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South East Asian Financial Crisis - Essay Example

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The origin of South East Asian financial crisis was in Thailand, with the collapse of Thai Baht mainly due to real estate problem. Even before the collapse of its currency it had become bankrupt as it had acquired lot of foreign debt. Apart from Thailand, South Korea and Indonesia were most affected, though practically almost all countries in the region had suffered its impact…
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South East Asian Financial Crisis
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Download file to see previous pages Its primary function was to develop economic growth, social progress and cultural development.
National resilience refers to all aspects of nation building - social, cultural, economic, ideological and political. It deals with security of nation emerging from the strength of national building. The member countries are ready to neglect short term losses in favor of long term achievements and friendships.
ASEAN practice non-interference. It does not mean that the countries are indifferent to one another or close their eyes on member countries. The countries refrain from criticizing the other countries but support them in all their needs. In some ASEAN countries economic development has been given preference over income distribution and employment creation. This has resulted in poverty and income disparities existing along with economic growth.
The creation of ASEAN was politically motivated. Its initial objective was to promote harmony among member nations as most of the nations were under security threat. Economic integration was the next priority.
ASEAN Free Trade Area was to be formed in 2003 comprising all the 10 South East Asian countries. AFTA was earlier established in 1992 as a political and economic entity. The objective of ASEAN Standing Committee (ASC) is to ensure peace in the region and live in harmony respecting the geographic and historical boundary. (Hank, Lim (2005), Regional trade agreements and conflict: the case of Southeast Asia, available at, http://www.idrc.ca/en/ev-132673-201-1-DO_TOPIC.html )
The countries thought that free trade would benefit their economy. It was decided that zero tariffs should be the ultimate goal of AFTA. Originally, only Singapore was in favor of a free zone. Obviously, because, unlike other countries, it is without natural resources and is an export based entrepot economy. The motive behind the formation of AFTA was to attract foreign investments. But AFTA started running into problems right from the beginning itself. That is because some countries were more interested in protecting their domestic industries. AFTA has been considered as a developmental form of regionalism unlike open regionalism which is for globalization. In fact it is between open regionalism and resistance regionalism which tries to protect industries from globalization. However it is closer to open regionalism. Though almost all the countries were in favor of a free zone, at least some of them were against their home industries with high economic status being put at risk. For example, rice in Indonesia, Philippines and Malaysia and sugar in Indonesia and Philippines. Automobile industry is bound to suffer because of lack of tariff protection. Singapore is likely to suffer because of the unwillingness of ASEAN countries to accept AFTA. Singapore backs up not only APEC but also WTO. Creation of growth triangular natural economic territories also establishes security of economy. Apart from that they ensure political stability and friendliness between nations. It is being pointed that some of the members of the triangles were bitter enemies in the past.
ASEAN has been successful in reducing conflicts among its member nations. AFTA went a step further by going for lower tariffs, which would boost intra regional trade and cement better relationship among ...Download file to see next pagesRead More
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