Transformation analysis in Afghanistan, Bangladesh, Bhutan, Cambodia, China, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, North Korea, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, South Korea, Taiwan, Thailand and Vietnam

If we look at Asia and Oceania in terms of geographical size, population size, and gross regional product, we find that the region in front of us is the largest of all the regions represented in the Transformation Index 2010, but at the same time, as indicators of socio - economic development show, it is also the most heterogeneous. Twenty-one countries are located in Asia and Oceania, where a wide variety of cultures and varieties of political institutions are found. Such heterogeneity, of course, has greatly affected the situation, trends and way of managing the transformation processes that have taken place in the countries of the region over the past two years.

Assessing the results achieved by the countries of the region during the period of transformation aimed at creating a market economy, we see,

Compared to mid-2008, reform processes in most countries in the region continued to deepen. Three countries - China, Vietnam and India-have been particularly successful in implementing active economic reforms and economic transformation. In contrast, the leadership of North Korea and Myanmar still refuses to initiate even the most basic economic reforms, since the survival of these autocratic regimes is based only on the use of natural resources.

The negative impact of the global financial and economic crisis was not particularly noticeable in Asia until the end of the study period. However, the same situation was observed in other regions of the world that are at the stage of transformation. For this reason, the results of the Transformation Index 2010 do not allow us to examine in more detail the impact of the global crisis and the strategies used by the countries of the region to deal with the crisis. Nevertheless, we can assume that the economic crisis will create serious problems for the export-oriented economies of Asia. As the crisis deepens - and it doesn't even think to stop - we will see more and more how vulnerable the transformation processes in Asian countries are.

Both new and often fragile democracies and stable autocracies that are experiencing high rates of economic growth - both of these groups of countries in the region are bearing additional burdens due to the crisis, and the next few years will show how sustainable institutional reforms have been here. In particular, the "enlightened development dictatorships" of China, Singapore, and Vietnam will have to simultaneously maintain domestic political stability and maintain the conditions that were conducive to successful management of transformation processes in these countries before the crisis.

From the point of view of democratic transformation, the Transformation Index 2010 showed that the level of democracy in the region has increased slightly since 2008. In former authoritarian states such as Thailand, Bangladesh, Bhutan, Pakistan and Nepal, there were fairly free elections, and politicians who won the election quietly took office. However, democratic processes in these countries continue to be shaped by political polarization, and institutions remain quite fragile. In addition, in" stable", if one can say so, undemocratic systems, there are weak (or no) attempts to make democratic transformations.

Since the introduction of the Transformation Index 2008, the assessment of the quality of governance in all countries of the region has changed only slightly, but if we look at the nature of governance carried out by political leadership, it turns out that the stability of governance is not characteristic of all countries and not by all criteria. For example, in South Asian countries (with the exception of

In India and Bhutan), the quality of governance declined, while in North-East Asia it remained the same as in the previous period.

Later in this chapter, we will analyze the state, trends, and nature of transformation management in twenty-one countries located in Asia and Oceania. The proposed study is based on the results of the Transformation Index and reports compiled in detail for each individual country. Within this heterogeneous sample, we used the following criteria: geographical location, common history and culture. Using these criteria, we have identified three regions: South, Southeast, and Northeast Asia.

State of transformation: Democracy

Based on the criteria and results of the Transformation Index 2010, we will identify six categories of modes in the region. During the period under review, three countries (Bangladesh, Thailand and Nepal) officially returned to democracy. For example, in December 2008, Bangladesh held parliamentary elections, which resulted in a civilian government replacing a transitional one, in which a significant part was made up of the military, who had been in power since 2007. As we recall, a military coup took place in Thailand in September 2006. However, soon after the parliamentary elections that took place in December 2007, the country once again rose a step higher and passed into the category of weak, defective democracies. Now let's move on to Nepal. In 2007, the Constituent Assembly of Nepal proclaimed a new Interim Constitution and the country a "federal democratic republic". Soon after this act, parliamentary elections were held in April 2008, and in August 2008 a new coalition cabinet was formed under the leadership of the United Communist Party of Nepal (Maoist).

Table 1

State of transformation: Democracy

The table is consistent with the Transformation Index data. Countries are listed in descending order of democracy score. Arrows indicate the country's move to a higher or lower category compared to the Transformation Index 2008 data.

