Asia's Future in a Globalized World
Working Paper by Ronnie C. Chan
23.11.1999 · Research Group on the Global Future
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When history is written, December 20 may well be considered one of the most momentous days of this fleeting century. Macau, the last colony of western power in Asia if not the world, will return to China after 400 years of Portuguese rule. The significance of this event lies in the fact that no one can properly understand today's Asia without recognizing the effects of colonialism. Although most European intruders were forced out of the region before World War II, Asia the victim is still struggling politically and economically decades later. Some would say that Europe through the EU is entering a period of post-nation state. Asia for its part remains at the nascent stage of nationhood.
The impact of centuries of colonialism should not be underestimated. The abrupt departure of the colonial masters left Asians ill prepared for self-governance let alone nation building. The crux of the problem is two - lack of adequate social institutions, and of the preparations for self-governance. Necessary institutions include the rule of law especially its enforcement; checks and balances inside and outside of government ensuring sufficient protections of individual freedom; a passable civil service system; and regulatory bodies to ensure commercial fair play. Leaders must educate their citizens to accept and respect such institutions.
Measured by these standards, Asian countries can be categorized into four groups. The first gets both accounts right. Thanks to Mr. Lee Kuan Yew, Singapore is the sole success story despite western skepticism.
The second group are those that went seriously wrong due to despots and / or communism. Here we have Cambodia, Laos, Myanmar, Vietnam, Mainland China. China is taking the lead to self reform and Vietnam is following suit.
The third group encompasses those who in spite of inadequate social institutions have strongly pro-business governments. These include Malaysia, Thailand, Indonesia, Taiwan and South Korea, which have all seen tremendous improvements of their citizen's livelihood. Using western institutional standards, Japan should also fall into this category.
Finally, there are countries that apparently have the right institutions but not the proper preparation for governance. They practice democracy right after independence and are all mired in poverty. Aspects of the Indian and Filipino experiences are not unlike many African ex-colonies. It is altogether unacceptable to have the veneer of a modern government if its citizens do not grasp its essence. The result is effectively a breakdown of the otherwise good institutions.
The critical question now is: where is Asia heading? To assess this, one must first recognize major global economic and political trends. Since the region is not powerful enough to lead the world let alone to dictate its rules, it will have to play along.
Economically, globalization driven by technology is altering at breakneck pace the commercial landscape the world over. Competition is heating up and trade barriers are crumbling. These developments spell tremendous opportunities as well as risks.
As a direct result of economic success, domestic politics everywhere is increasingly pluralistic if not democratic. It is natural that wherever there is a middle class, citizens will eventually demand more say. Unenlightened leaders resisting change do so at their own peril; prudent ones will proactively prepare their countries for democracy which is, of course, easier said than done. True leadership is required.
On the social level, there is increasing interaction between cultures due to technological advancements. To some Asian countries with thousand year old civilizations, globalization is a Trojan horse for Westernism, especially Americanism. The phenomenon is manifested i pop culture from movies and music to fast food joints and branded goods.
Internationally, the world now has a single superpower. The United States and its allies have no apparent threats. A New World Order is underway characterized more by cooperation than by confrontation.
Against this landscape, how will Asia fare? Working in its favor is the generational change of leadership. For example, domination pf the Liberal Democratic Party in Japan has ended; Taiwan has achieved democracy; Hong Kong has attained self rule; Indonesia, Singapore and Malaysia are all at various stages of exiting strong-man politics, and democracy in the Philippines has returned to normality. As this century ends, Asia is seeing the emergence of a fresh wave of post-colonial leaders.
That in itself guarantees nothing. The fate of Asia will be determined by how well the new leaders build proper institutions and educate their citizenry.
Economically Asia will do well to remember the causes of the recent crisis. Blaming it all on the massive capital flow from abroad is to neglect one's own domestic inadequacies. Speculative attacks are only a spark plug for trouble incapable of causing such damages without systemic weaknesses at home. Moreover, money flow is only one unexpected by-product of the globalized financial market. There will be others, many as yet unheard of. Only by shoring up one's own economic infrastructures will these countries have a chance of surviving the next onslaught.
At the heart of Asia's economic problem is poor public and corporate governance and the latter is a corollary of the former. Companies will not follow best practices, and banks will not abide by prudential requirements unless constrained by the proper government institutions. These include banking ordinances, security regulatory framework, stock exchange requirements, effective judiciary system, and professional bodies that demand ethical behavior. Above all, the government must be clean, especially at the law enforcement level.
