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MIDTERM EXAM
AREA AND REGIONAL STUDIES
Lecturer: Riska Sri Handayani

INTERNATIONAL RELATIONS STUDY PROGRAM

FACULTY OF HUMANITIES

PRESIDENT UNIVERSITY
CIKARANG, WEST JAVA, INDONESIA

Innayathul Fitrie
016202000107

October 28, 2021

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INTRODUCTION

The rising idea of global governance has shaped different nations to integrate under one
way of growth. Nonetheless, ASEAN has contributed for over five decades to make this dream
come true. During the 1997-1998 Asian financial crisis, ASEAN stepped up its policies in order
to establish an economic stabilization and at the same period, Laos and Myanmar were the last to
join the association which both joined in 1997.
Through this paper, their inclusion will learn how globalization and regionalism affected
ASEAN, Laos, and Myanmar within an explanation through the ‘spillover’ concept in
neo-functionalism approach.
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ANALYSIS

How the post-cold war and global economy shaped Asia

Ever since the barriers between states are more open towards one another, free trade and
liberal markets are given their stage to rise and invite multiple nations to join these schemes not
only to compete in the global market, but also to stimulate economic development.
It cannot be argued that the world economy after the end of the cold war is always
affiliated with globalization, which emphasizes the role of neoliberalism. However, the greater
issue of globalization lies upon the people’s choice and behaviour in the global market. The core
of this idea is weighted on pursuing a progressive and more democratic form in all levels of
society, which is a subject to resist profit-maximizing, consumerism, and market contribution.1.
As the new era began, the global financial development pushed Asia to change its
economic models into a global capital market-dependent, which resulted in a rapid liberalization
and deregulation among domestic markets to increase growth rates in the region.2.
The flow of liberalization and globalization are meant to increase global relationships,
which made Asian market development pushed towards three directions from regional, the
western hemisphere, and with the Middle East and Europe.3. Thus, it supports the importance of
economic stimulation in the global market.

The 1997-1998 Asian financial crisis

During the early 90’s, all kinds of liberalization made a promising idea to open a gate full
of opportunity for everyone to increase economic power. Asia began to experience some
difficulties, which later led into the financial crisis.
The instability of currency markets' exchange rates due to a problematic banking sector
added by foreign loans without sufficient value leading us into a currency depreciation, which
proliferates production decline, unemployment, and inflation.4. The crisis resulted in a regional

1
Mark T Berger, “The Post-Cold War Predicament: A Conclusion,” Third World Quarterly 22, no. 6
(December 2001): 1085, https://doi.org/10.1080/01436590120099803.
2
Eul‑Soo Pang, “The Financial Crisis of 1997–98 and the End of the Asian Developmental State,”
Contemporary Southeast Asia 22, no. 3 (December 2000): 571, https://doi.org/10.1355/cs22-3g.
3
C. Fred Bergsten, “The World Economy after the Cold War,” Foreign Affairs 69, no. 3 (1990): 101,
https://doi.org/10.2307/20044403.
4
Noerlina Noerlina and Sylvia Cinthya Dewi, “Asian Financial Crisis: Overview of Asian Crisis and
Recovery Progress,” The Winners 4, no. 1 (March 31, 2003): 15, https://doi.org/10.21512/tw.v4i1.3798.
 4

economic collapse due to a massive influx of foreign direct investment (FDI) and foreign
portfolio investment (FPI) that led to a huge debt.5. Therefore, Asia entered another depressive
moment, once again.
A retrospective of what happened during the post-cold war era in economic sectors can
be categorized as an effect of “bubble economy syndrome”, whereas fast and wide-ranging
capital markets and liberalization which began in the late 80s lead into massive inflow of foreign
capital.6. This statement also explained the early days of the crisis when almost all strategic
economic sectors are experiencing a deterioration.

Why did Myanmar and Laos join ASEAN?

