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The Process Of Globalisation Means That The Economies Of The East Asia Region ...

The process of globalisation means that the economies of the East Asia region are not only increasingly linked to each other, they are also linked to the global economy. AESAN had been formed to promote trade between the countries of East Asia. As a consequence of the financial meltdown of the East Asia region, it was logical for East Asia countries to strengthen regional co-operation and integration to restrict the damage of the 1997 crash, whilst reducing the chances of further financial meltdowns affecting the region. AESAN helped the East Asia region expand and it reduced the harmful effects of the financial meltdown in 1997. Organisations such as AESAN have limits to how far they can help the economies in their regions, yet without such organisations economic growth could be harder to achieve whilst recessions would last longer. AESAN continued to enlarge its membership after the financial meltdown, although that in turn has caused controversy. New members have included Cambodia and Burma (Howard & Louis, 2000, p.239). Amongst the implications of the financial meltdown in East Asia was the need for reforms being highlighted? Some financial experts believed that reforms would have reduced the impact of the financial meltdown or possibly prevented it. Governments are not always keen to introduce economic reforms though, as opening up economies can increase pressure to introduce social and political reforms which governments do not always want to implement. However, governments may believe that reforms are preferable to the economic, social and political harm caused by the financial meltdowns or severe economic recessions (Newnham & Evans, 1998 p. 139).
A worrying implication of the whole crisis was that the International Monetary Fund's strategies did not solve the crisis immediately. That was mainly due to the nature of the crisis being misunderstood. It was not a crisis caused by a balance of payments problem or high levels of government debt. Too much private borrowing and the banks of the region lending too much money caused the crisis. The usual austerity measures advocated by the International Monetary Fund made the financial situation worse, slowed down the recovery process and meant the governments of those countries involved in the crisis had to receive bigger loans (Radelet & Sachs, March 30 1998 p.27).
Conclusions
Therefore, there are several explanations for the financial meltdown in the East Asia region in 1997. Many of the countries in the East Asia region had, since the 1960s, benefited from almost unbroken periods of high rates of sustainable economic growth which few other countries came close to matching.


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