The Future of Northeast Asia’s Institutional Architecture

Vinod K. Aggarwal, Min Gyo Koo, and Seungjoo Lee

Northeast Asia, 2008

The institutional architecture under the San Francisco system served Northeast Asia well for the Cold War period, obviating the need for any significant regional institutionalization of both economic and security affairs. In the hub-and-spokes network of the San Francisco system, the US served not only as the principal architect of regional order, but also as a power balancer between Japan and China, as well as between the two Koreas and the two Chinas. US hegemony also played a critical role in gluing together its key allies through open access to its market, thus creating a unique institutional mix of bilateralism and multilateralism.

More recently, however, the traditional institutional equilibrium in Northeast Asia has come under heavy strain. The changes are subtle but significant in both the economic and security issue areas. Although Northeast Asian countries continue to pay lip service to their commitment to global economic institutions such as the World Trade Organization (WTO) and the International Monetary Fund (IMF), the erosion of their confidence in such global multilateral mechanisms is clearly visible in the proliferation of FTAs and currency swap agreements. In the security issue area, there have emerged various official and unofficial, formal and informal, bilateral and minilateral dialogues to resolve regional security imperatives, ranging from the rise of China, the Taiwan Strait issue, and the North Korean nuclear crisis. Although the strength and effectiveness of these security fora remain uncertain, the increasing number of channels for security dialogue and negotiations indicate positive and dynamic processes of promoting regional peace and stability.

This concluding chapter proceeds as follows. Section 8.2 summarizes our theoretical arguments. To systematically analyze the evolution of new institutional architecture in Northeast Asia, we developed an institutional bargaining game framework, focusing on the interplay of four broadly defined causal elements – namely initial shocks, goods, individual bargaining situations, and the existing institutional context. Based upon this conceptual framework, Sect. 8.3 analyzes the evolution of national strategies vis-à-vis the emerging regional institutional order, while summarizing key findings of country case chapters on South Korea, China, Japan, North Korea, Russia, and the US. Finally, Sect. 8.4 highlights the nexus between economics and security and draws policy implications for the future of economic and security institution building in Northeast Asia.

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