Interdependency, Decoupling, and Dependency Asian Economic Development in the Age of Global Financialization

After the devastating 1997-98 Asian financial crisis, Asian economies have tried to learn the lessons and orchestrate an effective development strategy in the midst of increasing global capital flows. In this paper, we attempt to identify the development strategy of Asian countries and the implications thereof for their economies and for the rest of the world. We argue that neither the "interdependency" theory nor the "decoupling" thesis adequately explains the current Asian development path. Instead, we argue that the dependency theory may shed light on the recent Asian development experience. By showing this, we highlight the fact that the ever growing financial power has, to a large degree, shaped the "real," productive side of the economy in Asian countries.