Elections were also held in six other democratic States. Here we see the following picture. The presidential elections in South Korea and Taiwan were won by opposition candidates. In Papua New Guinea and the Philippines, the ruling parties won the 2007 parliamentary elections. Just a few weeks after we completed our research on the transformation index, parliamentary elections were held in India and Indonesia, as a result of which the ruling parties strengthened their position.

Parliamentary elections in Pakistan (February 2008) and Bhutan (March 2008) resulted in the formation of a civilian Government. In Pakistan, however, the military and security services have managed to retain considerable power. In Bhutan, the monarchical throne has not been shaken, and the political forces of the country that came as a result of the elections have not received enough opportunities to govern the country. For this reason, the Transformation Index 2010 ranked Pakistan and Bhutan as autocratic states. Malaysia (2008) and Cambodia (2008) held elections, but only partially guaranteed equal conditions for candidates. In Malaysia, for the first time since 1969, the united opposition forces managed to push out the ruling multi - party coalition-the National Front, which traditionally received two-thirds of the vote. In Cambodia, the People's Party has consolidated its parliamentary majority.

Of the twenty-one countries in Asia and Oceania, only ten can be classified as democratic, although the quality of democracy varies in them. Among other countries in the region that have turned back to democracy, along with South Korea and Taiwan, Indonesia stands out. The country has been able to achieve a lot in strengthening and consolidating democracy. However, democratic reforms in Indonesia are not yet well-established, and their implementation is closely linked to the activities of the country's President, Susilo Bambango Yudhoyono.

South Asia: Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, Sri Lanka. Southeast Asia: Vietnam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam. Northeast Asia: China, North Korea, South Korea, Taiwan. Asia and Oceania: all of the above countries plus Papua New Guinea. The average values for the Transformation Index-2006 do not include Bhutan.

Figure 1. Political transformation in the region, 2006-2010

In addition, civil rights in Indonesia are not effectively respected, the rule of law is on a fragile foundation, and civilian control over the armed forces is weak. For these reasons, we conclude that Indonesia's political system has not yet established itself as a liberal democracy.

The results presented by the Transformation Index in Figure 1 do not support the widespread view that democracy in Asia is in deep crisis (Chu et al. 2009). But at the same time, we cannot convincingly support the converse. Thus, it should be recognized that the democratization situation in Asia has not improved over the past two years. In general, the political systems of the region can be divided into three main groups.

1. The first group includes stable democratic countries: India, South Korea, and Taiwan. There is very little chance of regime change or a significant deterioration in the quality of democracy in these countries in the near future.

2. The second group includes stable autocracies: Vietnam, China, Laos, Singapore and North Korea. The probability that these countries will experience political liberalization and democratic transformation in the near future is very low.

3. The third group includes political regimes located in the" gray zone " between democracy and autocracy (Bendel, Croissant and Rub 2002). The third group of countries has more or less the characteristics of both democratic and authoritarian States, and at times the characteristics of minimal democracy are mixed with those of authoritarian States. For regimes placed in the border "gray zone", the rating of democracy fluctuates very much. The situation with democracy in the third group of countries has a decisive impact on the overall state of democracy in Asia and Oceania.

It is for this reason that we should not attach too much importance to the recent fluctuations in the average indicator that determines the state of democracy in a given region. The aggregate rating for democracy increased by at least 0.25 points in five countries, while it declined by more than 0.25 points in Afghanistan, Sri Lanka and the Philippines. In addition, democracy in many countries in the region, such as Thailand, Nepal and Bangladesh, is very fragile and fragile, and it has all sorts of shortcomings.

It is not surprising that compared to the group of democratic States, ten autocratic countries (with the exception of Afghanistan, which should be classified as incapacitated States) have experienced a deterioration in most of the criteria that reflect political transformation. However, there is one important exception - the criterion of state solvency, according to which the rating of autocratic countries is slightly higher than that of democratic states. This situation is explained by the following two factors. First, there are very many democratic States that do not have the capacity to fully exercise effective governance. The number of such countries is growing, and to confirm this, we can say that quite recently a number of countries have already embarked on the path of democracy-

teasers. Secondly, the authoritarian regimes in the region also include "strong" states (China, North Korea, Singapore, Vietnam, Malaysia).

