How the Financial Crisis Transformed East Asia

According to Eric Teo in a 2003 article How the financial crisis transformed East Asia, apart from the various economic and financial changes that had taken place in East Asia after the financial crisis, the region had also embarked on a fundamental transition of the nation state itself.

There are four aspects to the transition.

First, Asian countries have to come to an understanding of national sovereignty in the new globalised context. Because of globalisation, the nation-state needs to be redefined in terms of its prerogatives and power. Many Asian leaders understand their control over many policies and decisions has been reduced significantly.

Second, there is the concept of national security versus subversion, separatism and terrorism. Asian states are now faced with increasing security issues that have sprung up either from their colonial heritage or their failure to build national entities and identities. Many Asian nation states are fragile because of their diversity of population, religion and ethnicity. This fragility is a cause for concern, as the potential for intra-state conflicts is high across Asia. But because national institutions have not been adequately built and consolidated since independence, subversive groups or separatists pose a direct challenge to authorities.

Third, Asian nation-states will have to contend with the increasing influence of "soft power" (culture, diplomacy, economic power and influence), as much as "hard power," (military and political) in the new global context. They must learn that to increase their role and place in the world they must not focus on "hard power" alone. China has built its "soft power" considerably as it realizes it cannot match US "hard power."

Finally, Asian nations will probably need to redefine inter-state relations within the region. Asian regionalism has been noticeably absent as countries have tended to look to the West for trade, investments, ideas, and expertise. Asian regionalism would be a new form of transition as countries seek to overcome national sovereignty issues and cross-border problems. Asian nations need to "think regional". This is not a case of chauvinism or Asian arrogance, but an East Asian regionalism in the making within the present "Asean plus three" framework. It should be perceived as one of greater prosperity and stability for the whole Asia-Pacific region.

Teo concluded that the fundamental transition for East Asia will come only when East Asia implement the ultimate change towards a larger nation-state beyond the present borders, as in the case of an increasingly integrated Europe. Indeed, Teo argued that Europe could be the inspiration for an ultimate transition of East Asia in the next 20 years.