Response to Risks

What can be done about these risks? It is important to address them for several reasons. For one thing, they are economic "bads" which reduce standards of living, especially standards of living for the poor. For this reason alone policies are needed to reduce economic risks in developing countries in Asia. But there is another important reason as well. In various ways, rightly or wrongly these risks and threats are often believed to stem in no small degree from the operation of uncontrolled market forces. And often there is also fear of the social changes that expanded markets threaten to bring. The existence of the risks and threats, therefore, often undermines public support for the types of pro-market reforms needed to promote economic growth.

To be sure, since there is a range of different types of risk, the risks need to be tackled at various levels -- at the individual level, at the community level, and at the international level. Many of the risks are best addressed by means of national policies but increasingly, in a globalizing world, effective regional cooperation is very helpful as well.

Looking across Asia and considering areas where regional cooperation might be useful, several points are evident. First, while some of the resistance to reform, pro-market policies, and globalization is essentially old-fashioned protectionism, it needs to be acknowledged that many people are genuinely worried, and even fearful, of the risks that globalization and greater openness can poses. In fact, it is true that many markets across the region do not function well and that many of the economic risks that abound in developing countries in Asia arise partly because of the poor operation of markets. And second, there is much that could be usefully done at the regional level to improve the functioning of markets and to improve the supply of public goods needed to help improve regional economic security (Estevadeordal 2004).