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Regionalization in a global contextGlobal forces are reshaping the context of Asian development. Globalization has meant significant growth in the Asian and Pacific region in areas such as trade,2 and the increase in global capital flows has been even more dramatic.3 Globalization has made capital increasingly mobile, which in turn has led to the potential to accelerate the development of countries. Globalization has increased the volume and speed of international communications, and is changing the structure of global production. Globalization, supported by technology transfer, has led to a rise in productivity and increasing specialization of the labor force. Although globalization has led many Asian countries to an unprecedented level of material well-being, it has also brought risks, as evidenced by the 1997 Asian financial crisis. In the aftermath of 11 September—for the first time since the 1970s oil crisis—all three engines of global economic growth (expansion of regional trade and tourism, foreign exchange earning capacity, and employment-intensive activities) are faltering. Without a carefully coordinated response, global economic progress may begin to reverse. On a global scale, international institutions can monitor and promote globalization to maximize benefits and minimize risks. For example, the United Nations (UN) system and Bretton Woods Institutions formulated the institutional architecture of global governance and global economic management. Similarly, regional institutions and groupings act as conduits between individual countries and global institutions.4 Regional consensus can facilitate and monitor regional compliance with international agreements. Regional groupings can be platforms for regional cooperation in infrastructure projects. Regional integration initiatives in Asia include the expanding ASEAN and the Asia-Pacific Economic Cooperation (APEC) structure. Regional groupings are not necessarily protective trading blocks that militate against the mandate of the World Trade Organization (WTO) by promoting trade diversion instead of trade creation. Rather, regional institutions and arrangements can form the intermediate building blocks of a global economic system — thus forming a relationship of synergy rather than substitution. Regional integration complements globalization in two general ways. First, indicators of global trends — such as investment, production, and trade linkages — are most clearly discernible at the regional level. Second, in an increasingly globalized world, national governments must address shared issues. This creates pressure for mutual adjustment on matters previously regarded as domestic — fiscal, monetary, and investment policies; commercial legislation; and environment and social protection. Regional integration helps individual countries balance domestic development needs with the forces of globalization, creating a manageable context within which to address key global concerns, such as protecting natural resources and controlling the crossborder transmission of diseases.
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