Crisis and opportunity

Abstract

It is not a good time for the global economy. Many countries are experiencing an economic downturn due to several factors. COVID-19 remains a persistent challenge to many countries despite high vaccination rates. In Asia and beyond, a new surge of cases has been delaying the ability of economies to recover and “normalize” since early 2020. Another factor is the ongoing Russia–Ukraine war that started in February 2022. With no end in sight, the war has taken a toll on global supply chains including food (i.e., wheat, potatoes) and oil. Rising food and oil prices have affected societies worldwide unequally with the poor and marginalized receiving the greatest negative impact of actions and decisions made beyond their states' borders.

Governments will face tremendous challenges in addressing the economic hardship experienced by their people. Their pandemic response has drained their fiscal resources and led many states to borrow extensively. In the Philippines, for example, government debt has doubled since the pandemic began. This has severely limited the ability of its government to effectively respond to inflation and jumpstart the economy. But it is in Sri Lanka where a full-fledged economic crisis wreaked havoc with the resignation of the government. Without sufficient foreign currency reserves, the Sri Lankan economy virtually shut down with a shortage of oil and gas as well as basic food necessities. As seen in the past, such economic hardship caused popular outrage with massive protests unseen in its contemporary history. The global economic downturn is a serious legitimacy challenge to governments of all types.

The dire global economic situation requires states and international institutions to immediately act, seriously work in a collective manner, and commit to uplift everyone from the crisis. This is not an easy decision as retreating to protectionist measures is the easy and rational path in the short run. The looming food crisis around the world is not because there is a lack of supply but with political decisions that seek to protect domestic markets at the sacrifice of foreign markets. This “protectionist reflex” could cause more hardship, especially in low-income economies and highly unequal societies. We will have to wait in the coming months whether the global economy can indeed fix these market distortions on its own but as history has taught us, previous international economic crises required proactive measures of states and international organizations.

Asian Politics & Policy has published numerous articles on the linkages between economic crisis and political factors. Yu's (2010) study about China's proposal to develop a Western Economic Triangle has been met with skepticism given the various challenges in the country's western frontier. This inequality within one of the world's biggest economies will continue to impact the ability of China to recover from the current economic downturn. China's more assertive stance in the region will also influence its ability to present itself as a problem solver to the current economic crisis. The country's ability to integrate itself into the global economy and be more interdependent with other countries has not necessarily released the mechanisms attributed by international relations theory regarding liberal or democratic peace. Leon (2017) argued that this is because China remains in a process of power transition. Thus, it will take some time before China can act as a responsible economic actor. Finally, existing regional trade arrangements such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership may require adjustments to appropriately and sufficiently address the current challenges faced by economies in the Indo-Pacific region. In one study, such trade arrangements may have to balance the desire to be autonomous from the global trade order with the necessity of linking with other economies to address the global economic crisis (Novikov & Shumkova, 2018).

In this issue of Asian Politics & Policy, we are pleased to publish original research articles that covered topics ranging from military history, Taiwan's soft power diplomacy, irrigation policy reforms in Southeast Asia, policy brokers for infrastructure projects in Thailand, and youth violence in Nepal. We are also featuring two policy review articles regarding COVID-19 policy responses in Indonesia and Hong Kong as well as the usual media and book reviews. We hope that our journal can be a good academic medium for serious and rigorous debates and discussions on public policies and international affairs in Asia.