In this chapter, we examine the comovement of macroeconomic variables, similarities, and dissimilarities of industrial structure, as well as patterns of similarity and dissimilarity in the movement of inequality in manufacturing earnings. This information can illuminate the degree of economic integration across countries in a region, and it can highlight important differences between Europe and Asia. We then examine the relationship between financial crisis and the movement of inequality. We show that crises typically generate increases in inequality, but more so in less developed countries and more so in regions that are more liberal in their policy regimes.

Introduction

In this short chapter, we examine the comovement of macroeconomic variables, similarities and dissimilarities in industrial structure, and the movement of inequality in manufacturing earnings, on which we have annual information for much of the global economy over the past thirty years. We argue that this information can illuminate the degree of economic integration across countries in a region and that it can highlight important differences between Europe and Asia. We then examine the relationship between financial crisis and the movement of inequality.

Macroeconomic Comovement and Regionalization

Was there an Asian crisis? Or again, was there an Asian crisis? Was the financial crisis that swept across the Pacific Rim in the summer of 1997, with a cascade of stock market crashes, currency devaluations, and regime changes, notably in Indonesia, specifically Asian, reflecting distinctive characteristics of the Asian region?