of high-growth economies (also known as the "Asian Miracle") the ratio came back to 33% (including China and India). ADB predicts in, "Emerging Asia" that the ratio will recover to a level as surprisingly high as 58%, the 1820 level, and calls it "Reemerging Asia." As for the numbers representing the potentiality I have just quoted they are technically reckoned, so I will refrain from explaining further.
But in order to make the long-term recovery or to elevate the position of Asia, including China and India, in the global economy, we shouldn't rely on a big trend happening in Southeast Asia and Japan alone and stand by awaiting the spontaneous solution of the crisis. We need to reconsider the cycle of the history, I think, Mr. Kyoto Sawa of the Economic Institute at Kyoto University proposed a new idea in his, "Keynesian Issue in 21st Century", Mr. Sawa advances the idea that the entire world is in a big wave motion of N. Kondratieff, and it was possible to predict that a recession caused by over-production would come. In such a situation, we need to take the issue of China into our consideration although this wasn't brought out in this symposium. As Dr.Yamano has briefly mentioned today, China is now over invested in terms of investment of labor-intensive goods, China's tendency toward over-production is a critical issue.
As Mr. Sawa also stated, I think if we optimistically disregard this tendency, the crisis will not to be corrected naturally to the growth path as ADB suggests. We must establish a consensus regarding to this issue, I think.
Secondly, the globally accepted major theory is so-called "Neo-Classical Economics as Ideology", referring to the comment by Dr. Shiraishi. The World Bank and IMF assert that the complete competition model exists in the textbooks and the economy in reality must be fitted to the model. Such an idea is implied in Neo-Classical Economics as Ideology.
The point is whether it really works. The on-going economic crisis is the result of actual proposed policies ignoring the market failure, even though such a failure is acknowledged in the textbook of Neo-Classical Economics as Ideology.
On the other hand, the on-going currency crisis reveals that unregulated financial market generates this sort of failure.
As a result, we should deliberate on these matters taking the market failure into consideration. The World Bank has been gradually changing its theory after Mr. Joseph Stigrate was appointed vice-president. They started to assume that nations must be brought back in a center position of the economic system. In a usual English expression, it's called "bringing back the state". In short, we are facing the urgent and intellectual issue to discover the new role of government.
That issue is deeply related to Japan, which is the last issue, I'd like to bring up. And I'm going to briefly point out three problems what Japan needs to deal with now.
Firstly, is the Japanese system really out of date? According to Neo-Classical Economics as Ideology, the Japanese system is regarded as entirely useless. It needs to carry out deregulation and administrative reform. However, I have experience being involved in Vietnam, and the Vietnamese government requested that I teach them from Japanese experience how Japan had managed to control foreign exchange and how to establish a finance system to flow the long-term investment for production. Upon the Vietnamese governments request, I will submit the documentation regarding these issues through Japan's Minister of Foreign Affairs to the Vietnamese Head Office of Communist Party next month. The point I want to make clear is to question whether it is OK to deny all Japanese value by saying "Japan's entire system is outdated." Though Japan needs self-alteration, it also needs to reexamine the past lessons learned appropriately and objectively. That is the first issue.
Secondly, I want to mention Japan's economic policy, which appears to be a more realistic issue. The world-wide famous economist, Feldstein, who is very close to the political powers, wrote a paper in the "Wall Street Journal" last year supposedly stating that the on-going currency crisis is Japan's fault. He clearly stated in the paper that, "Japan never boosted its domestic demand, leading to a depreciation of the yen. The depreciation of the yen caused the currency crisis occurring in Asia because it hindered export". So he secondly requested that Japan expand its domestic demand. Along with him, Professor Pole Crewman of MIT, who advanced the paper "The News of Asian Miracle" which frightened people all over the world a few years ago, asks over and over "Why doesn't the Bank of Japan issue more Bank of Japan notes which will not lead Japan's inflation?"
On the contrary, Japan had insisted on "No", in its priory of dealing with Financial Restructure. However, Prime Minister Hashimoto has changed his policy or something recently, since various opinions have been proposed. The point I want to clarify is that the Japan's economic policy is very much connected with Asia and Japan should take this into consideration in making its economic policy, However, Japanese are not fully aware of it. That's the second point.
Thirdly, relevant to the above-mentioned, the currently-emerging issues include: an Asian currency zone and the
