The Paradox of Asian Regionalism: State-Led Development, Competing Institutionalization, and the Formation of East Asia's Economic Order
This paper argues that East Asia's resilient economic order emerged not through deep institutional integration, but via a state-led mechanism where national developmental states functioned as de facto providers of international public goods, sustaining complex interdependence through flexible, pragmatic cooperation despite shifting regional power dynamics and the absence of a hegemon.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the study of how nations interact, there is a long-held belief that deep economic ties require deep legal rules. Just as neighbors who share a fence eventually need a written contract to avoid arguments, economists have traditionally argued that countries trading heavily with one another must create strong, binding international organizations to manage their relationships. This logic suggests that without a central authority to enforce agreements, high levels of economic dependence would lead to chaos or conflict. However, a different reality has unfolded in East Asia, a region that has become the world's most integrated economic engine while largely rejecting the creation of powerful regional governments or strict legal treaties. Instead of a rigid legal framework, this part of the world has relied on a unique mix of strong national governments and flexible, informal agreements. Understanding how this system works offers a fresh perspective on how the global economy might function when political trust is low and national interests are strong.
A new paper by Qinwen Yu, a researcher at Shanghai Customs College, investigates this puzzle: how has East Asia built a resilient, highly connected economic order without the deep, supranational institutions seen in places like Europe? The study argues that the region did not need a single powerful leader or a strict legal system to succeed. Instead, it found that individual national governments stepped in to perform the necessary work of coordination. By analyzing the history of the region from the 1970s to the present, the author shows that strong state-led industrial policies acted as a substitute for formal international rules. When countries like Japan and later China made strategic decisions to open their markets, invest in infrastructure, or guide their companies, they inadvertently created a stable environment for the entire region. These national actions provided the "public goods"—such as market access, financial stability, and physical connectivity—that international organizations usually provide.
The paper traces this evolution through the "Flying Geese Model," a concept describing how Japan, as the lead nation, transferred industries and technology to neighboring countries like South Korea and Taiwan, who then passed them on to others. This created a cascade of development where each country specialized in different parts of the production process. Crucially, this system was not managed by a regional treaty but by the strategic decisions of national governments and their corporate networks. When the 1997 Asian Financial Crisis struck, the region did not collapse into a legalistic union; instead, countries developed their own safety nets, such as the Chiang Mai Initiative, which allowed them to lend money to each other during emergencies without giving up their national sovereignty. This demonstrated that the region could handle severe shocks through flexible, state-centered cooperation rather than rigid, binding laws.
Today, the region faces new challenges, particularly from the growing rivalry between the United States and China and the rapid rise of the digital economy. The paper suggests that the old model of flexible cooperation is being tested by these forces. As nations compete over technology and data, there is a risk that the efficient supply chains built over decades could be broken apart by political decisions. The author points to emerging agreements on the digital economy, which try to set rules for how data flows across borders, as the next frontier for this system. The success of East Asia's economic order now depends on whether its governments can continue to manage these complex digital relationships without falling into the trap of creating separate, hostile blocs. The study concludes that while the region has avoided the deep legal integration of Europe, its future stability relies on maintaining a delicate balance: keeping economic pragmatism alive even as political tensions rise, and ensuring that national governments continue to provide the stability needed for cross-border trade to flourish.
Drowning in papers in your field?
Get daily digests of the most novel papers matching your research keywords — with technical summaries, in your language.