When discussing in international economic environment, the political and strategic environment cannot be ignored, however — if only because it intrudes directly into the forces shaping the international trading rules.

The end of the Cold War is reshaping the international environment of the East Asian market economies, as decisively as the Cold War itself shaped international economic relations in the 1950s and 1960s. The end of the Cold War has brought new opportunities: through the spur it has given to internationally-oriented growth in India and Indochina; and the opportunity it has provided for gradual economic change in North Korea in ways that will eventually facilitate internationally-oriented integration of the two Korean economies. It has also brought opportunities to China, as the greater security on its long land borders allows more confident and complete application of national energies to the tasks of economic reform and development.

But there are also challenges, and threats, to the continuation of internationally-oriented growth in the new environment.

The collapse of the Soviet Union, and the difficulties that its successor states and the states of Eastern Europe are having in establishing institutional bases for market-oriented development, are placing great strain on the whole European economy. In Germany this is compounded by the special problems of reunification. This has deepened and attenuated recession, and turned community opinion defensively inward on all matters related to the international trading system. The problems of Western European adjustment to marketoriented development in the East are formidable, and as yet only faintly appreciated. There will be exacerbation of intercontinental discrimination in European trade, in result if not intent. But even the intent will be increasingly unreliable, as jarring comparisons of East Asian and European economic performance, and a persistent competitive challenge in global including European markets, breeds resentment, at its worst paranoia, and more defensive and inward-looking approaches to trade policy.