Brief Economic History of East Asia
The effects of the cold war left the East Asia countries torn into two, and their regional cooperation severely compromised to an extent that it was deemed quite a luxury. However, the Association of Southeast Asian Nations (ASEAN), which was formed during the era of the cold war, was very significant in rebuilding the regional cooperation, even though initially, it focused on politics and security concerns. As the cold war neared its end, the huge political barrier that compromised the regional cooperation amongst the East Asian countries was eliminated. The ASEAN initiated the “10+1” dialogues with these countries, China, Japan and Republic of Korea, separately, to boost their trade matters.
The ASEAN concluded in 1992 and resolved to establish a free trade area that would be beneficial to all the East Asia nations. This decision shifted the ASEAN focus from the political and security concerns to trade, in order to improve the competitiveness of these East Asian countries so that they would meet the tide of globalization. Nevertheless, in the year 1997, the East Asian countries experienced a massive financial crisis that compromised their regional cooperation so much. This financial crisis acted as a catalyzing factor by rapidly boosting their regional cooperation (Nihon University, 1993).
The East Asian countries realized that their local trade was not only important in helping them meet the tide of globalization but also very crucial in promoting their collective strength and achieving common development in East Asia. Later, the ASEAN launched a 10+3 dialogue and mechanism between these East Asia countries, which boosted their trade, giving them a fast track on their cooperation and helped them attain great achievements in trade and common development (Nihon University, 1993).
In the early 1990s, East Asia countries had a very small share in the global economy of just 6%, according to the World Bank president, but the share has improved greatly over time and is presently about 18%. This was also reflected by the rise of the regional total trade volume, which summed up to 45% in 1992 to 52.23% in 2007. In addition, East Asia countries did not have any trade bloc during the early 1990s, but this changed with the launch of the ASEAN Free Trade Area in 2008. This was very significant in the East Asia trade because over 3.5 billion people benefited from the other five Free Trade Areas established two years later, namely ASEAN-China, ASEAN-Japan, ASEAN-Korea, ASEAN-India and ASEAN- Australia-Zealand. The economy in these countries plus other five ASEAN countries was boosted to an extent that they acquired 8 out of the world top 45 economies in 2010.
It was a great achievement for the East Asian countries to fight and overcome the 1997 and 2008 financial crisis. These countries used these crises as a catalyst to speed up their economic growth and reach common developments, which was very important in showcasing their strong vitality. In addition, the East Asia countries and the ASEAN established the Chiang Mai Initiative (CMI), which acted as a very active multilateral mechanism and improved their foreign exchange reserve to a collection of 120 billion US dollars. Their Credit Guarantee and Investment Facility (CGIF), a regional initiative that has been very significant in promoting and maintaining stability in the East Asian financial and economic growth, was also boosted to 700 million dollars (Esping, 1996).
The improved economic trade and the merging of the interests of all the East Asia nations involved has effected pace in their exchange of ideas and cooperation to meet the tide of globalization. This has enabled the nations to establish and maintain peace and stability within their borders since the end of cold war. No other hot war has ever broken since then, and this is important and a great achievement because their regional trade has not been affected. In addition, regional concerns, peace and stability between these countries have been greatly manageable with the increased financial and economic stability (Leipziger, 2001).
The improved trade associations in East Asia can be assumed to have increased with the increase in peace between the regions. The impact of economic growth in the area in meeting the tide of globalization increased greatly such that from 1980 to 2003, the nominal GDP of the East Asia economies grew so much to over 4.7 times. The total exports in the East Asia increased over 6.9 times and the investment inflows 19.3 times. This tremendous growth in the East Asia economy has improved so much and it is currently comparable to that of North America and Western Europe (Park, 2004). The other great achievement has been on the regional imports which have rose from 34.8% in 1980 to 58.6% in 2003 (Ng & Yeats, 2003).
These achievements have improved the trilateral cooperation within the East Asia region, contribution to progressive common development in the region. Countries in East Asia have achieved high economic growth and have significantly improved their position in the rankings of the world per capita income. For instance, Japan has been ranked second country with the highest economic growth in the world and the rise of the Republic of Korea from the last third to the first quarter of the ranking based on the GDP size of the world economies (Ng & Yeats, 2003).
Five Most Important Future Challenges Facing East Asia
Dating back to the era of the stop of the cold war to the present times, the East Asian regionalism has experienced differences of opinion in terms of development and significance.
One of the major challenges is divergence, in that; the East Asia is a vast region that is home to different nations that are at different developmental stages (Littlewood, 1999). It is home to fully industrialized countries like Japan and a range of rapidly developing nations. The region characterized by countries that embrace different political systems, that is, some nations embrace socialism, while others embrace capitalism and monarchies. Diverse religious and cultural backgrounds such as Taoism, Buddhism, Islam, Catholicism, Christianity and Shinto also characterize the region. The above mentioned examples of diversity pose a huge challenge on the efforts that are meant to foster regional integration.
