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Japan Provided The Impetus For Growth Across The East Asia Region. The United ...

Japan provided the impetus for growth across the East Asia region. The United States had originally intended to break up the largest Japanese enterprises to increase competition, yet in the end decided that strong economic growth was the best way of containing communism (Tipton, 1998, p.289). For the Americans the East Asia region seemed prone to communism and underdevelopment during the 1950s, although it seemed highly important for economic and security reasons. China had succumbed to communism in 1949, the United States and its allies prevented South Korea being defeated in the Korean War, whilst France and the United States ultimately failed to prevent the communist takeover of Vietnam. Democracy was lacking throughout the East Asia region and development was lagging behind expectations until the 1960s (Tipton, 1998, p.289). Japan's economic growth was planned by its Liberal Democratic Party governments, which meant that it went from a war torn economy to the United States' largest trading partner and one of the world's leading exporters (Tipton, 1998, p.293). Japan's economic progress was helped as it was not allowed to spend money on weapons, due to the United States protecting her as part of the peace treaty (Maidment, Goldblatt & Mitchell, 1998, p.69).
Japanese multi-national corporations have a major role in the global economy, which partly explains why the financial meltdown in East Asia in 1997 had implications outside the East Asia region, as well as within it. These multi-national corporations had plants in other parts of East Asia, such as South Korea, Malaysia, and China. Long term implications of the financial meltdown could have included plant closures throughout the region. Plant ands business closures paradoxically could affect the countries that developed the most, South Korea and Indonesia for instance. South Korea had remarkable successes in rapidly industrialising and expanding its exports. However, that success made its economy more vulnerable to financial speculation as well as potentially open to greater levels of financial and capital investment. Exposure to international competition can make economies stronger or it can make them weaker. South Korea's proneness to economic instability as a result of the crisis of 1997 was to be almost as noticeable as its well documented successes at export diversification (Siebert, 2002, p.168).
Explanations for the East Asian financial meltdown
The financial meltdown of East Asia during 1997 can be explained by shortcomings in the domestic economies of East Asia. Although, the states of East Asia had been committed to operating in the capitalist global economy, the economics of these states were not as liberalised or efficient as their high growth rates had suggested. The economies of East Asia had grown due to the government interventions and controls.

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