International trade and the natural resource curse in Southeast Asia: Does China's growth threaten regional development?

Abstract

China's growth, along with its increasing integration with world markets through WTO accession, abolition of Multifiber Arrangement (MFA) quotas, and reduced trade barriers with ASEAN, is expected to have significant effects on the structure of regional production and trade. Through bilateral trade growth as well as through competition with China in global markets, Southeast Asia's resource-abundant economies will become more intensive in natural resource-based exports and much less so in low-end, labor-intensive manufacturing such as garments. Both these effects will tend to increase demand for natural resources, one through a direct product market effect, the other by driving down the price of a complementary input, low-skill labor.