Transportation costs as a barrier to globalization for nine Asian countries including China

Asia Nine, as one of the most crowded places in the world, is composed of both advanced economies - Hong Kong, Japan, Korea and Singapore - and developing countries - China, Indonesia, Malaysia, the Philippines and Thailand. Bilateral trade between Asia Nine has increased dramatically since these countries joined the Asia-Pacific Economic Cooperation (APEC) agreement in 1989. Actually all these countries have links with the ancient Chinese cultural sphere and their languages are often derived from Classical Chinese; trade between these countries may date back a thousand years. The cultural and linguistic similarities may have facilitated transport and trade, but bilateral trade between these countries is very historically dependent and most East Asian countries have a colonial relationship with Japan, which as a historical factor would more or less affect bilateral trade. A comparison of transportation costs as a percentage of total trade in both developed countries and developing countries is presented in Table 2.1. G7 countries are included to enable a comparison to be made with Asia Nine. Over the last two decades, generally speaking, transportation costs as a percentage of total trade in the developed countries have declined less than those in the developing countries. As is evident from Table 2.1, however, transport costs as a percentage of total trade are decreasing in both developed and developing countries.