Definition
The Asia-Pacific Economic Cooperation (APEC) is an inter-governmental forum aimed at facilitating economic growth, cooperation, trade, and investment in the Asia-Pacific region. Established in 1989, it includes 21 Pacific Rim member economies promoting free trade throughout the Asia-Pacific region. The organization operates on the basis of non-binding commitments, with decisions made by consensus.
Phonetic
The phonetic pronunciation for “Asia-Pacific Economic Cooperation (APEC)” is: “ey-zhuh – puh-sif-ik ih-kon-uh-mik koh-op-uh-rey-shuhn (ey-pek)”
Key Takeaways
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The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum comprising of 21 Pacific Rim member economies. It aims to establish a greater sense of unity among Pacific Rim countries, focusing on trade and sustainable economic development.
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APEC’s key objectives include facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. It focuses on three key areas: trade and investment liberalization, business facilitation, and economic & technical cooperation.
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APEC operates on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. To avoid political disagreements, it implements decisions through consensus and on a voluntary basis.
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Importance
The Asia-Pacific Economic Cooperation (APEC) is an important intervention in the global business and finance landscape, as it is instrumental in enhancing the economic growth of the Asia-Pacific region. APEC constitutes 21 Pacific Rim member economies, making it a major economic hub, accounting for approximately 60% of the world’s Gross Domestic Product (GDP) and about 47% of global trade. It plays a crucial role in facilitating economic integration, encouraging free trade, and promoting cooperation among member economies across a range of sectors including business, finance, technology, and sustainable development. The forum is crucial for fostering regional economic diplomacy, promoting policy alignment, and reducing barriers to trade, thereby improving business opportunities and economic well-being within the Asia-Pacific region. Thus, APEC’s impact and importance are extensive and deeply rooted in international business and finance.
Explanation
The primary purpose of the Asia-Pacific Economic Cooperation, better known as APEC, is to stimulate economic growth and prosperity in the Asia-Pacific region. This forum was established to leverage the growing interdependence of Asia-Pacific economies, aiming to create greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative, and secure growth. It achieves this objective through policy alignment and economic cooperation among member economies while fostering a sense of community and promoting the region’s economic health.APEC accomplishes its mission by promoting trade liberalization, business facilitation, and economic and technical cooperation among member countries. One of its main functions is to provide a platform for leaders, ministers, and officials from its 21 member economies to discuss ways to improve the region’s economic conditions. Through various programs and initiatives, APEC encourages the growth of SMEs, fosters sustainable development, and trains workforce under the changing economic conditions. The collaborative efforts of APEC members result in a more effective global economic system, which benefits not only the Asia-Pacific region but also the global economy.
Examples
1. Bogor Goals: The Bogor Goals are an example of the APEC’s impact on the real world. Named after Bogor, Indonesia, where the APEC Economic Leaders met in 1994, these goals encapsulate their agreed target of free and open trade and investment in the Asia-Pacific by 2020. These goals have had a profound impact on the economic policies of the region’s 21 member economies, leading to liberalization measures and the advancement of regional economic integration.2. APEC Business Travel Card: A real-life manifestation of the APEC’s work is the APEC Business Travel Card (ABTC), which allows business people faster and easier entry to economies of the other APEC members. The aim of the ABTC is to open up business opportunities and improve the ease of doing business within the APEC region, demonstrating APEC’s commitment to promoting free trade.3. APEC Supply Chain Connectivity Framework: In 2010, APEC leaders adopted the APEC Supply Chain Connectivity Framework as an initiative to enhance the performance of supply chains in the region by reducing transaction costs and time. This has had practical impacts on businesses operating in the region, improving efficiency and reducing the costs of importing and exporting goods.
Frequently Asked Questions(FAQ)
What is Asia-Pacific Economic Cooperation (APEC)?
APEC stands for Asia-Pacific Economic Cooperation. It is a regional economic forum established in 1989 to create greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative, and secure growth, and by accelerating regional economic integration.
Who are the members of APEC?
APEC has 21 member economies, including Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Chinese Taipei, Thailand, United States, and Vietnam.
What are the main goals of APEC?
APEC strives to promote free trade and economic cooperation throughout the Asia-Pacific region. It works towards reducing tariffs and other trade barriers, fostering business-friendly regulatory environments, and enhancing economic integration.
How does APEC operate?
APEC operates on the basis of non-binding commitments and open dialogue. It utilizes a consensus-building process which allows member economies to develop policies and initiatives that reflect their respective economic conditions.
Where is APEC’s Secretariat located?
The APEC Secretariat, which serves as the coordinating body of APEC, is headquartered in Singapore.
How often do APEC Leaders Meet?
APEC Economic Leaders meet annually in what is referred to as the APEC Economic Leaders’ Meeting. There are also numerous meetings throughout the year at the Ministerial and Senior Officials’ levels.
What is the APEC Business Advisory Council?
The APEC Business Advisory Council (ABAC) is a private-sector body in APEC that presents recommendations to APEC Leaders, in an effort to foster the understanding and cooperation between businesses and governments.
How does APEC support businesses?
APEC fosters growth and innovation within businesses by providing access to research, establishing networking opportunities, and promoting policy dialogues with governments and other stakeholders.
Related Finance Terms
- Free Trade Agreements (FTAs)
- Economic integration
- Member economies
- Trade liberalization
- APEC Business Travel Card (ABTC)
