The Record of Global Economic Development

The Record of Global Economic Development

Eric Jones

The Record of Global Economic Development analyses the long-term and current economic forces which promote or impede globalisation, drawing on the experience of economic history to help interpret major trends in modern economies.

Chapter 8: The East Asian Crisis in Context

Eric Jones

Subjects: economics and finance, economic psychology, institutional economics

Extract

INTRODUCTION The world economy has long been dominated by the West and the arrival alongside it of East Asia as a second massive, economically successful region was bound to have profound implications. A suitable metaphor would be the launching of a big ship into the water. The creation of a second rich area in the world ought in the long run to offer the West great opportunities for trade but some early displacement was unavoidable. The West would have to change the structure of its economy, though before the ‘Asian crisis’ of 1997-98 it was unclear whether serious disturbance would be involved. With believable luck the displacement might have been gentle. Speaking in terms of aggregates like ‘the West’ raises difficulties because the term has more than one definition. One meaning refers to the material realm of geography: the location of the Western world taken as the OECD countries except for Japan, which obviously needs to be included in ‘East Asia’. The other meaning of ‘the West’ refers to the realm of institutions and ideas, and is taken as referring to the politico-economic organization of the established Western democracies, with their decentralized powers, independent courts, and free press. In the space of a chapter it seems reasonable to imply both by the same term and ask the reader to sense when one meaning may be implied more than the other. The currency crisis has added two problems to the initial displacement effect of ‘Asia rising’: one is the shrinkage of...

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