In addition to the differences found between democracies and authoritarian regimes, we also noticed a high degree of variability within each group. First, Asian democracies, with the exception of Taiwan and South Korea, seek to establish "selective" mechanisms and principles for citizen participation in political life. But at the same time, civil liberties and the rule of law are poorly respected in these States. Institutions designed to represent interests and serve as a link between different actors (for example, between political parties, interests of different groups) remain weak and fragile. The process of democratization is particularly fragile in Thailand and Nepal, where we see endless government crises and constant mass protests that interfere with the normal life of society.

There are differences between autocratic States. Countries that are characterized by " soft authoritarianism "(Singapore and Malaysia), compared to other autocracies and even democratic countries, received a higher rating for adhering to the rule of law and for creating a stable party system based on broad public support. In China and Vietnam, the level of social integration and stability of political institutions is also quite high. However, according to the Transformation Index, in both countries the system designed to mediate between different group interests does not meet the criteria of the democratic minimum, which are based on the standard principles of liberal democracy. China and Vietnam have slightly lower ratings than those found in less stable and less integrated democracies.

Note: Regional data is shown in Figure 1.

Figure 2. Political transformation in the region, 2010

In addition, Northeast Asia has a higher average rating for all criteria of democracy than South and Southeast Asia. This situation is partly due to the following factors: the rapid pace of democratic transformation in South Korea and Taiwan, as well as the relatively higher state solvency rating typical of this part of Asia. Conversely, with the exception of Singapore and Malaysia, the States of South and South-East Asia are characterized to varying degrees by weak State solvency, and Afghanistan, being an incapacitated State, is an extreme case. Similar but less serious difficulties are common to all the States of South Asia, the Philippine Archipelago, as well as Myanmar, southern Thailand and Papua New Guinea located on the periphery of the region.

State of transformation: market economy

We observe a large spread among the countries of Asia and Oceania in terms of market economy development. Taiwan, Singapore, and South Korea are highly developed economies with well-established regulatory systems. In the overall ranking of economic transformations presented in this edition of the Transformation Index, the above-mentioned states are ranked 2nd (Taiwan), 4th (Singapore) and 12th (South Korea). The level of market-based economic transformation achieved in these countries is comparable to that of the main group of OECD member countries, and in some areas even exceeds it (Bertelsmann Stiftung 2009).

In Malaysia, we see a working model of a market economy, but at the same time a weak institutional framework that creates conditions for market competition. If we take the Transformation Index criteria and apply them to Malaysia, we will find some shortcomings in the country's economic development and sustainability.

The group of countries with underdeveloped market economies includes nine low-income or lower-middle-income countries (World Bank, 2009b). From the point of view of the chosen direction of development, this group includes countries where economic indicators and the pace of economic reforms have significantly decreased in recent years (Thailand). This also includes some countries with the most dynamic and innovative economies (China, Vietnam, India). These three countries are experiencing very successful transitions from a planned or mixed economy (India) to a market economy. They are characterized by high growth rates, high levels of investment and innovation (especially in China), as well as a rapid increase in the standard of living of the general population. At the same time, the economic system of these countries still has shortcomings and vulnerabilities, such as a weak financial sector, inadequate legalization of market competition principles, and insufficient state regulation (for example, in the field of product safety standards, environmental protection, and intellectual property rights).

Table 2

State of transformation: market economy

The table corresponds to the Transformation Index data. Countries are included in the list according to the scores that assess the state of their market economy. Arrows indicate moving to a higher or lower category compared to the Transformation Index-2008.

Deepening social inequality and regional differences in the countries of the region may negatively affect social stability in the future, because neither social policies nor the social welfare regime in these States are able to fully guarantee basic social protection or maintain social harmony. So, we see that 37.8 percent of the Chinese population and 79.6 percent of the Indian population live in poverty, that is, on less than $ 2 a day. According to the UN Development Report, China, Vietnam and India are ranked in the second part of the Human Development Index (HDI) - 94th, 114th and 132nd out of one hundred and seventy-nine possible places, respectively (UNDP 2008).

The fourth category includes States that are characterized by a poorly functioning market economy, low economic indicators and a level of socio-economic development. But even in this group of countries, we see a variety of development trends. Pakistan and Nepal, for example, have failed to transform their economies (particularly due to a series of internal conflicts), but in Laos and Cambodia, market-based economic transformation is still progressing. In Myanmar and North Korea, the ruling elites do not want to adopt a coherent strategy designed to create an efficient and socially oriented economy based on market institutions.

