If domestic markets and institutions are not flexible enough to facilitate reallocation of labor and financial resources from unproductive sectors to productive sectors smoothly, the cost might appear in the form of stagnant growth and unemployment. In this regard, it is of utmost importance for policymakers to continuously pursue reforms to ensure that their domestic systems remain responsive to structural changes in the economy.
On the financial front, East Asia’s integration with the international financial system has also advanced steadily in recent years. The integration brings benefits to the economies in the region. With more funding options available, borrowers in the region can raise funds on more favorable terms.