Global Overview

The global economy continued to be anaemic in 1992, with a flagging recovery in the United States and Japan slipping into a recession in the first quarter of the year. Other major industrial economies are in no better shape, but economic reforms for market-led growth are occurring speedily, from the former Soviet Union and Eastern Europe to China and Mexico. The world has also seen much economic pluralism with the loss of political and economic hegemony of the United States, leading to the emergence of a multipolar global trading system.

The new paradigm in international trade looks at shifts in the composition and direction of direct foreign investment in tandem with new patterns of locations of multinational corporations (MNCs). This has been prompted by industrial restructuring, changes in technology, and supply and demand in an increasingly borderless world There is also a decline in effectiveness of the traditional gatekeepers of international trade (General Agreement on Tariffs and Trade, GATT) and the international financial system (International Monetary Fund, IMF).

Regionalism has grown apace, coexisting under a framework of globalism. Whether in response to moves in Western Europe and North America or out of its own accord, the Asia-Pacific region has also embarked on various concepts and configurations of an economic community. Fifteen economies in the Asia-Pacific Economic Co-operation (APEC) forum and twenty in the Pacific Economic Co-operation Council (PECC) currently constitute the more active Asian-Pacific groupings, apart from other efforts.

Within the Association of Southeast Asian Nations (ASEAN), more innovative ideas have emerged, based on private initiative as the locomotive of growth. An APEC-like proposal for the East Asian Economic Caucus (EAEC), including the six ASEAN states, Japan, South Korea, Taiwan, Hong Kong, China and even the Indochinese states, was mooted by Malaysia.