At the beginning of the study period, most East Asian countries showed high or very high economic growth rates, as well as increased their current account surpluses. This situation arose due to the positive dynamics of the global economy, an increase in the number of

the flow of foreign direct investment and stable macroeconomic conditions. During 2008, growth slowed significantly in countries that were previously known for their good economic performance (China, India, Singapore, Vietnam, and South Korea).

Note: Regional data is shown in Figure 1.

Figure 3. Economic transformation by region, 2010

As in previous years, the analysis of problems related to economic transformation in Asia and Oceania takes into account the following criteria: the level of socio-economic development, the level of general welfare, the guarantee of equal opportunities and the sustainability of the economic system. Here again, we see significant differences both between countries and within individual subregions. For all the Transformation Index criteria that assess market-driven economic transformation, Northeast Asian countries scored highest and South Asian countries scored lowest.

If we trace the relationship between the type of regime and the level of economic transformation using market-based economic criteria, we will find that the rating of democratic countries is on average higher than that of authoritarian ones. Only a few regimes that use authoritarian methods

in the economy (Singapore, China, Vietnam and, to a lesser extent, Malaysia), they seem to confirm the thesis about the successful development of authoritarian states in Asia. At the same time, we see great differences between the democratic countries of the region. We see the most significant differences between democratic and authoritarian countries in two areas that require significant regulation: respect for property rights and market formation. On average, the rating of democratic countries exceeds the rating of authoritarian regimes by 2.3 points (according to the criterion of property rights) and by 2.0 points (according to the criterion of market formation).

Managing transformation processes

Overall, the assessment of the level of management of transformation processes in Asia and Oceania has slightly decreased in comparison with the indicators of the Transformation Index-2008 (the average indicator for the region decreased by 0.1 points), even though according to the management index, two countries in the region are still among the top ten.

Table 3

Quality of transformation management

The table corresponds to the Transformation Index data. Countries are listed according to their scores on the governance index. Arrows indicate moving to a higher or lower category compared to the Transformation Index-2008.

At first glance, the results that reflect the progress of the transformation in 2010 are very similar to the results that we saw in the previous study. However, here we also see significant changes in the results obtained for individual countries. For example, since 2008, Pakistan, Nepal, the Philippines, and Afghanistan have all lost more than 0.5 points on the governance index, while North Korea and Thailand have lost more than 0.25 points. In contrast, the quality of governance measured by the Transformation Index criteria increased by more than 0.5 points in Bhutan, Bangladesh and Indonesia, and by 0.44 points in Papua New Guinea. The rating of the remaining eleven countries did not change.

It is important to note that the transformation index measures the quality of transformation implementation in individual countries in accordance with the principles of a market economy, as well as at the same time in accordance with the principles of-

social justice and liberal democracy based on the rule of law and a constitutional form of government. The rating of countries such as Singapore, China and Vietnam, where the leadership is implementing a transformation strategy designed to preserve the existing authoritarian order, fell by some criteria below the rating of democratic states in which the results of transformations carried out by the national elite are significantly worse.

These countries can be divided into five groups depending on their rating, which reflects the nature of management of transformation processes (see Table 3). South Korea and Taiwan are at the very top of the list. Their rating is very high for all four management criteria: managerial capacity, resource efficiency, consensus building, and participation in international cooperation. The second group included five countries whose leaders were less successful in terms of most of the criteria that assess the management of transformation processes. India received a particularly low rating for resource efficiency and management capacity compared to the Countries in the first group. Singapore has shown very good results in terms of reaching consensus, resolving conflicts and in terms of international cooperation. Out of the one hundred and twenty-eight countries considered in the Transformation Index 2010, Singapore received the highest rating for efficient use of resources. In addition, in Indonesia and Bhutan, the management performance indicator has increased, especially in the following criteria:: Management capacity and resource efficiency (Indonesia) and consensus building (Bhutan).

The third group includes six States. In China and Vietnam, the implementation of economic transformation was good and very good, respectively, and was also very progressive, but the political leadership of both countries stalled the process of democratization. China and Vietnam outperformed other autocratic states in terms of the "consensus formation" criterion. In addition, both countries demonstrated a high level of international cooperation. However, China and Vietnam have shown modest gains in resource efficiency (mainly due to corruption) and managerial capacity (due to authoritarian management styles).

