Dealing with globalization, people are driven to cope with their economic expectation by

producing, distributing, and doing consumption. It is not without exception that trade is
part of this cycle. As Asia’s economies have grown larger and more complex, they also
have become more integrated through trade, financial flows, direct investment, and other
forms of economic and social exchange.1 The Asian financial crisis of 1997-1998 has
taught the important lesson that East Asia needs to strengthen monetary and financial
cooperation in order to maintain regional financial stability. The global initiative to
strengthen the international financial system in this regard has been unsatisfactory. The
national efforts to strengthen individual economic fundamentals, to reduce the likelihood
of home-grown crises and to increase domestic resilience to crises and contagion
particularly through adopting the internationally recognized standards and codes take
time to bear fruit. Hence, the general sentiment in East Asia has been that the region must
establish its own “self-help” mechanism for prevention and management of possible
crises in the future. Such cooperation should include information exchange and policy
dialogue, creation of a regional liquidity support arrangement, joint development of a
balanced financial sector at the national and regional level, and collective policymaking
in certain critical areas such as exchange rate policy coordination.2 Regional cooperation
is now facing twofold challenges, those are to support the integration of Asia’s
production networks and to sustain an open, rules-based global system of trade and
investment. In order to foster integration and connect the region’s economies, it also
requires further investments in cross-border infrastructure-transport, communications,
and energy systems.

East and south Asia are home to breathtaking economic diversity. At one end of the
spectrum are the advanced economies of Japan, South Korea

1
www.aric.adb.org/emergingasianregionalism, accessed April 24th ,2010
2
Masahiro Kawai, Asian Economic Integration :Challenges and Opportunities, in 7th Hitachi
Young Leaders Initiative, page 2-3