8 - Summary and policy considerations

Summary

Summarising the results

The focus in many current commentaries on financial integration in east Asia has been on the east Asian financial crisis. This is a major defining episode in the experience of these countries, but analysis of financial integration should not be excessively short-term or focused on these events. There are other dimensions and longer-term perspectives to the story. This book has provided some analysis of the financial crisis in east Asia, explaining what happened, and why in chapter 2. The crisis has shown that there can be significant macroeconomic and social costs when financial reform goes wrong – in this case, when there are fundamental imbalances in domestic financial systems which leave economies exposed and susceptible to adverse shocks. Even in this case, however, it is important to keep perspective, and focus on the broader microeconomic and macroeconomic advantages of financial openness.

The issue of financial integration in east Asia needs to be placed in a broader context. This book has attempted to do this by also addressing other questions concerning financial integration in east Asia. Are there differences between financially open and closed economies? Have economies in this region become more open financially? Does financial integration have real, structural macroeconomic effects? What happens to consumption? These questions have been addressed in two parts. The first, addressed in chapters 3, 4, 5 and 7, focused on the measurement of financial integration or openness.