On the other hand, the quality of governance in Sri Lanka and Thailand has declined compared to the results of two years ago. In recent years, the government of Sri Lankan President Mahinda Rajapakshi has relied on the use of military force to fight the Tamil insurgents who operate in the northern part of the island, which has led to a solid increase in military spending. In May 2009, the Government forced the Liberation Tigers of Tamil Eelam to surrender, but the humanitarian cost of forcing peace was high. As a result, it has proved extremely difficult to achieve a sustainable political balance between different segments of the Sri Lankan population.

After the official restoration of Thailand's democratic system, the country's leadership failed to resolve acute political and social conflicts, which led to a coup d'etat in 2006. However, following the parliamentary elections held in December 2007, riots broke out, after which the military had to officially withdraw from the government. Since 2007, the country has seen a rapid succession of shaky multi-party coalitions under the leadership of the People's Power Party (PPS), which managed to ban the Tai Rak Tai party of ousted Prime Minister Thaksin Shinawatra. First, the party was led by Prime Minister Samak Suntharawet (January-September 2008), then by Prime Minister Somchai Wongsawat (September-December 2008), and since January 2009, the former opposition Democratic Party, led by Prime Minister Aphisit Vetchachiwa, took the helm.

Thailand's parliament has been effectively replaced by increasingly aggressive street politics and popular protests. The country's political system was paralyzed by the actions of the so-called yellow shirts of the People's Alliance for Democracy (NAD), which is supported by royalists, and the red shirts of the Democratic Union against Dictatorship (DSPD), controlled by the exiled Prime Minister Thaksin Shinawatra.

The reason for this struggle of political groups for power is rooted in the general social inequality that is caused by the unstable model of socio-economic development of Thailand. Its supporters are mostly middle-class people in Bangkok, who believe that their political and economic rights are being threatened by the demands of the rural population living in the north and northeast of Thailand to carry out economic redistribution and increase their level of political participation. Former Prime Minister Thaksin has made these demands a political goal (Croissant 2008). It is clear that in such conditions it is impossible to consistently implement any economic transformations.

More successful were the political transformations in Papua New Guinea and Bangladesh. Despite serious shortcomings in the effective use of resources and managerial capacity, the Interim Government of Bangladesh (CAA), led by former Central bank Governor Fakhruddin Ahmed, has managed to implement a number of reforms, such as in the fight against corruption. The Interim Government was also able to improve coordination between various ministries and administrative agencies. It also kept its promise to restore the parliamentary system. Yet it remains unclear whether these positive developments will help ease tensions between rival political factions and moderate their political demands. Initial signals received after the victory in the parliamentary elections of 29 December 2008, which resulted in Sheikh Hasina Wazed taking over the Government, indicate that the political process can once again negate all the gains made by establishing a dictatorship.

The fourth group includes countries where we are seeing very poor results of transformation-Laos and Cambodia. This group also includes Nepal, the Philippines, Afghanistan and Pakistan, where the quality of governance has declined significantly in recent years. In the Philippines, the efforts of President Gloria Arroyo's administration to consolidate power have increased the political influence of the military and intelligence services. Due to the long-term crisis that has been eating away at the country's political system for many years, it has been virtually impossible to develop any coherent strategy designed to address pressing socio-economic and political problems. Instead, the Government gradually surrendered political and economic positions in exchange for vital political support from the main political and economic forces and even some members of the Government.

The quality of governance in Afghanistan, Nepal and Pakistan has also deteriorated recently. A particularly striking example is Pakistan. The country's sovereign wealth crisis only worsened during the rule of President Asif Ali Zardari and Prime Minister Yusuf Raza Gilani (both members of the Pakistan People's Party (PPP)). The Government has been unable to bring the security services under control, nor has it been able to come up with an effective strategy to combat political extremism. In our opinion, the threat of an imminent collapse of the state or the possibility of a takeover of power in Pakistan by the Taliban is overstated. Yet, despite this, Pakistan lacks a coherent strategy for political and economic transformation. As a result, Pakistan's international partners are increasingly losing confidence in the country. The same can be said of the Karzai government in Afghanistan, albeit in milder terms.

In Nepal, there are growing signs that the agreement between the political parties that ended the king's rule in 2006 is likely to fail because of the irreconcilable interests and goals of the parties. The three-way coalition led by Prime Minister Prachanda (United Communist Party of Nepal - UCP) collapsed in 2009, as President Baran Yadav (Nepalese Congress) refused to dismiss the royalist commander-in-chief at the Prime Minister's request.

