utilizes the growing share of well-educated women, at times that declining net fertility should be mitigated by dismantling the ‘glass ceiling’ facing educated women. The quality of human capital is essential for the future prospects of countries, but in various countries there is under-investment in the quality of human capital, and overinvestment in time and resources spent inefficiently.
Stay tuned for more information.
