Challenges to Economic Cooperation
Chapter 6: Asia-Pacific Economic Regimes
Page 52 6 AsiaPacific Economic Regimes Historical events, as we have reviewed earlier, once dictated economic ties of many AsiaPacific economies: Korea and Taiwan to Japan, the Philippines to the United States, Indonesia to the Netherlands, Vietnam (Cambodia and Laos) to France, Singapore, Malaysia, Burma, AustraliaNew Zealand, and India and South Asia to the British Raj. World War II signalled the liquidation of the old imperial model of economic regionalization, anchored to a paradigm of colonial economic regimes. The postWorld War II new economic era that followed was centered on the U.S. dollar, and then the demand pull of the postWorld War II U.S. economy sustained the new economic regime of exportled growth that progressed during the 1960s through 1980s. Stability of this economic regime was made possible because the United States provided what Kindleberger (1986) calls ‘‘international public goods” in the form of monetary stability and international liquidity (in addition to a defense and security umbrella, of course). On August 15, 1971, the freely flexible exchange rate, defined by the fixed gold value of the U.S. dollar, ceased to be in operation. Automaticity of the operation of the international free market failed to correct the imbalances that continued to plague the stability of the global economic order. In September, 1985 an ad hoc international regime of currency management by the G5, then the G7, was put in place. A new international economic order appears to be emerging and is likely to...
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