The new Prime Minister of Nepal, Madhav Kumar (Communist Party of Nepal (United Marxist-Leninist) - CPN (UML)), led a coalition government consisting of twenty-two parties. The Maoist United Communist Party of Nepal, which fought against the central government until the end of the civil war in 2006, is boycotting the constitutional assembly and more or less openly threatening to resume fighting. The current political crisis does not allow the country to implement much-needed reforms. In addition, the heterogeneous composition of the government, consisting of twenty-two parties, significantly restricts its actions, preventing it from taking steps in the political sphere.

Finally, the fifth and final group includes the DPRK and Myanmar. In both countries, there is no transformation at all. Both countries are vivid examples of how authoritarian leaders defend their political will by any means necessary, regardless of even significant humanitarian costs. Myanmar's ruling military authorities may well expect to be tolerated as a political force in the future. They can also always count on receiving economic assistance from neighboring States , such as China and a number of other ASEAN States. However, unlike Myanmar, the DPRK is becoming more and more a burden even for China.

If we group the regimes according to the criterion of governance effectiveness, we will immediately see that, unlike democratic countries, autocratic systems have more limited ability to carry out successful transformations due to the higher level of complexity of these systems themselves.

As can be seen in Figure 4, from the point of view of governance effectiveness, the biggest difference between a democratic and autocratic regime can be traced by two criteria:: according to the ability to achieve public consent and managerial potential. At the same time, the difference between these types of regimes will not be so great if we take such criteria as efficient use of resources and international cooperation. In this case, the small gap is partly due to the relatively good reputation of authoritarian systems such as Singapore, Vietnam, and China compared to weak democracies. Both democratic and authoritarian regimes received the highest rating in terms of international cooperation.

Note: Afghanistan is not included in the table.

Figure 4. Criteria for implementing changes by different types of regime (sample N = 20 States)

For most Governments in the region (with the exception of the DPRK), membership in regional organizations is an important factor in helping to implement transformation. These organizations include: Association of Southeast Asian Nations, South Asian Association for Regional Cooperation (SAARC), Mekong River Commission (including dialogue partners-China

Figure 5. Governance criteria by sub-region (sample N = 20 States)

and Myanmar), the Chiang Mai Initiative, the Shanghai Cooperation Organization, and the Asia-Pacific Economic Cooperation (APEC) Organization. Such regional cooperation can assist in the coordination of national programs aimed at overcoming the economic crisis.

Figure 5 shows that, based on criteria such as consensus-building, effective resource management, and managerial capacity, Northeast Asia is rated significantly higher than other subregions.

Conclusions

Over the past two years, some countries in Asia and Oceania have continued to build market relations and democracy. However, in most cases, the conversion results were very modest, and the speed was low. Indeed, in many countries, the quality of democracy is still quite low. Almost half of the region's States still have authoritarian rule. As in the previous edition of the Transformation Index, all countries in Asia and Oceania are grouped into the following types: countries with stable and successful democracies (South Korea, Taiwan, India), countries with economically successful autocratic regimes (especially China, Singapore, and Vietnam) , and countries with more or less fragile political systems. standing at various (generally low) stages of democratic transformation.

Несмотря на тот факт, что политическое руководство большинства государств региона проводит рыночные реформы, результаты преобразований все же носят неоднозначный характер. Индия и ключевые государства Восточной Азии, в которых произошло так называемое экономическое чудо, продолжают

follow the path of transformation (World Bank 1993). On the other hand, a number of countries in South and South-East Asia have not yet been able to continue their development and modernization as dynamically.

And there are many reasons for this. Thus, some states in the region face unfavorable structural conditions and geopolitical factors (Afghanistan, Pakistan). Sometimes, however, the poor quality of transformations carried out by the political leadership plays a more significant role. Myanmar and North Korea are a prime example, and the same situation has been observed in Thailand and the Philippines in recent years. In Nepal, Papua New Guinea, Cambodia, and Bangladesh, we see that basic conditions and the reluctance of political actors to implement reforms have negatively affected the transformation process. On the other hand, the example of Indonesia shows that the political leadership is also able to make a positive contribution to the development of democracy (and a market economy), despite the difficult basic conditions.