ASEAN welcomed Myanmar on July 23rd 1997 which resulted in greater regional
corporations. Although the admission was early, ASEAN still calculates whether or not this
country is qualified to integrate with the rest of the members. Myanmar was underdeveloped and
poor compared to other ASEAN members, however they have potential natural resources which
are beneficial for ASEAN economic development although the 1997 crisis seriously questioned
their power, but their capacity is still advantageous once the economic recovery from the crisis is
conducted.7.
Prior to Asian financial crisis, Laos was profited through tourism which was estimated to
be $31 million and stimulated the tourism development plan, but later in 1997 their economy
suffered due to heavy floods that pushed the government to ask for rice from other nations.8. In
which will profting ASEAN in the future. Myanmar join the ASEAN is due to prioritizing the
agricultural sector to survive the 1997 crisis by increasing paddy rice quota sales, although the
irrigation facilities and cultivation were poor, which later resulted in low prices.9.

5
Eul‑Soo Pang, “The Financial Crisis of 1997–98 and the End of the Asian Developmental State,”
Contemporary Southeast Asia 22, no. 3 (December 2000): 572–73, https://doi.org/10.1355/cs22-3g.
6
Lowell Dittmer, “Globalization and the Asian Financial Crisis,” Asian Perspective 23, no. 4 (1999): 49,
https://doi.org/10.1353/apr.1999.0002.
7
Robert Cribb, “BURMA’S ENTRY into ASEAN: BACKGROUND and IMPLICATIONS,” Asian
Perspective 22, no. 3 (1998): 56, http://www.jstor.org/stable/42704181.
8
Martin Stuart-Fox, “Laos in 1997: Into ASEAN,” Asian Survey 38, no. 1 (January 1, 1998): 75–78,
https://doi.org/10.2307/2645470.
9
David Dapice, “Current Economic Conditions in Myanmar and Options for Sustainable Growth”
(Working Paper, 2003), https://core.ac.uk/reader/7051873.
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Aspect of globalization and regionalism in ASEAN

Giving a hindsight to what happened prior to the 1997-98 financial crisis, there is a
significant role of globalization that shaped ASEAN. The crisis is one of many pieces of
evidence that show how such a system can lead into a deterioration. As explained earlier how the
crisis began after the world market and economic gate was opened, it brought inevitable
consequences for Asia and ASEAN.
What happened during the crisis can be simplified as to the ‘price’ that Asia must pay in
which explaining the problem of globalization can be unsettling due to the unequal global pattern
that affects capital markets and flows of migration, that drives policy makers to challenge issues
as part of national identity.10.
Looking back to Myanmar and Laos' inclusion during 1997 can be seen as a backlash of
globalization as if trying to seek for alternative solutions, but at the same time it damages
economic and social stability, which later make regionalism a life-saver because it will be
beneficial to reduce the impact of cultural or political globalization, although still less
sophisticated and still andangering than globalization in economy.11.
The inclusion also inline with ASEAN future membership that was expected during the
post-cold war era. ASEAN membership will continue at a later stage depending on the ability of
those countries to remodel their economies to boost closer economic and political ties ASEAN as
the projection of its regionalism will grow.12.

ASEAN integration through the lens of ‘neo-functionalism’

The ‘spillover’ concept in neo-functionalism approach with the inclusion was also
beneficial as there is an opportunity for the recovery once the crisis ends. Therefore, their
integration was also part of economic integration.

10
Noel Gaston and Ahmed M Khalid, Globalization and Economic Integration : Winners and Losers in
the Asia-Pacific (Cheltenham: Edward Elgar, 2010), 3.
11
Sandro Sideri, “Globalisation and Regional Integration,” The European Journal of Development
Research 9, no. 1 (June 1997): 69, https://doi.org/10.1080/09578819708426677.
12
Leszek Buszynski, “Southeast Asia in the Post-Cold War Era: Regionalism and Security,” Asian Survey
32, no. 9 (September 1992): 833–34, https://doi.org/10.2307/2645074.
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Moreover, the way how ASEAN responded to the crisis was to increase its mechanisms
for the future as a self-help process and avoid hostility to recover its economic integration.13. As
the concept of spillover gives an opening for integration, there is an initiative to extend the
entirety of the economy that can be solved through integrating more tasks.14. In response to the
crisis, ASEAN established the ‘ASEAN Vision 2020’ in the same year as a tool to build a
dynamic development, and later in 1988 ASEAN established ‘ASP’ (ASEAN Surveillance
Process) as an observation process to increase the financial system macroeconomic stability.15.

