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The Asia-Pacific, Regionalism and the Global System

The Asia-Pacific, Regionalism and the Global System

Edited by Christopher M. Dent and Jörn Dosch

The expert contributors shed critical light on how significant developments are impacting on the global system. In particular, they consider emerging forms of global governance, and how the Asia-Pacific as a region, individual countries such as China, Japan, South Korea and the US, and regional organisations and forums like APEC are shaping the world. Uniquely, the discussion is not limited to East Asia but also takes Latin America prominently into the equation.

Chapter 3: Managing the Great Recession in South Korea and Mexico: Economic Institutions, Domestic Market and Regional Trade

José Luis León-Manríquez

Subjects: asian studies, asian economics, asian urban and regional studies, development studies, development studies, economics and finance, asian economics


José Luis León-Manríquez* 1. INTRODUCTION Due to globalisation of production and financial exchanges, the 2008/09 global financial crisis (the ‘Great Recession’) spread across the planet with extraordinary swiftness. The mechanisms of contagion of this crisis were at least as diverse as the responses from different countries. For the sake of analytical simplicity, The Economist (10 March 2009) summarized these responses by stating that ‘we are all Keynesians now’. However convincing this statement might seem, it is still worth analysing the mechanisms of transmission as well as the specific answers to the global crisis undertaken by different Asia-Pacific Rim countries. Two interesting comparative cases are South Korea and Mexico, both being manufacturing-export economies of similar size with parallel experiences of trade liberalisation, privatisation and productive restructuring in the 1980s and the 1990s. In terms of gross domestic product (GDP), they ranked as the 14th (Mexico) and the 15th (South Korea) largest economies in the world in 2010 (World Bank 2011). In 2008, both countries experienced a rapid devaluation of their currencies, falling levels of exports and sharp falls in their stock exchange indices. Forecasts made by the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) foresaw moderate declines in their GDPs by the end of 2009. Yet, at the end of that period, Mexico recorded a 6.5 percent contraction in GDP and South Korea a modest growth of 0.2 percent. This chapter argues that the diverging economic performances of South Korea and Mexico during...

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