What harm is regionalism

International finance policy

Heribert Dieter

To person

Dipl.-Pol., Dr. rer. pol., born 1961; research assistant at the Institute for Development and Peace of the Gerhard-Mercator-University GH Duisburg.

address: Institute for Development and Peace, Geibelstr. 41, 47057 Duisburg.
e-mail: [email protected]

Publications including: The Asian Crisis: Causes, Consequences and the Role of the International Monetary Fund, Marburg 1998; Structures and trends of the world economy, in: I. Hauchler / D. Messner / F. Nuscheler (Ed.), Global Trends 2000, Frankfurt 2000.

Three years after the start of the Asian crisis, clear signs of economic recovery can be seen in some of the countries affected. Nonetheless, the crisis has led to profound changes in East Asia.

I. Introduction

In July 1997, the Asian crisis began with the release of the Thai baht exchange rate. This economic crisis represents a turning point for the world economy. The Asian crisis was not a small, cyclical economic crisis, but exposed the systemic shortcomings of today's world economic order. After this crisis, the neoliberal model, which has long been dominant and which primarily relies on deregulation and liberalization of the economy, is increasingly called into question. International financial markets in particular have come under fire. According to numerous observers, there is an increasing number of speculation and irrational exaggeration to deal with.

Some of the Southeast and East Asian crisis countries have recovered extremely quickly from the crisis. South Korea in particular has found its way back to growth within twelve months and has clearly exceeded the most optimistic forecasts. On the other hand, it would be wrong to conclude from this that the Asian crisis has already been overcome economically and politically in the entire region.

However, the Asian crisis has strengthened the foundation for East Asian cooperation. It is now becoming apparent that the Asian crisis marks a turning point in supranational regional cooperation in East Asia. Attempts to make the region less susceptible to new crises and thus at the same time less dependent on the countries of the West and the International Monetary Fund, which is dominated by the USA, are clearly recognizable today. Experience with the policies of the International Monetary Fund (IMF) and the inability to make decisive changes to this policy have led to the search for alternatives. A new form of regional cooperation, monetary regionalism, is emerging in East Asia.

Outside the region, the initial zeal for reform has already died out. The title "new financial architecture" aroused expectations that cannot be realized. A new, global currency order is not in sight. If one considers the most important concepts currently available, the international financial markets should also be subjected to a mild reform rather than a radical change.

In this article, the cause of the crisis is first presented in broad outline. Then I look at the very different economic recovery in the individual economies. The main proposals for reform of the international financial system are then discussed. This is followed by a description of the steps taken so far towards a monetary regionalism in East Asia as well as some theoretical considerations on this concept. In the last point I discuss the consequences of this development for the international financial system.