, they tell of the miniaturised home - made wireless that they used clandestinely to keep up with the course of the war. this device had been cobbled together by a fellow prisoner of war - a new zealand officer in the raf. that officer we now know was flight lieutenant a. w. h. ( bill ) phillips, 2 known to economists the world over as the inventor of the “ phillips curve ”. phillips had been trained in new zealand and australia as an electrical engineer, had spent time in asia before the war, spoke fluent cantonese, and only embarked on a career in economics after his discharge from the raf when the war ended. output growth enough of these biographical curiosities. i will now turn to the main subject of my lecture tonight which is the role of asia in australia ’ s economic future. i think for most of the past two decades, there was general agreement on the importance - if not the primacy - of asia in australia ’ s economic future. but this agreement suffered a couple of setbacks in the 1990s. first, japan, the biggest asian economy and the one which had been the main driving force, fell back into a period of very slow growth at the beginning of the 1990s. second, the asian crisis which started in mid - 1997 and lasted for about 18 months, severely dented many people ’ s confidence in asia ’ s future. for those who are not, the relevant references are “ the war diaries of weary dunlop ”, penguin, 1990, and “ weary : the life of sir edward dunlop ”, sue ebury, penguin, 1995. sir laurens van der post refers to him in his book “ the night of the new moon ”. weary dunlop also referred to him in his published war diaries ( entry for 5 november 1942 ) and confirmed in conversation with leeson that bill phillips was the new zealand raf officer who built the wireless. this event - the asian crisis - had a profound influence on opinion for three or four years. many people saw it as evidence that the “ asian miracle ” had feet of clay after all. there was a widespread view among western observers that the crisis was the inevitable result of severe governance deficiencies in asian countries, and that these deficiencies would hold back further economic development. during the “ tech boom ” and the period of infatuation with the “ new economy ” in the late 1990s, perceptions of asia suffered again as its economy was compared unfavourably with more technologically

and the rest of the world. it mirrors a general shift in the trade patterns of developing economies which are now predominantly exporters of manufactured goods. as recently as 1980, only 25 per cent of the exports of developing countries were manufactures ; now the figure is well over 80 per cent - for asian countries, the figure is likely to be over 90 per cent. the question for australia then is whether our exports to asia are growing as fast as those of other countries into asia. it is difficult to answer this with precision, in large part because of gaps and inconsistencies in data, but the approximate calculations we have made suggest that our exports are keeping up ( graphs 1, 2 and 3 ). these graphs look at imports into non - japan asia and its two biggest economies - china and korea. as already established, the relevant question for us is whether imports from australia are growing as fast as imports from other countries outside the region. the data we have suggest that this is the case ; imports from australia have grown faster than imports from the g10 countries. this is less true for china, where our performance is more or less in line with the g10 countries, but for korea, imports from australia have grown a lot faster than their imports from g10 countries. graph 1 graph 2 graph 3 as we would probably expect, when we look at the breakdown of asian imports by category, it is in categories such as food, fuels and crude materials that australia ’ s performance has been particularly strong. imports of these goods to china and korea from australia have grown much more quickly than their total imports. australia has been increasing its exports of manufactures into asia as well, particularly to china, but this is from a very small base. exports of manufactures to china grew at an annual rate of 22 per cent over the past five years, but even then they represent only 4 per cent of our total manufactured exports. in summary, i think these comparisons show that we have been doing reasonably well. our pattern of international trade is strongly integrated into asia, and apart from a small downward adjustment due to the probably temporary effects of the asian crisis, the trend is stable. there appears to be a lot of upside potential in the trading relationship with china, given our low market share in that country. when we come to financial integration, however, the story is very different because we do not have a high propensity to buy asian financial assets ( table 5 ). i have always been struck by the contrast between