Engine for Dynamism and Stability
Edited by Masahiro Kawai, Jong-Wha Lee, Peter A. Petri and Giovanni Capanelli
Masahiro Kawai, Jong-Wha Lee and Peter A. Petri 1.1 INTRODUCTION The year 2008 will long be remembered for the precipitous slide into world-wide recession that has affected all Asian economies and their engines of growth, especially trade and direct investment. The speed and synchronization of the downturn have surprised policymakers and academic economists alike, offering stark evidence of how interdependent the world economy has become. They laid to rest once and for all the idea that Asia – or any other region – could ride out storms that affect its significant centers of global activity. But 2008 also focused attention on a longstanding trend – a gradual but decisive shift in the importance of different countries and regions in world production and consumption. The crisis originated in the world’s financial center, not in developing or emerging markets. Even in the downturn, emerging market economies maintained better economic performance than the mature economies. And when the time came to convene the world’s economic leadership to develop a concerted policy response, it was the G-20, and not the G-7, that emerged as the logical choice. To be sure, the advanced exporting economies of Asia were seriously affected, but despite sharp deceleration, the growth rates of China, India and several ASEAN economies held up better than those of developed economies. Twelve years after suffering its own devastating financial crisis, Asia is much healthier at a fundamental level. The region exhibited remarkable resilience to global shocks over the past decade. On the back of strong growth and...
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