ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Flailing Eagle, Crouching Tigers

The combination of 'runaway shops', the low rate of domestic savings in the US, tax cuts, and the spectacular increase in military spending, has led to an explosion of both the US budget deficit and its current account deficit. These deficits have been sustained largely by the repatriation of savings and export earnings of east Asian economies - the Asian 'tigers'. However, greater regional integration in east and south-east Asia and the growth of consumption is likely to lead to a significant decline in the cash inflows that would fundamentally undermine the material foundations of American dominance. If US actions aggravated the impact of the 1997-98 economic crisis and led to greater cooperation among the Asian 'tiger' economies, this cooperation is now potentially poised to undermine the American eagle.

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