The second major future challenge is in relation to complex grievances experienced among the East Asia counties. With reference to world records, the East Asia region still stands out as the only region that has a legacy of cold war. Today, the circumstances surrounding the Korean peninsula still pull constant strains on regional security. Furthermore, the ancient, historical dispute backgrounds in terms of ethnicity, religion still linger in the region and are a major contributor to the dampening of the spirit of cooperation between the countries (Sakakibara & Yamakawa, 2003). For instance, in the recent years, the major powers of the region interacted more intensively in the East Asia and the Asia-Pacific regions, where their interests are intertwined – a factor that has did capture world’s attention. Another set of challenges that emerge from this factor is the increasing instances of terrorism activities, transnational criminal activities, occurrence of natural disasters and increased prevalence of infectious diseases.
The third major future challenge is in terms of the prevalent institutional deficiencies in most East Asian countries. The aforementioned informal forums that foster mechanisms of cooperation in terms of 10 +1, 10 +3 as well as the East Asia Summit should be more flexible, binding and efficient while advancing openness and comfort for all the nations. However, the deficiency experienced in regional security mechanisms displays a weak connection in regional cooperation.
The fourth major future challenge lies in coordination amongst the countries in the East Asia, in that, a majority of the cooperation mechanisms that have been implemented in the recent times have divergent emphasis. This leads to overlapping interests in the membership and the agenda for discussions that fuels instances of competition, which is disadvantageous to the pooling of resources. Additionally, there needs to be untraveled coordination amid the corporations of the East Asia and Asia Pacific (Kuroda & Kawai, 2004).
The fifth key future challenge is the influence the US has across the East Asia region. The US is the world’s leading force, a significant pacific nation and an affiliate of the East Asian Summit. In essence, the East Asia cooperation is a subject that should concern only the East Asian countries and there is widespread feeling that there is interference, positive or negative, by the United States that influences their procedures.
The East Asia countries should embrace peaceful coexistence, respect and treat other members as equals, while promoting reciprocal political trust. The achievements of the East Asia countries can be credited to the generally peaceful and stable environment in the recent past years, and this should be appreciated and treasured by the region (Sakakibara & Yamakawa, 2003). In the recent past, disputes have risen between a number of the East Asian countries, which have dented the political trust between the nations involved and affected regional cooperation and involvement of all the countries. The countries in this region must never go back to the era of cold wars, and should therefore, adopt a common principle that fosters security, joint development initiatives, peaceful coexistence and resolving disputes by way of dialogue or negotiations, and laying strong political foundations that deepen regional cooperation.
The East Asia countries ought to foster cooperation between each other and pursue shared development that is beneficial to all of them. The region has experienced rapid development in the past two decades but it is feared that the momentum for growth is slowing down due to the rise of protectionism, lethargic economic recovery and instability of the global financial market (Kuroda & Kawai, 2004). Therefore, the countries should prioritize economic growth and social improvement while fostering the spirit of mutual assistance and a win-win paradigm. Only by embracing this recommendation, will the countries be able to effectively mobilize resources, merge public support for cooperation and attain complete recovery of the region.
The East Asia countries ought to foster openness and inclusiveness by taking advantage of the nature of their complementary factors. As noted above, the diversity in the region brings about both negative and positive connotations, but all this can be diverted to positive energy (Kuroda & Kawai, 2004). The countries should be respectful of the legitimate interests and opinions of the member countries, while copying examples from other successful regions in the world, for example, Europe.
The relationship between the US and the East Asia region should be promoted even though there exists differences in terms their historical backgrounds, cultures, development stages and social structures, and in the way the two view international affairs (Mason, 2001). The relationship should be mature and involve in depth communications for strategic economic development and in dealing with disputes. As long as the two regions work concurrently, they will continue with coexist peacefully and cooperate between themselves, a factor that would be beneficial to both of them.
The ASEAN has been significant in the establishment and spread of norms to the bigger powers in the region, while at the same time socializing them. It should continue fostering the spirit of cooperation between these nations including the relationship with the USA, to thwart any competitiveness and promote community building processes (Kuroda & Kawai, 2004). Even though the East Asian countries identify with regional order, institutional systems and regional identity, as the primary stages of growth and development, regionalism has shown distinctiveness in the maintenance of regional stability and fostering prosperity.
The measures for economic integration should be taken seriously by the East Asia countries, through expansion of the ASEAN framework and establishment of a regional monetary fund for trade and financial integration, with suitable exchange rates and coordination mechanism for the region (Edwards, 2011).
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