During the post-war period of the 1950s, the East Asian region was considered to be part

of the third world with international agencies holding pessimistic views over the potential

for growth and development in the region. However, contrary to these views, the East

Asian region has experienced extremely rapid growth and development which

surpassed all expectations and eclipsed those growth rates of neighbouring developed

nations. This highly unexpected rapid economic growth has been the trigger for much

analytical interest attempting to explain the various causes of the phenomenon that was

the economic miracle. A big part of this occurrence can be argued to be in part due to the opportunity of globalisation that these nations seized in order to compete on a more international as opposed to regional scale. Hence, throughout this discussion, I am going to attempt to examine the different areas that aided East Asian globalisation and how these areas also created obvious drawbacks and sufferings for the nations involved. The topics which I am encouraged to discuss under this heading of global

The governments of the region took on a more developmental strategy as they saw this as essential to help the market grow much more quickly than just resigning to a market friendly approach. In some cases such as South East Asia, this did not work as well as hoped but in Japan, Korea and Taiwan, this provided a solid foundation for which to begin other methods in which to globalise, such as export-orientated industrialisation.

This leads onto the last segment of this discussion where I am going to look at how neo-liberalism and developmental statist ideas were used to exploit the growing need to globalise. Neo-liberalism was adopted by the more modern liberalists as a free market approach. The World Bank has long been a believer of a free market philosophy. From the Early 1970s, multi-lateral trade organisations, such as WTO and APEC, working towards a free market area within the Asia-Pacific region forced these economies to start lowering barriers and opening up to an international market. This was considered to make trading much easier in support of globalisation whilst opposing the idea of extreme developmental statism. Countries such as: Hong Kong and Singapore are a clear example of following the market-friendly approach with results of great success, even though success was not to the extent of the other nations. In the case of Singapore, the state did intervene to a point, but only in order to implement a more free trade area, welcoming FDI and international trade. Hong Kong was driven towards a non-selective approach towards development, rejecting ideas towards manufacturing industrialisation. This is not to say they had no state intervention, but that they took on a different approach in comparison to the extreme examples of Japan, Korea and Taiwan. The neo-liberalist idea, as supported by the most advanced western nations, has achieved spectacular results in comparison to extreme developmental ideas. It can be seen that right-wing economists argue that it is a free movement of capital which allows investors to seek the best opportunities for growth in the most sufficient way.10

Unfortunately, in 1997, the tragedy of this accelerated growth of the East Asian region struck in the form of the financial crisis. It hit a set of the ASEAN economies almost simultaneously and this overflowed into the other nations in part as a result of contagion. The financial integration that the region had embarked upon triggered an overheating of the economy caused by vast over-evaluations of the domestic currencies, following Thailand after it de-pegged the baht from the US dollar. The uncertainty over whether to invest in Thailand bled into the other neighbouring countries in the South East Asian region. Potential foreign investors were forced to evaluate the state of the regional economies. To add to this, the huge surge in short-term investment, namely ‘hot money’, flowing into the East Asian region was now flowing out at a similar rate as a result of contagion and the ongoing inability of the local governments to instigate capital control in order to prevent this from happening. We may be able to stipulate that it was a turn towards this neo-liberalist approach that caused the financial crisis. This shift away from capital control over the financial market, influenced by the IMF(international Monetary Fund) had started to gain ground in the 1990s and begun in London, where approximately half of all financial trading takes place. As a result, today, capital control has diminished as it is becoming increasingly impossible to control currency speculators. However, established economist, Paul Krugman proposes that in an emergency such as the Asian crisis, capital controls may help to prevent panic8. An article printed in ‘The Economist’9 recently observed that China has been blamed for America’s trade deficit and the deflation in Japan. At the most recent APEC(Asia Pacific Economic Co-operation) summit in Bangko

Some topics in this essay:
East Asian, East Asia, South Korea, Asian NIEs, Hong Kong, Research DevelopmentR&D, Korea Taiwan, FDI MNC, Vietnam War, FDI ASEAN, east asian, asian region, east asian region, hong kong, east asia, economic growth, south korea, east asian nations, south east, foreign firms, asian nations, financial integration, hong kong singapore, growth east asian, japan world’s largest,