Financial Crisis and Regional Economic Cooperation in Asia-Pacific: Towards an Asian Economic Community?

Asia-Pacific region has emerged as the growth pole of the world economy over the past decade. However, in the aftermath of global financial crisis, sustaining the dynamism of Asia-Pacific economies would require a rebalancing in favour of greater domestic consumption and exploiting the potential of regional economic integration. This paper argues that broader regional economic integration in Asia within the Comprehensive Economic Partnership of East Asia (CEPEA) framework, proposed for the ASEAN+6 countries, could be an engine of growth for not only the participating countries but also has the potential to enhance the welfare of the rest of the world by unleashing the synergies of Asian countries for trade creation besides making the region emerge as the third pole of the world economy along side NAFTA and the EU. Furthermore, monetary and financial cooperation in the region has further possibilities of generating additional aggregate demand for sustaining their dynamism by efficiently intermediating between region’s excess savings and unmet investment needs. By forming credible schemes of regional economic integration, Asia will be able to seek its due place in the global economic governance and contribute to building a more democratic and multipolar world economy. Asian economic integration by increasing the interdependence of countries in the region will also ensure peace and stability.