- New Global Economic Architecture: The Asian Perspective ed. by Masahiro Kawai, Peter J. Morgan, Pradumna B. Rana
This edited volume makes a distinctive contribution to the literature on financial crises, which has proliferated since the 1997–98 Asian Financial Crisis (AFC), because it is more than the usual post-mortem of causes and policy issues. The volume is more provocative than its subtitle suggests, as the trauma of the AFC has characterized Asia’s responses to subsequent financial crises and the new global economic architecture. It is not that the pre- and post-2008–09 Global Financial Crisis (GFC) architecture may be irrelevant in the ever-changing financial world or requires tweaking for greater influence. It is about customizing it to suit Asia’s socio-cultural and political economy, and fulfilling the ambitions of a rising Asia — notably China and the countries of the Association of Southeast Nations (ASEAN). There is, however, an implicit hint of judgemental rationalization as the volume unfolds.
Through globalization, emerging Asian economies — such as China and Indonesia — have joined the developed industrial states in the Group of 20 (G20). Indonesia is now often grouped with Brazil, Russia, India, China and South Africa as part of the emerging BRIICS grouping. The “Asianization” process of the global architecture is well on its way to completion. Yet, Asia’s emerging economies are aware of the implications of participating in the global economy. In the introductory chapter, Kawai, Morgan and Rana explore the concept of a New Bretton Woods (NBW) system, and how it is presently “at an interregnum phase” although its “constitutive phase could fizzle out” (p. 23).
In Chapter 2, Rana differentiates between the pre-GFC architecture (led by the Group of 7 [G-7] and Group of 8 [G8]) and the post-GFC architecture (led by the G20). With the judicious use of tables and figures, it captures the historical development and decentralization of the global architecture with its new Asian emphasis. More suggestions to reform the global architecture follow in Chapter 3 (Cooper) and Chapter 4 (Siregar and Chabchitrchaidol). Cooper’s critical assessment of the G20 as “moving beyond the BRIC” (p. 33) is a refreshing narrative that involves the personalities of key policy-makers, balancing correctness in economics, politics and diplomacy while coping with changing eras and new financial tools. In Chapter 4, Siregar and Chabchitrchaidol discuss the challenges facing the Chiang Mai Initiative Multilateralization (CMIM) and its surveillance unit, the ASEAN+3 Macroeconomic Research Office (AMRO). Despite the steep learning curve for these new Asian financial institutions, they have “the strong support of ASEAN+3 governments” (p. 81) — indicating these states’ intention to ring-fence their economies from global economic shocks.
Chapter 5 (Hill and Menon) and Chapter 6 (Kawai and Morgan) provide assurance that Asian financial systems are being well finessed, despite being newer and smaller than the trinity of the International Monetary Fund (IMF), World Bank and World Trade Organization (WTO). However, Hill and Menon’s discussion of whether the CMIM is a complement or an alternative to IMF (pp. 92–99) is moot. The authors conclude that the CMIM remains unlikely to act as “a co-financier or a substitute” (p. 109) as the IMF remains the global lender-of-last-resort. Kawai and Morgan argue that the establishment of the ASEAN Economic Community is pivotal for financial regulation in Asia. Such Asian institutions seem to provide a forum for mutual recognition, regulatory harmonization and cross-border supervision. Yet, [End Page 292] it remains unclear if such institutions can muster the necessary political will and legal commitment for regional financial regulation.
The volume’s comprehensive coverage is evident in Chapter 7 (Kawai and Wignaraja) and Chapter 8 (Plummer), which examine trade, foreign exchange rates, balance of payments, and official reserves — all part and parcel of financial crises. Kawai and Wignaraja detail how two usually sensitive trade sectors — agricultural trade (pp. 149–50) empowered by farm lobbies and services trade liberalization (pp. 150–53) — are simply excluded in Asian free trade...