As almost all developing economies, Asia is plagued by corruption. At the beginning stage of economic development where socil institutions are inadequate, corruption may serve certain useful functions as long as it benefits a broad group of people (e.g. Thailand and China) and not only a few (e.g. Marcos' Philippines and Suharto's Indonesia). Left unchecked, however, corruption will eventually turn gangrenous destroying the economy.
There are three ways to deal with corruption. The Chinese method of moral persuasion based on Confucianism is doomed. The Japanese means of social pressure succeeded on the popular level, but it is hardly replicable outside of the country. For example, Japan is the only society where vending machines are not vandalized. (Of course Japanese organizations both public and private have all too often institutionalized corruption.) This leaves only one relatively effective model - the Western approach of the rule of law. Maximizing its acceptance and minimizing arbitrary powers of the individual should be a priority of all Asian leaders.
Socio-economically, political masters must juggle the interests of the various segments of society to keep wealth differential at bay. This is a problem in all developing economies. Leaders must wisely determine how much social welfare is appropriate by balancing the extend of the public safety and the incentive to work.
The challenge is even more daunting on the political front. n dealing with the economy, most would agree that wealth creation is a necessity. Opinion only differs n how wealth is earned and distributed. In politics, the objectives are often unclear.
Nevertheless, most would agree that respect of human dignity and economic development are two essential criteria to judge any political system. If so, then Asia's experience of the past decades is instructive on the last three counts. First, pre-mature democracy, either for lack of adequate social institutions or of civic education, is a sure recipe for economic disaster. Once again, India and the Philippines are examples.
Second, all economically successful Asian countries created wealth in the absence of liberal democracy. In fact, they all had autocratic, albeit pro-business, governments like South Korea, Taiwan, Hong Kong and Singapore before the 1990's. Although under a different system and culture, Japan in principle has a similar situation. Its citizenry is uniquely obedient and government initiatives are rarely challenged.
Third, as a country develops economically, it will somehow find its way to social plurality and eventually, democracy. This is true of all four "Tiger" economies.
Given that, Asian leaders must gauge the speed of democratization while building the necessary political infrastructures. Reins too tight may risk falling short of the demands of the citizens. The outcome can be ugly. Reins too loose - running ahead of institution building and civic preparedness - is also troublesome. In fact, the more democratic a society, the more difficult it is to educate the people on civic responsibilities.
Empirical evidence shows that a benign autocratic government is more efficient economically especially in the beginning stage of a country's development. Consequently, Asia will have to choose between faster economic growth and speedier democratization. For the past thirty years, Singapore pursued the former and the Philippines the latter. Today, tens of thousands of Filipina domestic helpers are working in Singapore. If the clock can be turned back, would Philippines have chosen otherwise and be the boss rather than the servant?
Nurturing democracy is difficult enough without having to answer to the constant beleaguering of particularly the American legislators who tend to view democracy as a panacea achievable overnight. Though relatively the better system, democracy is not without inherent weaknesses. Democratization also goes far beyond the mere act of voting. It is a process that takes time, and the resulting system comes in many shapes and forms. Just consider Europe. As long as certain fundamentals are present, all models deserve respect.
As such, it behooves Asian leaders to be cautious of foreign pressure. Listen and learn, but apply knowledge according to the own situation. Blanket prescriptions form those who hardly understand the depths of Asia's political realities, social dynamics and economic conditions spell only trouble. Witness Russia and China. Practicing democracy without preparation has left Russia in total chaos - politically, economically, and socially. China, on the other hand, is quietly but steadily building the necessary institutions. Moving too fast will only run the risk of social unrest which will destroy twenty years of progress.
Socially, Asian cultures are being challenged. Whereas the East has much to learn from the West like critical reasoning, respect for the individual, meritocracy and creativity, certain aspects of western culture such as excessive liberal mindedness and unfettered individualism are problematic. Campus killings, drugs, births out of wedlock, breakdown of families etc. are merely manifestations thereof. Wholesale acceptance of such elements is unwise. If unchecked, Asian youths will likewise fall victim.
Unfortunately, in this globalized inter-connected age, it is impossible to fence off undesirable elements. Asia can only hope to shield itself by providing moral education for its youths. Wether it is Islam for Malaysians or Indonesians or Confucianism for the Chinese, success will prove elusive. But given the moral degradation of western societies, Asians have no choice but to try. The liberal West will ridicule and it will take wisdom and courage on the part of Asian leaders to act. Afterall, the West, in particular the United States, should reflect on its own social ills. Mutual respect is the foundation of peaceful co-existence.
