INTERNATIONAL MONETARY FUND AND EAST ASIA: DEVELOPMENTS, CHALLENGES, AND LESSONS LEARNED

Abstract

The article demonstrates that during the extended period of cooperation, the IMF’s activities have had both positive and negative impact on the development of economies of the East Asia region. On the one hand, the IMF initiated and supported in-depth reforms that formed a solid basis for sustainable development and growth of countries of the region. On the other hand, the IMF failed to achieve positive outcomes in some specific important areas mostly because of its unbalanced policies and due to disregard to specific needs of particular countries of the region. Furthermore, the IMF failed to properly discharge one of its main mandates to effectively predict, address, and overcome international financial crisis tendencies and processes that emerged from the fragility and the lack of sustainability of the global liquidity system at the regional level, and in particular during the Asian crisis of 1997-98. The IMF’s failures led to a significant decrease of cooperation with the East Asia region and gave rise to the IMF stigma and subsequent regionalism processes. Although quite uncertain, any further cooperation may only be carried out on a new basis with due consideration of the specificity of the region and the particular countries. Methodology. The author provides first, based on the IMF’s official statistics and data, an analysis of the cooperation between the IMF and the East Asia region in order to identify main achievements and failures and then explores possible forms of further cooperation with due regard to all stakeholders’ interests and needs. The author aims to demonstrate, based on the IMF’s experience in East Asia, that cooperation between the IMF and particular countries or regions is a complex and challenging process, which most often involves the need to give due consideration to various important factors, including country-based specificities and risks of reluctance to the IMF’s activities. Results. It is shown that despite the IMF’s several failures in East Asia the cooperation was, from long-term perspective, beneficial for the countries of the region, and that it is in the best interests of all stakeholders to find ways for further cooperation although on a new basis in order to ensure sustainable growth and to be able to effectively face eventual financial crises.