ASIAN REGIONALISM

Since the Asia Pacific Economic Cooperation (APEC) forum began in 1989 as a
regional institution for economic cooperation, momentum for regionalism in Asia has
gradually developed and led to institutionalized regional progress.

 Differentiation: Regionalization vs Globalization

Regionalization Globalization

There is a movement towards economic integration of more than one

country.

The construction and utilization of

multilateral intergovernmental
institutions to share information.
Occurs among shared geographic
space
The worldwide integration along
economic, political, social, and
cultural lines.

- Regionalization - the development of increased commercial and human

transactions in a certain geographical region which gradually
transform perceptions of regional operations.

 The construction and utilization of multilateral

intergovernmental institutions to share information; to
develop, endorse, and enforce common rules and
regulations; and to settle disputes.
 Membership is normally based on shared geographic
space.
 A product of economic interaction, not political planning.

- Globalization - the worldwide integration along economic, political, social,

and cultural lines.

o Globalization is a new phenomenon with a number of core characteristics:

  Unprecedented economic interdependence, driven by cross-border
capital movements, rapid technology transfer, and "real time"
communication and information flows;

 Rise of new actors that challenge state authority, particularly non-

governmental organizations (NGO’s) and civic groups, truly global
firms and production networks, and even financial markets;

 Growing pressure on states to conform to new international

standards of governance, particularly in the areas of transparency,
accountability, and the rule of law;

 The emergence of an increasingly Western-dominated

international culture ─ a trend which has sparked concern about the
erosion of national identity and traditional values in many Asian
countries; and

 The rise of increasingly severe transnational problems – such as

energy and environmental concerns, large-scale migration flows, and
organized crime networks, which require multilateral cooperation to
resolve.

 Background on Asian Regionalism

Asian regionalism moved forward steadily until the 1997 Asian financial crisis. The
financial crisis dealt a severe setback to much of the region, highlighting Asia’s
shared interests and common vulnerabilities and providing an impetus for regional
cooperation. Regional countries were hit hard by the multiple follow-on crises.
Affected economies felt panic and were not able to cope with serious challenges,
and they discovered that existing regional mechanisms were of little use in either
protecting the region or helping it recover. There were two main reasons for this
ineffectiveness:

 The existing mechanisms remained mostly to be regular dialogue forums

and could not generate necessary resources when needed.
 Lack of confidence among Asian nations – for several Asian Nations,
especially SEA countries believed the existing regional mechanisms served
American and Western interests at the expense of the regional countries.

In the early stages of Asia’s economic takeoff, regional integration proceeded

slowly. East Asian economies, in particular, focused on exporting to developed
country markets rather than selling to each other. Initially, they specialized in
 simple, labor-intensive manufactures. As the more advanced among them
graduated to more sophisticated products, the less developed economies filled the
gap that they left behind.

 Factors leading to greater integration of the Asian Region

1. The rise of the People’s Republic of China (PRC) in the Global Economic
and Political Arena
 Although the rise of PRC has not resulted in a structural overhaul of
regional cooperation, especially among the ASEAN and APEC
member states, its economic improvement and its increasing
presence in the global politics suggest that it has dramatically
changed the developing trend of regional cooperation in Asia.

2. Investment in Infrastructure among Asian States

 Infrastructure development is essential to Asia’s economic and

political development,

3. Adoption of ‘open regionalism’

 This aims to develop and maintain cooperation with outside actors.

This form of regionalism was meant to resolve the tension between
the rise of regional trade agreements and the push for global trade.

‘Open’ refers to the principle of non-discrimination, more

specifically an openness in membership and openness in terms
of economic flow.

4. Parallel Security Needs

 Aside from a select number of small, localized rebel groups and
militia, the Asian region also needs to contend with foreign-
supported terrorist groups and networks operating in some Asian
countries.

