The Asian crisis exposed gaps, of varying levels of seriousness, in the existing global and national surveillance mechanisms. Taken in this sense, the crisis can be considered a wake-up call for initiatives to fill these gaps, including efforts to include explicitly a regional dimension in measures to preempt crises. This section discusses a few modalities for how global efforts to improve crisis prevention can be supported or complemented by efforts among countries in the Asian and Pacific region.

Why initiatives at the regional level? The first consideration is that the economies in the region have become much more interdependent in terms of both trade and investment over the last decade. They are increasingly being considered as belonging to one region (or subregion) and investors tend to treat the countries as having the same characteristics. The financial crisis has highlighted the fact that the stake of each one in the growth and orderly development of the others is growing. In other words, precisely because spillover effects in the region are very insidious, there is a pressing need to engage in regional cooperation. It should be stressed that the action to forestall a crisis has largely to be undertaken at the national level. However, given the dynamics of open markets and systems which link the economies closer with each other, there are many possibilities for regional cooperation and these may help encourage and reinforce action at the national level.

Four modalities of increasing degrees of formality are discussed here. In this regard, as noted in chapter IV, there are increasingly complex forms of cooperation.⁹ Perhaps the simplest form is the adoption of common standards or definitions (such as accounting terms, format for data preparation etc.). Another form is a rules-based framework in which countries continue to make decisions autonomously but follow the same rules. Or it can involve a structured exchange of information which would not take place unless there was an institutional mechanism. The deepest (and the most difficult) form is joint decision-making by countries. Different levels of international cooperation obviously entail different costs and benefits in economic resources as well as political capital. Depending on the political dispositions of countries, there are thus a number of ways in which they can interact at the regional level to enhance crisis prevention. It should be noted that these modalities are not mutually exclusive but rather form a continuum of increasing degrees of regional cooperation in which countries may wish to engage, depending on their past experience with cooperation and their motivation, which is itself a reflection of the degree of their involvement in the regional and global economies.

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Footnotes:

⁹ See also Richard Cooper, "Panel discussion: the prospects for international economic policy coordination", in W. Buiter and R. Marston, eds., International Economic Policy Coordination (National Bureau of Economic Research, 1985), pp. 366-372.