In studying the policy responses to economic crises in ASEAN and the EU, this paper addresses three issues: the financial crisis of 1997–98 in Southeast Asia, and the European Union’s financial crisis of 2008 followed by the sovereign debt crisis; policy adjustment actions in both regions in the area of economic coordination; and areas of mutual policy inspiration for both regions.
Both crises studied were regionally risk-intensive. However, their natures were different. The Asian crisis was mainly externally driven by capital flows, while the EU one — especially the sovereign debt part of it — was predominantly of an internal nature due to imbalances in the euro area and a worsening of the situation in public finances in some euro members. On top of it, the pre-crisis economic governance structure differed with a light one in ASEAN and a deeper one in the EU; however, economic policy was still based dominantly on coordination.
The policy adjustment corresponds to the nature of the crisis and original governance structures. In ASEAN, it is characterized somewhat both by a deepening of regional cooperation and a widening of risk-pooling beyond the borders of the region (ASEAN Plus). On the EU side, the policy response privileges a strong deepening of policy cooperation coupled with more narrow-looking geographical coverage.
The crises offer a unique window for policy adjustment. ASEAN could consider: deepening multi-lateralization in the single market; a gradual and low-intensity monetary cooperation; and enhancing its institutional capacity. The EU can, on its side, fully implement its new rules and put them under the EU-27 roof. It can go beyond this and consider a broader economic partnership with some of the new instruments with the EFTA countries. Finally, it can also reflect on the ASEAN success with the enlargement of its regional influence — how to strengthen its leadership in its closest neighbourhood (Balkans, North Africa, Eastern Partnership) by ensuring an area of stability and prosperity.