Financing Regional Economic Integration and Functional Cooperation for Northeast Asia: A Multilateral Financial Institution for Northeast Asia

The Northeast Asian region, despite the recent changes in political leadership in the major countries of China, Japan Korea and Russia as major players, is still one of the most dynamic economic centers of the world. With its own capital resources and advancing technology along with enormous resources in Russia and Mongolia, and productive linkages to the Pacific and North America, the region continues to play a pivotal role in the global economy. This is a remarkable development in that for centuries until the later part of the twentieth century, this region suffered from the political environment of military conflicts, tension, and territorial rivalries among the major powers of China, Japan, Russia, and the United States. Even with the phenomenal economic growth in the region in recent decades, regional security and stability has been fragile, mainly attributable to the geopolitical conditions resulting from the Cold War era. In the twenty-first century, for the countries in Northeast Asia to further their development aimed at creating a region in which peaceful coexistence and common prosperity prevail, functional economic cooperation is essential to harness the individual economies together. This is a challenge for the Northeast Asian countries, and initiating specific functional cooperation is one concrete and constructive approach toward meeting this challenge. Northeast Asia is one region of the world where a formal regional institutional mechanism comparable to the European Union or ASEAN has yet to be developed. Yet, it is crucial for the Northeast Asian countries to continue to promote region-wide cooperative projects. The Korea Institute for International Economic Policy (KIEP) and the Northeast Asia Economic Forum (NEAEF) have been cooperating on the effort toward achieving closer economic and financial cooperation in the region, and this volume presents the results of the project implemented in 2012 to develop a regional institutional arrangement for financing cross border infrastructure developments and thereby regional economic integration. The northeastern part of China, North Korea, Mongolia, and the Russian Far East together constitute an area that is well-endowed with natural, energy and human resources. This sub-region has the potential of becoming a tremendous source of natural resources for the entire region, and what is needed is to realize that potential through cross border infrastructure developments. Energy security and efficiency, coupled with protection for the environment, and the promotion of green growth, for example, is an important area of cooperation, as the three major countries of China, Japan and Korea are heavily dependent on energy imports and are highly vulnerable to energy crises. Financing requirements for the necessary cross-border infrastructure are likely to be large, and a regional financial institution is a key to meeting that financing need. This volume, fourth in the series of proceedings volumes titled, Financing Regional Economic Integration and Functional Cooperation for Northeast Asia: A Multilateral Financial Institution for Northeast Asia, comprises papers, research reports, and summaries of a main conference and several specialized meetings, as well as affiliated activities, that took place under this project. The results of this project represent activities contributing to the regional economic integration and have been carried out in a spirit of cooperation.