As globalization proceeds, and as new markets open to foreign direct investment and the flow of capital across borders, trade relationships are also changing. The United States has in recent years, become far more participative in economic integration with the countries of East Asia. It is the purpose of this report to examine this interdependence. The thesis to be explored is that this economic interdependence offers advantages to the United States in the form of new investment opportunities and trade relationships, while also benefiting the economies of East Asian countries.
McCarthy (2002) reported on statements by Alan Greenspan that indicate that though U.S. external debt levels have continued to increase, American businesses still remain very attractive to other countries and their investors. The United States has developed the ability to sustain a gap in its current account in part because of inflows from international investors.
Neither Japan nor China show any interest in bailing out of U.S. assets despite the fact that low interest rates in the United States have led some global investors to seek out higher yielding returns elsewhere. Japan and China are still purchasers of U.S. assets and many economists believe there is little threat of any reversal in these flows. This indicates the degree to which economic interdependence between the U.S. and its Asian partners is of significance domestically.
East Asia, a region of the world that at its broadest encompasses Hong Kong, the Republic of Korea, Singapore, Taiwan, Indonesia, Malaysia, and Thailand, is one of the more fascinating global regions in that the economic development activities taking place there have fostered dramatic growth, a reduction in poverty, and improvements in the standard of living. Danny M. Leipziger and Vinod Thomas (1994) stated that if economists in the early 1950s had been asked to predict which countries would be successful in t...