13
Laura Allison, The EU, ASEAN and Interregionalism : Regionalism Support and Norm Diffusion
between the EU and ASEAN (Houndmills, Basingstoke, Hampshire ; New York, Ny: Palgrave
Macmillan, 2015), 91.
14
Arne Niemann, Zoe Lefkofridi, and Philippe C. Schmitter, “3. Neofunctionalism,” in European
Integration Theory (Oxford: Oxford University Press, 2019), 9–10,
https://doi.org/10.1093/hepl/9780198737315.003.0003.
15
Laura Allison, The EU, ASEAN and Interregionalism : Regionalism Support and Norm Diffusion
between the EU and ASEAN (Houndmills, Basingstoke, Hampshire ; New York, Ny: Palgrave
Macmillan, 2015), 95.
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CONCLUSION

The main players weighed on the effect of globalization and later encouraged the last
members of ASEAN to join the association, which led them into a regionalization with the
motivation of economic integration. Although the concept of spillover in neo-functionalism
approach is a ‘euro-centric model’, which was originally used in EU integration, it is still
applicable in ASEAN further plan after the 1997 member inclusion.
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Bibliography

Allison, Laura. The EU, ASEAN and Interregionalism : Regionalism Support and Norm
Diffusion between the EU and ASEAN. Houndmills, Basingstoke, Hampshire ; New York,
Ny: Palgrave Macmillan, 2015.
———. The EU, ASEAN and Interregionalism : Regionalism Support and Norm Diffusion
between the EU and ASEAN. Houndmills, Basingstoke, Hampshire ; New York, Ny:
Palgrave Macmillan, 2015.
Berger, Mark T. “The Post-Cold War Predicament: A Conclusion.” Third World Quarterly 22,
no. 6 (December 2001): 1085. https://doi.org/10.1080/01436590120099803.
Bergsten, C. Fred. “The World Economy after the Cold War.” Foreign Affairs 69, no. 3 (1990):
101. https://doi.org/10.2307/20044403.
Buszynski, Leszek. “Southeast Asia in the Post-Cold War Era: Regionalism and Security.” Asian
Survey 32, no. 9 (September 1992): 833–34. https://doi.org/10.2307/2645074.
Cribb, Robert. “BURMA’S ENTRY into ASEAN: BACKGROUND and IMPLICATIONS.”
Asian Perspective 22, no. 3 (1998): 56. http://www.jstor.org/stable/42704181.
Dapice, David. “Current Economic Conditions in Myanmar and Options for Sustainable
Growth.” Working Paper, 2003. https://core.ac.uk/reader/7051873.
Dittmer, Lowell. “Globalization and the Asian Financial Crisis.” Asian Perspective 23, no. 4
(1999): 49. https://doi.org/10.1353/apr.1999.0002.
Gaston, Noel, and Ahmed M Khalid. Globalization and Economic Integration : Winners and
Losers in the Asia-Pacific. Cheltenham: Edward Elgar, 2010.
Niemann, Arne, Zoe Lefkofridi, and Philippe C. Schmitter. “3. Neofunctionalism.” In European
Integration Theory, 9–10. Oxford: Oxford University Press, 2019.
https://doi.org/10.1093/hepl/9780198737315.003.0003.
Noerlina Noerlina and Sylvia Cinthya Dewi, “Asian Financial Crisis: Overview of Asian Crisis
and Recovery Progress,” The Winners 4, no. 1 (March 31, 2003): 15,
https://doi.org/10.21512/tw.v4i1.3798.
Pang, Eul‑Soo. “The Financial Crisis of 1997–98 and the End of the Asian Developmental
State.” Contemporary Southeast Asia 22, no. 3 (December 2000): 572–73.
https://doi.org/10.1355/cs22-3g.
 9

———. “The Financial Crisis of 1997–98 and the End of the Asian Developmental State.”
Contemporary Southeast Asia 22, no. 3 (December 2000): 571.
https://doi.org/10.1355/cs22-3g.
Sideri, Sandro. “Globalisation and Regional Integration.” The European Journal of Development
Research 9, no. 1 (June 1997): 69. https://doi.org/10.1080/09578819708426677.
Stuart-Fox, Martin. “Laos in 1997: Into ASEAN.” Asian Survey 38, no. 1 (January 1, 1998):
75–78. https://doi.org/10.2307/2645470.