It is indeed a delicate balancing act. The Asian financial crisis and the current global economic crisis both clearly showed the risks attendant to excessive and unbalanced openness. Our integration and openness must be matched by well-entrenched institutions and regulatory systems.
The potential benefits from broader globalization are enormous. Asia is now leading the world out of this crisis. In a new report [to be released today], Asian Development Outlook 2009 Update, the Asian Development Bank forecasts that developing Asia will contribute more than 75 percent to world economic growth this year. That is an amazing figure and, in the years to come, Asia’s global footprint will become even more pronounced. Broader globalization will help Asia reap rewards, while minimizing economic distortions.
The good news is that this growth model need not come at the expense of ties with industrial economies. As we learned from the EU and North American Free Trade Agreement, there is no reason why vibrant international trade cannot coexist with vibrant intra-regional trade.
Balanced openness and globalization is key to the world’s future economic growth, but Asia cannot do this alone. Successfully managing globalization calls for cooperation between advanced and developing countries. We must work together to keep the flow of global trade, financial assets and human resources stable. Protectionism in trade, capital and labor must fall by the wayside.
Promoting regional integration in a global context must be brought center stage. With that, Asia can take its rightful place as we restructure our global economy to the benefit of all.
Lee Jong-wha is chief economist of the Economics and Research Department and head of the Office of Regional Economic Integration at the Asian Development Bank.
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