Question

Discuss the two divergent views that are offered to explain the emergence and subsequent success of the Asian NIEs. What is the main implication of each respective view on the repeatability of such success by other less developed countries? In what sense are these two views complementary to each other rather than mutually exclusive?

Answer 1

If one examines the nowadays impact of globalization on the predominant world order, economically and politically, one cannot exclude Asia out of the equation in most possible scenarios, and particularly not East Asia. The region is on its best way to become the main promoter of global economic growth (and already performs as such), but yet, is not profoundly changing in – nation-state transcending – institutional terms. Hence, scholars have often raised the lack of settled regional institutional structures, implying that a fundamental institutional gap would prevent the establishment of a formidable regionalism.1 Indeed, the Region would lag far behind the highly supra-nationalized governance system of the European Union, thereby not living up to the level of mutual cooperation being achieved in the European effort sui generis. 2 Subsequently, analyzing the actual involvement of East Asian countries in forums of dialogue, it turns quite obvious that a strong reliance on the Association of Southeast Asian Nations (ASEAN) does exist. That is, in fact, being able to display initiatives within a broader framework of regional cooperation facilitating a mutually elaborated decision-making process.3 Beyond ASEAN, though, the East Asian institutional landscape displays less formal and standardized institutions determined by the concept of ‘Minilateralism’.4 Consequently, the rise of regional regimes seems to matter more than the founding of formalized institutions which work as overarching supranational organs to establish common policy-making procedures. In accordance, formulating a state-of-the-art character study, Alagappa outlines five key features of international relations in East Asia. Therein the Nation state is the actor in international interactions, driven by survival (and thus keen to preserve sovereignty and independence) as the inherent key agenda. Moreover, security encompasses both external and internal dimensions, stressing the competitive over the cooperative approach to ensure stability. And lastly – what is key – societal change shows omnipresence in the region.5 Bearing in mind this rather pessimistic but realist picture, the academic world sometimes refers to a “fundamental skepticism”, regional institution-building in East Asia appears to be highly contested. 6 Despite substantive obstacles, this exploratory study does not intend to stop at the given point. Instead, the forthcoming narration of East Asian cooperation seeks to actively think forward through the application of Neo-functionalism to a new area. This is to detect possibilities re-imagining what neo-functional insights might account for in a non-European context. In this sense, the author thinks that a constantly evolving discourse on the question is needed if furthered (economic) integration matches the higher sake of welfare, stability, and peace in East Asia. Therefore this paper wants to stimulate the discussion through which method regional integration can be made feasible and if the European incremental model can be employed as a meaningful guideline. Thus, the view of “Holistic Convergence” and “Procedural Divergence” will form part of the elaboration, emphasizing to what extent the European functional experience may help to predict the potentially extended regional integration in East Asia.7 That said, no cultural or respectively political imperialism will be exercised, but a critical assessment of the validity of neo-functional principles in the context of East Asia. In all aspects of the consecutive analysis, the region in focus involves at its core Japan, China, the Asian newly industrialized economies (NIEs) and the ASEAN. The eventual objective is to depict policy profiles which could enhance the overcoming of rather weakly fledged regional regimes. To do so, the European experience will serve as an important focal point and be compared with the East Asian reality – with regard to implications for the future development of the region. It will be debated how regional economic integration can be applied as a framework for securing peace through interdependencies, promoting a regional community in East Asia. Correspondingly, the study aims to derive innovative views within the field of comparative regional integration – a research realm providing illustrative accounts of the interplay between globalization and regionalism. Concluding, the purpose of this paper is to discuss the rationale and opportunities for closer economic cooperation in East Asia and to consider the European experience for the corresponding institutional arrangements. Thus answering the question: In what sense are these two views complementary to each other rather than mutually exclusive?

