The process of recovery from the 1997 financial crisis serves as proof of the economic integration between Japan and other East Asian countries, according to Naoki Tanaka, an economist and president of the 21st Century Public Policy Institute.

Citing the corelationship between the yen-dollar exchange rate and share prices in crisis-hit Asian countries in the years since the turmoil erupted, Tanaka pointed out that the yen's comeback since the summer of 1998 has triggered a pickup in stock prices -- and also in the real economy -- in those countries.

"Following the July 1997 start of the Asian crisis and the collapse in November 1997 of Japan's major financial institutions, Japan began to witness a simultaneous fall in the yen's value and share prices," Tanaka told participants attending the Asian Economic Crisis and Prospects for ASEAN-Japan Relations forum.

The yen hit bottom in the fall of 1998, as did share prices in Tokyo -- as well as those in other Asian countries. Share prices in South Korea, Singapore and many other ASEAN members hit bottom immediately after the yen began its upturn, Tanaka said.

Behind this relationship, Tanaka said, lies the economic integration of Japan and many other Asian nations. "The yen's appreciation against the dollar is beneficial both for Japan and ASEAN countries. An upturn in Asian economies will naturally benefit Japanese export-led industries," he observed.

ASEAN countries have become an offshore production base for many Japanese manufacturers. When the yen rises, those makers shift their production to their ASEAN subsidiaries, thus benefiting thelocal economies and, subsequently, Japan.

"The crisis is over and the recovery process has testified to the economic integration between Japan and ASEAN," Tanaka declared. The question now, he added, is how Japan builds up its domestic demand to lead the region to full recovery.