5. Increased Cooperation in Education and Skill Development

 A deeper level of economic integration, which is required for
sustainable development, calls for regional cooperation in skills
development. Such could take the form of regional and sub-
regional Technical and Vocational Education and Training (TVET)
strategies, such as the creation of training frameworks and
encouragement of national commitments to invest in critical areas
like high-skilled manufacturing.
 The Challenges of Globalization towards Asia
Each country, based on its individual endowments and circumstances, will have to
design and implement national policies in a range of areas that ensure the country
takes advantage of the opportunities that globalization provides and at the same
time deals with the risks that it introduces. In terms of the national economy, as
Stiglitz6 pointed out, there are three distinct advantages:
(a) The demand for a country’s product is no longer constrained by its
own markets;
(b) A country’s investment is no longer constrained by what it can
save itself;
(c) A country’s producers can have access (at a price) to the most
advanced technology.
Corresponding to these opportunities, some of the challenges are:
(a) Lack of complete access to product markets, caused by both trade
barriers and hefty subsidies in developed countries on commodities of
interest to agricultural producers;
(b) Limited access to financial resources, and for some countries high
conditionality attached to concessional resources;
(c) The constraints on acquiring technology in terms of resources,
both human and financial, and inadequate infrastructure.
 The Challenges of Regionalization towards Asia

Asia’s growing interdependence presents a compelling case for regional

cooperation—to deliver regional public goods, manage regional externalities,
and help coordinate policies within the region, as well as acting together to
ensure an open global economic environment.

(a) Access to Markets in the Asian Region

Access to markets, in the region and beyond, is critical to Asia and
thus a high priority on the regional agenda. In low-income
economies, trade facilitates the movement of workers into high-
productivity jobs; in middle- and higher income countries, it provides
incentives for innovation and productivity. Regional cooperation can
strengthen Asia’s trade by creating vast regional markets, building a
seamless production base that makes the region even more
competitive in the world economy, and enhancing Asia’s role and
bargaining position in global economic policy.
(b) Strengthening Financial Markets
Since the crisis, Asian financial systems have improved dramatically.
They have shaken off nonperforming loans and low capitalization
levels, developed stronger supervision, and expanded equity and
bond markets. However, the financial systems of several important
Asian economies are still dominated by banks; their regulatory
systems remain patchy; and their international flows, to the extent
that they are liberalized, are mainly intermediated by financial centers
outside the region. Building safer, deeper, and more integrated
financial markets remains a high priority for Asia.
(c) Intensified Macroeconomics
Interdependence generates spillover and enhances the need for
cooperation. Some experts argue that Asia is in fact “decoupling” from
the world economy. Whatever the eventual outcome, for now, Asia
clearly has a significant role in shaping global economic activity and
especially regional activity, and this role will increase with the
region’s growth and wealth. Policy makers need new, more
sophisticated tools to monitor regional economic developments and
set policies that will dampen economic fluctuations and exchange
rate volatility.
(d) Social and Environmental Issues
As well as driving Asian dynamism, regional cooperation could help
ensure that its benefits are sustainable and widely shared. In
countries where public finances are tight, governments seek targeted
ways to reduce poverty, decrease income disparities, and address
environmental concerns—and regional markets and policy experience
offer solutions.
(e) Cooperation
Marshaling collective efforts across Asia’s vast, diverse economies is
a huge challenge. Unlike the EU and Asia’s economics, politics, and
history are different—and call for new, distinctive solutions. Asian
institutional development will likely remain pragmatic and gradual, and the
region’s policy architecture will likely feature multitrack and multispeed
solutions.

The logic for Asian economic cooperation is powerful. The region is

already highly integrated, and its governments are aware of their
common interests and obligations. Increasingly, they are working
 together. Asia has returned to stability and growth, and goals that
seemed daunting a few years ago—the elimination of systematic
poverty and the absorption of large masses of people into a
prosperous middle class—are within reach. To be sure, important
problems remain, and regional cooperation will require complex and
delicate decisions. But Asia has begun the search for common
solutions to its shared challenges.

Sources:

Asian Development Bank. (2003). EMERGING ASIAN REGIONALISM: A Partnership

for Shared
Prosperity [Ebook] (pp. 1-18). Mandaluyong City. Retrieved from
https://www.adb.org/sites/default/files/publication/159353/adbi-emerging-asian-
regionalism.pdf

Ehito, K. (2014). Globalization and the Asia Pacific and South Asia [Ebook] (2nd ed.).
Thousand Oaks,
California: SAGE Publications, Ltd.