For the last ten years (and this time interval coincides with the period covered by the Transformation Indices from 2003 to 2010) We can see that economic conditions in Asia were initially favorable. The situation changed during the global economic crisis, as a result of which the developed and developing countries of Asia had to face huge risks.

difficulties. And already in 2008, most of the twenty-one States in the region experienced a sharp slowdown in economic growth. International organizations, such as the Asian Development Bank, predict an even greater slowdown in growth in 2009.

Unlike the 1997 Asian financial crisis, the current global crisis is not caused by structural weaknesses in the financial or monetary systems of some South and Southeast Asian States. This time, Asian countries were dragged into the crisis through no fault of their own. It turned out that, unlike in 1997, the current banking system of Asian countries remains relatively resilient to the global crisis. For example, in the late 1990s, the strong economic recovery and sustained demand experienced in the world's three leading economic centers (the United States, the European Union, and Japan) allowed Asian countries affected by the economic crisis to recover quickly. However, during the current crisis, everything is different, as the economy of the main consumers of Asian exports is experiencing a deep decline.

As a result, the global crisis significantly affected the export-oriented countries of South-East and North-East Asia: starting from the fourth quarter of 2008, export volumes in these two regions decreased by 10 and 30 percent, respectively. Even though China is growing at a fairly high rate, the average growth rate of Northeast Asia declined from 10.4 percent in 2007 to 6.6 percent in 2008. In South Asia, economic growth declined from 6.4 percent in 2007 to 4.3 percent in 2008. The preliminary forecast for 2009 indicates a decline in economic growth to no more than 1 percent (ADB 2009b).

So far, South Asia and Oceania have been the least affected by the crisis. Since the countries of these regions are less dependent on exports, the current and projected slowdown in economic growth will not be so severe. Yet States in the region will not be able to protect themselves from the negative impact of the crisis; they will lose income that they cannot obtain without outside assistance. In addition, these countries will have problems accessing international aid, on which their very existence often depends entirely.

In addition, there was another problem. As the global crisis reduces the demand for cheap labor in the Gulf states and some Asian industrialized countries, the economies of some countries in South Asia and Oceania are beginning to experience additional difficulties due to the fact that Nepal, Pakistan, Bangladesh, Vietnam and the Philippines (as well as India and China) They are among the main recipients of foreign currency, which migrant workers from these countries transfer back to their homeland. According to the World Bank, the flow of these transfers will dry up, and in 2009 its value will be somewhere around

between 4 and 9 percent (ADB 2009b). For countries such as Nepal and the Philippines, where remittances from migrant workers account for more than 10 percent of GDP, the social consequences can be very serious.

Another challenge that Asian economies will face is obtaining the necessary amount of investment and financial resources, while at the same time there is a growing shortage of loan capital on the international market. From this perspective, it is likely that all East Asian States and a smaller proportion of South-East Asian States, which have greater capacity to mobilize domestic savings and substantial foreign exchange reserves, will have an advantage over those countries that have only high external debt.

Since the" real economy " of Asian states has a different ability to withstand the impact of the global economic crisis, the social and political consequences will also be different. For example, South Korea and Taiwan, where we can see established and officially recognized democratic institutions, as well as a social security system that is more developed than in other countries in the region, will be able to overcome the consequences of the crisis quickly enough and without negative socio-political consequences.

The situation is much worse in most of the weak, defective democracies, perfect and moderate autocracies. In these countries, the political system is not based on the consent of broad social strata, and deep social differences and the division of society, accompanied by conflicts, have already led to political instability. And this happened in economically more favorable conditions. Such States lack the social resources and institutions that would mitigate the social tensions that have arisen as a result of the economic downturn.

It is difficult to say what China and Vietnam will do (and their actions are not predictable) against the background of the general reaction of Asian countries to the global economic crisis. So far, China looks quite good and may well come out of the crisis even stronger. However, will the structures created in recent years and decades be reliable and durable? The excellent results achieved by the Chinese leadership in the course of transformation over the past few years do not yet give us reason to say that the Chinese political leadership is able to counteract the potentially negative political and social consequences that will arise during the economic crisis.

So, in order to understand how Asia will develop towards building democracy and a market economy, we need to answer the main question: will the autocratic states of Asia be able and to what extent to maintain their economic achievements in the coming years in the context of the crisis?

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