factors. structural change and pro - growth policies were coalesced synergistically with hard work ethics. in many ways, asia has maximised its comparative advantage with international trade as a major source of growth over several decades. economies were transformed from being driven by the traditional commodity based sector, to one that was driven by the manufacturing sector that produced goods for the increasingly affluent domestic markets and for the export market. this strategy and economic transformation in asia has also been facilitated by the steady inflow of foreign direct investment into the region. given the region's competitively - priced factors of production, combined with pro - business economic policies, global producers relocated their production bases to asia. in terms of robustness, this model has survived several global slowdowns. even in the face of the 1997 - 1998 asian financial crisis, the affected countries recovered rapidly and resumed strong growth. the fundamental strength of the asian economies has also been its economic flexibility to adjust to changing conditions. the challenge before us now is whether asia, going forward, will rise to the new challenges that is being presented by the rapidly changing global environment in the aftermath of the current global economic and financial crisis. while asian financial systems have shown a high degree of resilience during this global financial crisis, most asian economies have been markedly affected by the economic spillover effects of the crisis. by the second half of 2008, what was a “ localised ” financial crisis had spread to the rest of the world. however, the financial reforms and development of the financial systems in asia during this decade since the asian crisis have, to a significant extent, insulated our financial systems from these developments. however, the openness of the asian economies have resulted in a significantly slower growth with economic contraction occurring in several countries. in the immediate future, several favourable factors will support growth in asia. strong fundamentals, pro - growth policies and structural factors will support an early recovery. this is also being reinforced by greater regional integration. going forward into the future, the global shifts taking place calls for a new economic model, one that would leverage on regional strengths, address the current and future risks and recognise the new global opportunities. in the context of these developments, this conference will be discussing these issues and the new directions that are likely to emerge for asia. also important are the lessons that we can draw from the european experience. the agenda is for us to discuss the alternative economic models for the future, including the financial aspects and the role of policies

zeti akhtar aziz : south east asia – potential and perspectives in the new asia luncheon address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 2010 institute of international finance ( iif ) annual membership meeting, washington dc, 8 october 2010. * * * generating growth and a long lasting recovery is the primary priority for the global economy in this aftermath of the recent crisis. the massive life support that was provided to avert a deep recession was to be temporary – to provide the opportunity to address the weakness in the system and to rebuild the capacity for a self - sustaining recovery. recent indications are that this prospect has not been realised. the emerging world has however performed well with the potential to generate such a sustained recovery. these developments have drawn significant interest to the asian emerging economies and on their changing role in the global economy and in the international financial system. it is my honour and great pleasure to speak at this 2010 institute of international finance annual membership meeting. my remarks today will focus on the challenges in managing such a sustained recovery with specific focus on the potential for emerging asia to rise to these challenges in this new global economic and financial environment. the final part of my remarks will be on the changes taking place in the international financial environment from the perspective of emerging asia. as growth in the developed world slows, weighed down by structural factors, will the global environment of increasing interdependence then dampen the prospects for the asian emerging economies? asia comprises highly diverse economies. south east asia, with a population of more than 500 million people is strategically located south of china and east of india, has been since the 13th century an important trading hub connecting asia to the west. being the most open economies in asia, and perhaps in the world, we, therefore stand to be the most vulnerable to global developments. while economic stimulus is vital for crisis containment, it will not, however, be sufficient to produce a self - sustaining recovery. the challenge is essentially the economic restructuring and transformation, the reform and rebuilding of the institutional capacity so as to remain effective in the new environment and to be well positioned to manage future shocks. as emerging economies in asia transition into this post crisis era, three important structural shifts are transforming the region. the first is the economic restructuring and the strategy to pursue more balanced sources of growth. this has involved significant shifts to new areas of comparative advantage and new areas of growth, and the greater emphasis on domestic demand as a