Asia’s International Trading and Finance Centres
Edited by François Gipouloux
Chapter 10: The Global Economic Crisis: Opportunities for Major Cities in East and Southeast Asia?
10. The global economic crisis: opportunities for major cities in East and Southeast Asia? Peter W. Daniels INTRODUCTION The global economic crisis of 2007–2009 was essentially a global financial crisis. The financial sector is the ‘central nervous system of modern market economies’,1 distributing liquidity and mobilizing capital to finance large investment projects; allocating funds to the most dynamic sectors of the economy; and providing households with the necessary funds to smooth consumption over time.2 Financial crises have happened before, but the events of 2007–2009 are often described as ‘unprecedented’. This crisis is notable for the way in which national and international financial authorities have adopted a range of interventions that are new and unusual. The key, however, is that in contrast to many of the earlier financial crisis that had their origins in the emerging economies and then spread globally, the recent crisis emanated from the US which is the core of the global financial and economic system. This was new territory and in view of the deeply embedded financial links spanning the Atlantic the banks, insurance companies and investment managers in Western Europe were quickly exposed to diminishing liquidity and disappearing credit. This has provoked questions about the scope for re-regulation of financial markets, the paring down of high reward remuneration cultures and other interventions that may have the effect of corralling the apparently inexorable ability of London, Paris, New York or Frankfurt to retain, attract and control the lion’s share of international financial activities and...
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