The challenge is how to preserve the best of Asia's own traditions and integrate them with the strengths of the West. Compromises are inevitable and each society must make its own judgements. For example, whereas unrestrained individual freedom may be good for creativity, it will weaken personal discipline and social cohesion, qualities especially valued by Asians.
Maybe it is time for Asia to define its own identity. Rooted firmly in Asian values but complemented by the positive western elements, it may prove to be a most desirable prize of globalization. If so, Asia would have finally exorcised the ghost of colonialism.
Regional and international challenges
As Asia gains economic strengths, it is also witnessing encouraging developments in the regional and international arenas. First, communism which has divided the region since World War II is definately on the retreat. Second, the Association of Southeast Asian Nations (ASEAN) has held together despite turnoil in Indonesia, the most populous country in Southeast Asia and the de facto leader. In fact, there is now regular forums for dialogues between ASEAN and its Northeast Asian neighbors. This is a step in the right direction to build a pan-East Asia community. Third the ASEAN Regional Forum (ARF) has provided a platform for region-wide discussions on security issues. Fourth, until the recent crisis, intra-regional trade had exceeded trade with the U.S. or Europe. The latter which has retreated from the region after the ar returning with renewed economic interests.
Moving forward, regional institution building must be high on the agenda of Asian leaders. The aim is to foster a peaceful community of nations akin to the European Union. Underlying this effort is the common desire for economic development and collective security. The task, however, is considerably more difficult for Asia. At the root of EU's political formation is political consideration: France and Germany, the two keay players in particular, want to avoid future conflicts. Asia has a similar situation with China and Japan. Unfortunately Japan, unlike Germany, has consistently refused to deal adequately with war responsibilities. As such, East Asian nations are justifiably still suspicious to Japan. At the same time China's turbulent history of the past decades is another source of concerns for its neighbors. Moreover, whereas the EU members are all at similar stages of economic and social developments, differences among Asian countries are wide.
Consequently, what took Europe 40 years to achieve might take longer for Asia. That, however, should not prevent the region from embarking on the same path. The concentrated efforts on economic matters so far should extend to deepening the discussions on political and security issues as well. Track II activities such as the Council for Security Cooperation in Asia Pacific (CSCAP) can be precursors to official breakthroughs.
Beyond building intra-regional institutions, inter-regional arrangements such as APEC should also be strengthened Dialog with countries on the other side of the Pacific is significant especially when it pertains to the role of the U.S. It is by far the single largest trading partner and one that exports capital and technology. Like it or not, America still provides the security umbrella for much of Asia. It is also the only realistic catalyst for better relations between China and Japan. Ultimately, comprehensive trilateral cooperation of U.S., China and Japan is the only way to ensure lasting peace in Northeast Asia.
The pivotal position of the U.S., however, exposes several problems. First, America is uncertain about how to deal with China and incorporating the country into the regional and international community is absolutely crucial. At times, the U.S. Congress seems set on creating an enemy out of it - perhaps to succeed the Soviet Union as an adversary. That relationship is further complicated by the shift in the emphasis of U.S. foreign policies from real politik to human rights and democracy. It is ironic that this is occurring when China is in fact achieving the most improvements ever.
Second, the difference in perceptions of Japan between the U.S. and East Asia is wide. America will always view Japan as the loyal subordinate which it has been only since its defeat in World War II. The same view is hardly shared by other East Asian nations, all of which were victims of Japanese brutality inconceivable to most Americans. The U.S. security umbrella is reassuring while it lasts. However, it is unrealistic to expect the arrangement to continue indefinitely. Afterall, Japan already has the second largest military budget in the world. Practically this makes little difference because both the U.S. and Asia must embrace Japan. However, Asia's wariness is justifiable and must be alleviated.
In conclusion, the most urgent task facing Asia is institution building. In a globalized world, the playing field is leveling and trade barriers are coming down. Most Asian countries must undergo massive social reengineering to remain competitive. Proper economic infrastructures must be supported by reasonable political apparatus. If not, Asia will remain at best a second player in the world. Regionally, transnational organizations must be strengthened and in some instances, created in order to sustain peace. The work is daunting and will test the true colors of Asian leaders.
Mr. Ronnie Chan
Mr. Ronnie Chan is a 1998 Co-Chair of the Davos Annual Meeting of the World Economic Forum. As Chairman of the Hang Lung Development Company, he is a noted entrepreneur in Hong Kong, and his business interests reach worldwide. He has vigorously joined the debate on "Asian values," fusing his own practical experience in both east and west with a willingness to engage deeper issues often left out of the debate. His essays have appeared in, among other places, the International Herald Tribune and the Financial Times.
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