A common assumption when talking about non-Japan Asia in a global context is that the region's economic cycles pretty much follow the pattern set by the core OECD economies, only Asia lags some way behind.
New research by Goldman Sachs, however, has a different take on Asia's place within the global economy. The bank's latest "Asia-Pacific Economics Analyst" report says that Asian economic trends provide timely signals of global demand and its trade figures often precede those of core markets, thus giving an earlier indication of world trends.
Goldman's findings, which exclude figures for China and India, suggest that because the region is open to trade - exports account for 42% of GDP in Korea and Taiwan, for example - it serves as a 'transmission channel' for external shocks. Consequently, Asia is extremely sensitive to global trends.
Secondly, Asian countries have become big exporters and intermediate producers, most notably in the information, communication and technology (ICT sector). Goldman sites the success of Taiwan semiconductor foundries in the 1990s of an Asian industry that was able to successfully exploit shifts in global demand.
This is an important point as it highlights an example of Asia being highly sensitive and flexible, which suggests there is little lag in Asia responding to global demand patterns.
Goldman also believes that during times of a synchronized turn in the growth of core economies - i.e. when there is clear evidence of major economies being locked into the same cycle - the Asian export cycle reaches the point slightly earlier than the OECD growth cycle. This seemingly further evidence that Asian economic changes do not lag behind global changes.
Should we be surprised by these findings? After all, the ex-Japan Asia region has become increasingly developed and thus more geared to shifts in global investment. Using the ICT sector as an example, its success across Asia reflects the timeliness of responses to changes in demand.
Another interesting point the report makes is that the recent upturn in Asian exports has been led by the ICT sector. It is commonly thought that a decline in this sector has been a major contributory factor to the economic downturn experienced by Asian economies in the past year or so.
Finally, for all those who still think that this business is slave to what is happening in the US, the upturn in ICT exports actually preceded any rise in new orders from the US. The increase has been driven by growth in intra-regional trade and demand from Europe.
