has established itself as the intra - asian platform for the production of labour - intensive goods - especially for the us - india ’ s strategy is based on the export of services. however : china and india import a considerable volume of goods from other, in particular, asian countries and record only small current account deficits. what obviously differentiates india and china from other asian emerging economies, but also from brazil and russia, is their sheer size. both countries combine a population of roughly 2½ billion, representing more than a third of the world ’ s population. the global economy is therefore confronted with an adjustment process of a special type and magnitude that is significantly larger than those witnessed in the past. the growing range of goods and services from china and india, produced and supplied at low cost, will lead to significant changes in global production patterns, trade and relative prices. the continuous shift in the global economy ’ s centre of gravity towards asia with its enormous labour reserves also means that the employment prospects for low - skilled workers but increasingly also for highly skilled employees in the industrial nations will continue to deteriorate. on the other hand, the development of the as yet inadequate infrastructure in these countries and their rising demand for high - quality industrial goods will offer the industrial countries tremendous export opportunities. if the countries which today are at the leading edge of the global value - added chain maintain their advantages in the development and production of technology - intensive goods and services, they can but profit from the low - cost products from asia. it is not absolute but comparative cost advantages which decide the pecking order of economies and regions in the context of the international division of labour. this adjustment process to the changes in the world economy will vary from country to country and may result in economic and political tensions between the trading partners in these countries. integration of the large emerging market economies involves the risk of increasing protectionism. countries which see themselves as losers in the globalisation process will resort to short - term isolation measures that endangers both the progress already made and further progress in the global division of labour. iii the shift in the global economic focus towards east and south - east asia also raises the question of economic cooperation within asia and its possible political implications - including the shift in the balance of power. one has to bear in mind that rising regionalism is a global phenomenon because countries - big and small alike - have used this to respond to global challenges and developments. they integrate because they do not want to lose out in the global competition

timely fashion and proactively in the interests of preserving the stability of the financial system. the complex evolution of banking business and the concomitant increase in risk can no longer be coped with by the traditional instruments. the globalisation of the financial markets calls for a departure from purely national rules and regulations, and the adoption of greater flexibility and greater proximity to the bank on the part of supervisors, so as to foster financial market stability. europe cannot disregard these trends if it wants to hold its own in the international competition for market shares. furthermore, european banks will have to adjust to the introduction of internal rating systems if they do not wish to get out of touch with the united states in the field of up - to - date techniques of credit - risk management. market players and others are called upon to lend a hand in shaping the definitive regulations during the consultation phase that is now in progress and subsequently during the second such period from autumn 2000 onwards. academic economists, in particular, can likewise help to answer the still unresolved issues posed by the basle accord. we should face up to this major challenge, which is not least an intellectual competition for the best proposals, by making a joint effort.