This study analyzes the causes and effects of the economic crisis of Southeast Asia as the ‘first crisis of globalization’, centering on the capacity of government, the role of state, and the structure of regime. It suggests modernization for ‘sustainable development’ and regionalization for ‘open regionalism’ as autonomous initiatives for globalization. The open economies of Southeast Asia were faced with transitional tasks such as the improvement of government capacity, the readjustment of state role and the transformation of political regime to cope with globalization. As delayed transition precipitated their breakdown, their breakthrough converged on internationalism and liberalism in contrast to the prediction on the spread of closed nationalism and radical populism. The dynamics of economic crisis and recovery implies a ‘managed’, neither ‘closed’ nor ‘laissez fair’, strategy as the most feasible alternative to minimize the risks and maximize the opportunities of globalization.