Measuring Economic and Financial Interconnections for a Selection of Asia-Pacific Economies

31 Pages Posted: 24 Aug 2015

Date Written: July 1, 2015


This paper presents an examination of economic and financial linkages for a selection of economies in the Asia-Pacific region for the period 2001 to 2012. The countries examined are the ASEAN5 group of nations – Indonesia, Malaysia, the Philippines, Singapore and Thailand; the three large northeast Asian economies of China, Japan and South Korea; and Australia and New Zealand. Taking a multivariate approach to measuring integration, we examine 6 broad measures of economic interconnections for the following reasons: Firstly, to unlock as much information as possible about the nature of economic and financial integration between the countries examined. Secondly, to investigate whether (and which) individual dimensions of these connections might drive economic integration more generally, in the Asia Pacific region. We find that, regardless of the measure used, Australia and New Zealand are the most connected country pair. We also find that interconnections within and between the ASEAN5 countries are driven primarily by financial linkages, while those for the larger countries in the region are driven more by real linkages. Finally, we find that real links are positively related to financial links, that is, they exist as complements.

Keywords: Economic and Financial Integration, Asia

JEL Classification: F15, F36

Suggested Citation

Cavoli, Tony, Measuring Economic and Financial Interconnections for a Selection of Asia-Pacific Economies (July 1, 2015). CIFR Paper No. 072/2015, Available at SSRN: or

Tony Cavoli (Contact Author)

University of Adelaide ( email )

233 North Terrace
Adelaide, South Australia
(+61 8) 8303 4507 (Phone)
(+61 8) 8223 1460 (Fax)


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