ISAS Working Papers

This is a bad time for the world economy and it is an even worse time for the western financial system. However, this is a good time to speculate about the future shape of the global economic system and also how Asia may influence the shape of things to come. Is the current crisis a mere interruption in the process of global economic change that began a decade and a half ago when, with the process of globalisation exerting its force, the structure of production and the structure of international trade began to change? These changes propelled some large emerging markets, most of them in Asia, to the centre of the global economic stage. Or are we seeing, as some analysts have maintained, a change that will inevitably result in directing the global economy towards the direction it was taking before the current crisis began to take its toll? Some analysts have said that the “rise of the rest” – Fareed Zakaria’s phrase3 – may not, after all, actually be a rise but a temporary phase in the evolution of the global economy. They believe that the opportunities offered by globalisation will become constrained as the world’s rich countries make adjustments to the crisis that started in 2007 and is likely to turn the corner in 2010.4 I happen to agree with Zakaria