Asian Regionalism in the World Economy: Engine for Dynamism and Stability

Asian Regionalism in the World Economy

Author(s): Masahiro Kawai, Jong-Wha Lee, Peter A. Petri

ISBN: 978-1-84844-854-4

Publisher: Edward Elgar Publishing

Year: 2010

Price: ₤95.00

Reviewed by Dilip K. Das, Professor, SolBridge International School of Business, Woosong University, Director, Institute of Asian Business. Daejeon, Republic of Korea.

Research and organization of this large volume was funded by the Asian Development Bank’s (ADB) technical assistance project 6238. Selected academic scholars, economists employed by the ADB and non-academic contributors submitted papers for a study entitled Emerging Asian regionalism: A Partnership for Shared Prosperity (2008). The authors of these contributions benefitted from the discussion and comments received during several workshops organized under this ADB-funded project.

The book does not have a preface and therefore it is a trifle abrupt in its beginning, which is the joint chapter 1 by the three editors. What is the purpose and target audience is nowhere provided in the book. Usually such details are provided in the preface. Many of the academic scholars, from universities and research institutions in Asia and Oceania, are well-known professionals. Their previous writings in these areas comprise an important part of the literature. Going by the technical and matured level of the writing, it appears that the book is intended for graduate students in economics and international economics as well as public policymakers who have their hands on the policy levers in the Asia.

In three sections the book covers three essential areas: (i) sustaining dynamism: productivity and growth, (ii) financing development: innovation and stability and (iii) extending cooperation: social and political framework. These three principal areas a covered in the background of what became known as the Great Recession of 2008.

Including the introductory essay by the three editors, the book contains 14 chapters. Parts I and II contain four chapters each, while Part III is relatively larger, having five chapters. The three themes named in the preceding paragraph comprise each one of the three parts of the book.

As regards the methodology of the book, it takes a non-technical, non-formal, approach. As the issues it deals with are essentially policy-oriented, the book takes a qualitative approach. The analysis is largely qualitative, based on pertinent statistical data compilation and data series. It is appropriate for dealing with such a theme.

The conceptual seed of this book is the Great Recession of 2008. It had a large global impact and initiated a radical transformation in the global economy. Although much less adversely affected, the Asian economies were no exception (Das, 2011). The Asian economies were affected due to weakening of trade and investment. The rapidity and synchronization of the global downturn surprised the economic profession and policymakers alike. Some well known theories that propounded that Asia, or any other region, could ride out the economic maelstroms that affected the center of global economic activity were put to rest.

What happened in 2008 accelerated the decisive, albeit gradual, shift in the relative importance of different economies and regions in the global production and consumption. The origin of the global financial crisis (2007-09) was the global financial center, that is the financial markets of the largest economy in the world. This time it did not emanate from the emerging-market economies (EMEs) or even in the developing economies. During the downturn EMEs demonstrated resilience and in recovery they led. The Asian EMEs, particularly China, deserve a distinctive accolade in this regard.

The global economic contours were in the process of shifting. Somewhat belated replacement of the Group-of-Seven (G-7) by the Group-of-Twenty (G-20) reflected this on-going transformation. Economic leadership of the world economy had logically moved to a new, more representative, group of countries. The export dependent economic of East and Southeast Asia were no doubt affected during the crisis and their growth rates decelerated. Nevertheless they held up better than those of the advanced industrial economies and many other developing and emerging-market economies. The East and Southeast Asian economies demonstrated that while they burned their fingers badly during the 1997-98 Asian crisis, they did learn invaluable lessons. Consequently these economies had stronger fundamentals, were in a healthier shape and more prepared to face external shocks than ever before. The strength and robustness of the Asian economies along with their growing regional and global integration has turned this regional group into an emerging source of global economic growth. Their contribution to global economic growth went on increasing. It was particularly remarkable during the global financial crisis.

The book under review sought to analyze the long-term implications of these fundamental changes in the global economy and their implications for the Asian economy. Notwithstanding the global crisis, it is easy to see that the changes that occurred in the recent past, and are continuing at present, will be far-reaching. Their impact therefore will have to be substantial. As the long-term pattern of global growth changes, a new network of international relationship is bound to emerge. The importance of the Asian economies for their neighboring economies has been growing stronger. The newest trend is that in terms of trade, finance, investment and policy they have grown increasingly important for each other. Although Asia’s emerging regionalism is essentially market-based, for some time institutional or government-led regionalism has also been advancing pari passu with market-led regionalism. The global financial crisis has if anything further strengthened Asian regionalism. Various chapters in the book address the question whether the strengthening regionalism in Asia will “fragment and undermine the global economy” (p. 2) or render it more dynamic and vigorous. The editors justly assume that dynamism of Asia has helped stabilize the global economy.

Regional economic integration is a challenging task. The chapters analyze various dimensions of Asia’s economic integration and propose how these economies should cooperate to resolve the difficulties en route to regional integration. This analysis follows the three-part division of the book, which was indicated earlier in this review. The individual chapters focus on the recent trends as well as the likely future trends. They explore into the global role of the Asian economy and the possibilities of Asia contributing to the greater prosperity of global economy. Governance was another important issue of focus in these chapters. Different scholars naturally take different perspectives to address these issues. They take both theoretical an on-hand practical viewpoints to derive various policy strategies. The final output gives an impression of thoughtful research and writing and rewriting. The chapters are analytical and well-designed from the perspective of an academic and policy researcher. The present reviewer recommends this book highly.