Asia Optimist


How Asia Will Change Because America Boomed

By Jim Rohwer

Crown Business -- 409pp -- $27.50

In 1995, Jim Rohwer published a well-received book called Asia Rising. Two years later, Asia was anything but, thanks to a financial crisis that swept the region and rattled global markets. Now, Rohwer is back with another wide-angle-lens treatment of the region, Remade in America: How Asia Will Change Because America Boomed. A contributing senior editor for Fortune magazine based in Hong Kong, Rohwer is an optimistic soul when it comes to Asia. In his view, the economic shocks of 1997 and 1998 were a necessary wake-up call for a region chock full of weak banking systems, poorly trained bureaucrats, and corrupt governments. That the downfall was so fast and furious, he concedes, reflected just how weak institutional structures were--and how powerful the onslaught of globalization. He also admits that, once the crisis hit, the title of his first book caused observers plenty of mirth.

Perhaps one shouldn't be too unkind to Rohwer. Precious few others saw that freight train of financial contagion coming, either. And in theory, his basic argument--that the U.S. economic model of liberalization, entrepreneurial dynamism, deep financial markets, and technological innovation is starting to transform much of Asia--doesn't seem far-fetched. But don't expect a sea change overnight. The U.S., after all, started deregulating in the 1970s and had lots of ups and downs before its record run of prosperity last decade.

Rohwer is a skilled writer, which comes in handy in such a broad treatment of this economically diverse region. He meshes economic analysis with interviews and personal asides while driving his larger argument. He concedes that structural reform is spotty and that refashioning societies to keep pace with globalization is no cakewalk.

That said, Rohwer sees the underlying strengths of the region--a deep savings pool and strong work ethic--as big competitive advantages. He argues that a technology such as the Internet, with its assist to business-to-business commerce, is a big plus, too, in a region so reliant on manufacturing and exports. In short, Asia has a latecomer's edge as it adopts the best business practices and technologies of the U.S.

Rohwer's optimism may be misplaced. The U.S. growth juggernaut sucked in imports and farmed out high-tech supply work that lifted Asia in 1999 and 2000. But now that the U.S. information-technology-spending bubble has burst, these same linkages are pounding South Korea, Malaysia, and Thailand. And Japan isn't able to pick up much slack.

The other hallmark of globalization, unfettered capital flows, is probably great news for China, what with its vast market and cheap labor force. But net capital flows have never really recovered to pre-crisis levels in Southeast Asia, where Indonesia and Thailand continue to struggle. Globalization may not float all boats in Asia evenly. And the increasing frequency with which global financial crises have swept emerging markets as diverse as Mexico, East Asia, Brazil, Russia, and Turkey suggests that the world economy can trip societies when they least expect it.

Anyone who cares about Asia will hope that Rohwer is right to be optimistic. But his book fails to fully describe the existing risks out there for middling Asia economies.

By Brian Bremner

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