This study of regional South-South (S-S) trade and cooperation in East, South and South-East Asian countries (ESSEA) aims to provide an economic rationale for S-S trade; shed some light on the extent and pattern of S-S trade in the ESSEA region. The study also examines the dynamic forces behind the expansion of such trade, its shortcomings and vulnerabilities and proposes policies for enhancing and strengthening regional cooperation. The main conclusion of the study is that, while the rapid expansion of trade among ESSEA countries has been mainly the result of industrialization and industrial collaboration in the form of production sharing, it has not been driven through the operation of market forces alone. South-South trade can also be used as a policy-driven vehicle for industrialization in lower-income countries. However, enhancing S-S trade requires proactive policy measures for cooperation that go beyond tariff reduction and trade agreements.

October 3, 2008.