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In this report, we shall explore the reasons for the shift from multilateralism to bilateralism, which is rapidly emerging in the wake of the 1997-98 economic crisis and we shall also focus upon the role of regionalism in East Asia in recent years.

Extracts from this document...

Introduction

Chapter 1: Introduction Since the 1997-98 financial crisis, a new trade arrangement has begun to emerge in East Asia that represents a clear break from the region's strong history of multilateralism. The countries of East Asia are now giving more attention to ways of expanding intra regional trade that include the establishment of regional trade agreements; plans to establish a free trade area involving the economies of ASEAN and China; as well as moves towards bilateral trade agreements. Such a development is important given that an export-led growth and development strategy has provided the platform for the region's remarkable and prolonged period of high and sustained economic growth since the 1960s. Thus this trend towards bilateralism and the new regionalism, the motivations behind them, their impacts upon the region, their future evolutions and prospects are of profound regional and also global significance. Therefore in this report, we shall explore the reasons for the shift from multilateralism to bilateralism, which is rapidly emerging in the wake of the 1997-98 economic crisis and we shall also focus upon the role of regionalism in East Asia in recent years. In doing so, the report will proceed as follows. Chapter 2 presents a brief background on the Asian Financial Crisis. Chapter 3 looks at the trade arrangements in East Asia before 1997. Chapter 4 discusses the reasons for shift from multilateralism to bilateralism. Chapter 5 looks at the new trade approach after 1997 and its impacts upon the region. Chapter 6 focuses on regionalism and its progress so far in East Asia. Chapter 7 elaborates on the various roles of regionalism, emphasising on its importance especially after the crisis. Last but not least, chapter 8 will discuss the effects of regionalism in East Asia before we present our concluding remarks in chapter 9. Chapter 2: 1997-98 Asian Financial Crisis1 The financial and economic crisis of Asia in 1997 struck East Asia, bringing an end to its miracle and the myth of its growth. ...read more.

Middle

Regionalism offers opportunities to build a sense of community or to repair past tensions between neighboring economies. For example, the ASEAN plus Three members started scheduling not just summits but also regular meetings of senior officials, ministers, and leaders. The subjects on the agenda have become increasingly comprehensive, ranging from trade liberalization and monetary and financial affairs to e-commerce and the environment. This offers a chance for deeper interaction between countries. An important development in East Asia is the rapid rise of the China economy. China was able to sustain an economic growth rate of 7-8% even in the midst of the crises elsewhere in the region, and it continues to record rapid expansion in both trade and inward investment. Over the decade 1990-2000, average real growth rate in China was 10% annually. Exports quadrupled from US$ 62 billion to US$ 250 billion. Hence there is a need by other economies in the region for stronger cooperation with China, both as a growing import market and as a rising competitor in export markets. There is great growth potential in China. Hence regionalism opens up new opportunities for countries in the region to venture into the China market at favorable terms. Chapter 8: Effects of Regionalism on East Asia One of the positive effects of the 1997 financial crisis was to stimulate a nascent sense of East Asian regionalism although it had negative effects in the short term. In the long run, it brought ASEAN as a grouping closer together, as well as Northeast and Southeast Asia. There are a number of reasons to welcome a more developed system of cooperation in East Asia. Interdependence in finance, trade and investment has been increasing. Potentially, regionalism assists the nation state in dealing with these phenomenons and in addressing some of the negativities of globalization. 8.1 Short /Medium Term Effects First, regional integration has clearly intensified crisis contagion effect. ...read more.

Conclusion

37.46 (22) 17.61 (1) 69.72 (5) 9.09 (1) 93.79 (200) 58.97 (2,794) 74.45 (879) 25.29 (1,525) 14.45 (513) 154.00 (210) 43.94 (62) 19.69 (833) 37.31 (871) 38.68 (595) 159.73 (539) 15.26 (0) 9.10 (28) -6.19 (-2) 132.27 (1,308) 20.61 (156) 58.89 (506) 9.19 (244) 7.72 (177) -12.08 (-14) -12.69 (-4) -0.42 (-14) -4.63 (-76) -1.18 (-9) 69.01 (18) -3.11 (0) -4.00 (-1) 6.42 (0) 110.04 (138) 49.43 (743) 37.84 (180) 21.88 (541) 19.20 (511) 343.99 (2,081) 26.45 (134) 5.83 (410) 16.34 (401) 39.81 (206) 51.05 (574) 10.15 (21) -3.62 (-7) -4.34 (-48) 84.41 (1,502) 33.07 (442) 38.23 (81) 21.54 (1,316) 13.81 (146) 6.14 (8) 92.00 (117) 7.18 (637) 13.67 (514) 31.26 (780) 148.27 (1,578) -5.15 (-23) -2.66 (-6) -7.07 (-479) 113.56 (4,261) 16.44 (163) 67.16 (1,060) 7.43 (236) 8.02 (125) 44.33 (100) 10.14 (9) 6.70 (858) 7.94 (319) 19.37 (1,049) 126.25 (139) 4.74 (3) 79.06 (5) 10.11 (260) 62.02 (382) 34.12 (90) 61.38 (78) 18.28 (226) 16.53 (86) 117.54 (21) 48.53 (7) 33.18 (948) 36.23 (216) 28.14 (312) Note: 1) Otrn - Other Transportation, Electr - Electrical Products and Electronics, Mach - Machinery, Omanf - Other Manufacturing 2) No.s in parentheses are the values of export growth in million dollars. Table 11. The Impact of East Asian Regionalism on Industrial Production (unit: %) China Japan Korea ASEAN NEAFTA EAFTA NEAFTA EAFTA NEAFTA EAFTA NEAFTA EAFTA Agriculture Forestry Fisheries Energy Food Textiles Clothing Chemistry Metals Auto, Part Otrn Electr Mach Omanf 2.34 0.02 0.74 -0.32 3.75 -0.12 6.94 -0.63 -1.47 -11.10 -0.03 2.69 -1.11 0.16 2.37 -0.02 0.76 -0.15 2.86 0.21 6.83 -0.68 -1.17 -11.11 0.24 3.24 -0.81 0.18 -1.76 -0.49 -0.36 -0.66 -0.53 3.99 -4.70 0.60 0.89 -0.56 -2.33 0.46 1.54 0.11 -2.84 -0.70 -0.66 -0.67 -1.33 3.98 -5.78 0.86 1.60 1.23 -0.30 -0.10 1.82 -0.04 -1.62 0.47 1.54 -0.69 7.20 15.64 9.30 3.88 -0.80 -2.36 -6.03 0.85 -1.69 1.49 -1.87 0.26 1.42 -1.15 6.50 17.46 8.64 4.52 0.10 2.17 -7.78 0.13 -1.71 1.46 -0.12 -0.25 -0.16 0.09 -0.71 -3.10 -2.20 -0.77 -0.25 -0.14 0.09 -1.29 -0.92 -0.28 2.09 3.00 1.62 0.10 8.75 4.59 7.36 4.23 2.74 -22.27 17.09 6.46 7.67 4. ...read more.

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