Magazine article IPA Review

Asia Pacific in an Era of Trade Blocs

Magazine article IPA Review

Asia Pacific in an Era of Trade Blocs

Article excerpt

Asia is the flavour of the year, but few commentators actually know enough about the region to get behind the statistics and the propaganda. Michael Dobbs-Higginson, the former head of Merrill Lynch's Asian operations, has spent most of his adult life in one Asian country or another, and brings both intelligence and experience to his subject. Asia-Pacific is, he points out early, a personal view rather than an academic analysis; but in many ways has more of value to say than any number of almanacs and professorial theses.

He sees the next century as an era of trade blocs: an expanded EEC and a NAFTA group, perhaps extended to include parts of Central and South America. Faced with these adversaries, Asian countries will have little choice but to form an association of their own. The developing and newly-developed economies are dependent on exports, especially into Western Europe and the United States. By themselves, none of the Asian countries--not even Japan--can maintain their economic success. They need either secure markets within the region, or the bargaining clout that an association would provide.

Dobbs-Higginson examines each of the Asian countries, assessing their prospects and evaluating the gains each might make from a supranational grouping. South Korea, Taiwan and Singapore have shown a remarkable capacity for hard work and cohesion; Thailand, Malaysia and Indonesia have used their resources and large populations to build thriving, broad-based economies. The Philippines, strengthened by several years of political stability, has started on the road to prosperity. Even Vietnam has established a framework for growth.

There are a few special cases: Laos, Burma, Cambodia and Papua New Guinea are likely to remain on the margins of the boom; shackled by political conflict and uncertain of their direction. North Korea is likely to remain a wild card, possibly becoming even more unpredictable as its leadership structure crumbles.

Significantly, Dobbs-Higginson also looks at India, often neglected in assessments of Asia. Until recently, it has been burdened with attempts to impose Soviet-style economic planning, and there is not yet firm evidence that its move towards liberalization has taken root. Another serious problem is its increasingly radical sectarianism, which may yet pull the country apart. But Dobbs-Higginson points out that India has huge potential, and has developed high standards of technology in surprising area. Another advantage it enjoys is a network of Indian expatriates spread across the pacific, providing not only a source of capital and local expertise, but a "connecting tissue" for the region.

India could also provide a balance to China, although China has its own problems. Apart from the question of Deng's successor, there is the issue of whether Beijing can govern a country where economic warlordism is rampant. The old order is breaking down, with everyone in business for themselves: the military, the Ministry of Finance, even small village communities. Dobbs-Higginson cites the case of a local mayor who taxes his constituents in order to build a new road to a factory he owns.

He notes that China's new prosperity is concentrated in the coastal cities and in the Special Economic Zone linked to Hong Kong. The growing chasm between the nouveau riche and the peasant culture has the potential to tear China apart--an event which would send shock-waves throughout the region and the world. But Dobbs-Higginson retains a sense of optimism regarding China: its people recognize that the future of their country will be determined by the next few years, and are likely to pull back from the abyss. …

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