Page 24 - Global Political Economy_Understanding The International Economic Order

THE NEW GL OBAL E CONOM IC ORD ER
and industry, they have declined in relative (not absolute) terms,
while the industrializingeconomies, especially China, have gained
economic importance. Before the 1997 financial crisis, which began
in Thailand and eventually plunged East Asia into political and eco-
nomic turmoil, Pacific Asia’s economic success had been extremely
impressive; many of these economies achieved average annual growth
rates of 6 to 8 percent. And despite the financial crisis, such economic
“fundamentals” as high savings rates and excellent workforces sup-
port the belief that these emerging markets will continue to be impor-
tant actors in the global economy.
Economic regionalism has spread in response to these political, eco-
nomic, and technological developments. Compared to the earlier re-
gional movement of the 1950s and 1960s (the European Economic
Community is the only survivingexample of that movement), the new
regionalism has much greater significance for the global economy.
The movement at the beginning of the twenty-first century is nearly
universal; the major economies, with a few exceptions that include
China, Japan, and Russia, are members of a formal regional arrange-
ment. Regionalism at the turn of the twenty-first century entails in-
creased regionalization of foreign investment, production, and other
economic activities. Although there is no single explanation for this
development, every regional arrangement represents cooperative ef-
forts of individual states to promote both their national and their
collective economic and political objectives. Economic regionalism is
an important response by nation-states to shared political problems
and to a highly interdependent, competitive global economy. As the
international economy has become more closely integrated, regional
groupings of states have increased their cooperation in order to
strengthen their autonomy, improve their bargaining positions, and
promote other political/economic objectives. Regionalization is not
an alternative to the nation-state, as some believe, but rather embod-
ies the efforts of individual states to collectively promote their vital
national interests and ambitions.
These developments have made the governance of the global econ-
omy a pressing issue. Effective and legitimate governance requires
agreement on the purpose of the international economy. During the
Cold War, the purpose of the world economy was primarily to
strengthen the economies of the anti-Soviet alliance and solidify the
political unity of the United States and its allies; this goal frequently
necessitated acceptance of trade discrimination and other illiberal
policies. Today, many Americans and others assert that the purpose
of governance should be to promote unrestricted free and open mar-
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