Asian crisis and global economics

Asian crisis and global economics

It took a speech from United States President Bill Clinton to
remind the world of one vital, but strangely neglected factor in
the excess of debate over the Asian economic crisis.

On his way to attend the Asia-Pacific Economic Cooperation
summit in Vancouver, Mr. Clinton drew attention to the inter-
dependence of the world's major economies, pointing out that
millions of American jobs and a third of U.S. exports are
dependent on trade with Asia. The same is true for the rest of
the Western world and, if this message can be reinforced in
Vancouver over the next couple of days, it may broaden the nature
of the discussion and lead to a positive re-assessment of the
strengths and weaknesses of world markets.

Too much concentration has been focused on apportioning blame
and seeking scapegoats as the currency collapses rebound around
the region. Globalization is a word that somehow slipped from the
lexicon of Asian leaders and financial gurus in the resulting
chaos. Now that it has been reintroduced, the situation can be
seen as one which threatens the world economy, and is potentially
just as devastating to the developed nations as it is in the Asia
Pacific region.

That recognized, the summit is an opportunity to look
positively on what is admittedly a painful, but salutary,
experience and to examine the options for change. Mr. Clinton has
pledged U.S. help in stabilizing and strengthening the region's
financial markets, but a permanent remedy requires the worst
affected countries to completely restructure their financial
markets, reform their banking systems, and reevaluate their
economic strategies.

In the immediate future, there is little cheer on the horizon
for countries whose difficulties arise from over capacity and
falling demand, but economists appear united in the view that the
long-term future remains positive. Hong Kong is fortunate in
having pursued farsighted policies which led to a change from a
manufacturing base to a service economy.

The transparency of the system, the culture of a level playing
field, and the common law system are the bulwarks of a resilient
economy. But there cannot be total immunity from the Asian "flu",
either here or in the rest of the world.

-- South China Morning Post, Hong Kong