Does the presence of a region’s hegemon necessarily prevent regional organizations? Opposing to classical realist assumptions, a hegemonic nation “with the power to decisively shape regional arrangements may choose institutions over direct suasion in managing a region”. This is because a formalized regional order, established through rule-based organizations, arguably offers “its own intrinsic value for both governor and governed”. 104 In context, one can even extend this argument highlighting that successful regional integration would essentially need the presence of a dominant leader, because of his capacity to center the coordination of rules, regulations, and policies, while also easing developmental asymmetries through aid payments. Corresponding, the United States appeared as such a dominant power in both Europe and East Asia after World War II. Its divergent strategies for influencing the two continents, however, point to the paradoxical question why the US’s approaches to local regionalism have been less supportive in East Asia, compared to the manifestation of regional institutions in the European example. At least the latter emphasizes that a dominant hegemon can and did foster regional institutionalization processes. In effect, it is notable that –unlike the experience of the EU – the US role in the context of East Asia was to stimulate a focal point but without providing political or financial support for the establishment of a regional entity. From another point of view, one can argue that the precondition for regionally encompassing institutions is great power balance. Such balance, though, has never been continuously present in East Asia. Nowadays, this is emphasized by the geopolitical tensions between, for instance, China, Japan, and the United States in the South China Sea. The lack of a regional balance hence leads to the absence of a formidable regionalism. Indeed, the Cold War exercised – different to the European experience – a centrifugal rather than the centripetal impact on East Asia. Even though the region is now freed from its paralyzing influence, the basic rationale of either-or polarizations has seemingly persisted. By contrast, Europe witnessed reconciliation between the two major powers of the continent, namely Germany and France, settling the way for deepened cooperation and integration. Moreover, the requirements of war-time reconstruction and the emerging bi-polar confrontation with the UdSSR contributed a critical spur to the dynamic of regional cooperation. While this process of integration was stimulated by the material support and – at times – the political leverage of the US, the European nations themselves determined significantly the continent’s specific course of regionalism. This independent willingness of Europeans to foster intraregional cooperation elucidates that the rather one-sided assumption of Hegemonic stability theory, preassuming that only a very powerful, hegemonic state can compel national governments to pool national sovereignty and commit to common rules, is not entirely providing explanatory reasons for the EU experience. Such will which is uniting the region toward cohesion can only be attested with large exceptions in East Asia. This is due to the region’s confinement in a dense net of geopolitical tensions, largely impeding the constitution of a shared vision toward regional cooperation. In context, the divide of liberal Inter-governmentalism and “classic” realist thoughts can be detected in three ways. First liberal intergovernmentalist theory tries to explain (European) integration as a product of increasing economic interdependence rather than as a function of geopolitics. Second, neoliberal institutions are perceived to be essential for international cooperation. Accordingly, it is stressed that the EU would be no threat to the nation-state, but a necessary institution that might preserve or even strengthen the nation-state, enhancing economic stability and performance. This again mirrors the theories acknowledgment of the importance of domestic politics in formulating state preferences. Corresponding, changes in the structure of the global economy are seen to increase the benefits of economic exchange, thereby putting external pressure on governments to facilitate economic cooperation through institutionalization. Outcomes are thus expected to constitute an institutional choice under the premise of efficient configurations of state preferences and interstate bargaining, as a result of the process of demand and supply sides. This is indeed affirmed by domestic political legitimacy and domestic agenda-setting power. In effect, national preferences of the ASEAN+3 Member states exhibit shared interests in some realms of cooperation. For instance, based on asymmetrical interdependence, each of the involved countries showed motivation to join the ASEAN+3 initiative on financial stability, the CMI. Corresponding, the progression of the CMI, based on bilateral swaps, into the CMIM, forming a multilateral reserves pooling mechanism including the rules of lending, borrowing, and voting power, elucidates this process. Because the CMIM rests upon enhanced and far-reaching agreements, greater potential gains and less political risk are expected. Consequently, the ameliorated financial stability through the CMIM is likely to go along with gains of domestic political legitimacy and domestic agenda-setting power. However, when it comes to the establishment of a surveillance mechanism, political sensitivities tend to be higher. Installing a strong surveillance unit, thus, appears rather improbable since domestic political legitimacy and agenda-setting power are unlikely to be provided easily. Only if the regional surveillance unit AMRO is strengthened, the likelihood of moral hazard will be restricted, making a lower level of linkages with the IMF possible. However, this would require the necessity of pooling sovereignty in a rather supranational than an intergovernmental framework, which by now seems not appropriate in the East Asian context – a stark difference to the European Economic and Monetary Union. Despite such findings, applying liberal inter-governmentalist theory only would face shortcomings, because ‘what you see is not always what you get’. Limitations stem from the basic theoretical framework of liberal Inter-governmentalism, since external influences such as the IMF, the US, or the China influence cannot be neglected with regard to East Asian regional cooperation. This is evident taking into account the closely interconnected network of the nowadays international economy as well as the high leverage of the US and China in the East Asian region. This can be again emphasized, taking the CMIM as an instance. Acknowledging that borrowing rules have a limitation on the available borrowing funds, and the – compared to the IMF – rather limited capacity of the CMIM, reliance on other factors turn obvious. Accordingly, the Multilateral Swap Agreements provide financial assistance in form of swaps to any ASEAN+3 country which is in need of balance of payments support or short-term liquidity support. However, this mechanism can only complement existing international financial facilities, as provided by the IMF. Only once domestic political-economic interests and institutions have sufficiently converged, culminating in similar national economic policy preferences, meaningful political compromises for effective regional cooperation will become possible.