of the world will, therefore, have important consequences for the future of GVC integration and productivity growth of developing East Asian countries.

Analysis on the CPTPP shows that the agreement would have positive trade and income effects for developing East Asian countries, notably for Vietnam. Maliszewska et al. (2018) estimate the economic and distributional impacts of CPTPP using a global dynamic computable general equilibrium (CGE) model. By 2030, CPTPP members’ income is estimated to be on average 0.87 percent higher than in the baseline. Vietnam is expected to reap the largest gains from CPTPP, ranging between 2.8 to 4.4 percent of income. The gains are determined mainly by three factors: reduction in tariffs, lower trade costs associated to changes in non‐tariff measures, and the importance of CPTPP members as trading partners. Vietnamese sectors that benefit the most are food, beverages, and tobacco; wearing apparel and leather, and textiles. Most services sectors would also expand faster than in the baseline. Increases in output are mostly driven by higher exports. CPTPP is expected to reduce the poverty rate in Vietnam, but higher‐skilled workers are likely to benefit more. CPTPP is estimated to lift from poverty (at PPP$5.50 a day) 0.6 million people in 2030, relative to baseline conditions. Although all income groups are expected to benefit, people at higher ends of the income distribution benefit proportionately more than the poor, because the agreement creates more economic opportunities for skilled workers.

# **4. CONCLUSION**

The world is changing in ways that developing East Asian countries cannot predict or control. Looking back, we have demonstrated how countries in the region have forged a remarkable development path, taking advantage of technologies that favored labor intensive manufacturing and access to foreign markets that was secured by trade agreements. We also showed how their trade and developments prospects have been profoundly affected by the emergence of China.

None of these largely external developments can simply be extrapolated into the future. The window for continued labor‐intensive industrialization is defined by a race between two prices: how fast the real wage in China increases relative to how fast the price of robots falls. That race will determine whether companies like Foxconn shift production from China to Cambodia or automate. The scope and speed of technological change has always been impossible to forecast. Aging and rebalancing in China favor a faster increase in real‐wages, but initiatives like the Belt and Road could awaken the relatively underdeveloped interior of China to prolong its hold on large scale, low wage manufacturing. It is also hard to assess whether the backlash against globalization in its erstwhile strongest proponents, the EU and US ‐ provoked in part by the pain of adjusting to East Asia’s remarkable success – will be dissipated in political rhetoric or translate into a serious retreat from legally bound openness.

Even though the evolution of the world economy is mostly beyond developing East Asia’s control, the countries of the region still have significant power to mold their own economic destiny. National reform in services, especially telecommunications, transport and finance, would equip East Asian citizens and firms with the connectivity and capital needed for productive and inclusive 47