Abstract
Related to the issue of governance, globalization also affects economic performance. Globalization can propel countries to new economic heights or it can lead to dramatic domestic dislocations–a fact affirmed by the changing fortunes of East Asia. This chapter discusses the challenges that globalization poses to the developmental state. It argues that the financial crisis induced by participation in the global economy has made it imperative to reform, but not jettison, the state. The chapter presents an argument for placing the present globalization in a longer historical context. It contrasts two different theories on the East Asian economic miracle that are relevant to the discussions on globalization. The chapter shows the degree of Asia’s globalization in light of certain commonly used indicators so as to establish a partial account of the Asian financial crisis. It concludes with a discussion of the future of the developmental state.