Crisis, reform and recovery

The Asian financial crisis of 1997-98 shook the foundations of the global economy and what began as a localised currency crisis soon engulfed the entire Asian region. This book explores what went wrong and how did the Asian economies long considered 'miracles' respond, among other things. The combined effects of growing unemployment, rising inflation, and the absence of a meaningful social safety-net system, pushed large numbers of displaced workers and their families into poverty. Resolving Thailand's notorious non-performing loans problem will depend on the fortunes of the country's real economy, and on the success of Thai Asset Management Corporation (TAMC). Under International Monetary Fund's (IMF) oversight, the Indonesian government has also taken steps to deal with the massive debt problem. After Indonesian Debt Restructuring Agency's (INDRA) failure, the Indonesian government passed the Company Bankruptcy and Debt Restructuring and/or Rehabilitation Act to facilitate reorganization of illiquid, but financially viable companies. Economic reforms in Korea were started by Kim Dae-Jung. the partial convertibility of the Renminbi (RMB), not being heavy burdened with short-term debt liabilities, and rapid foreign trade explains China's remarkable immunity to the "Asian flu". The proposed sovereign debt restructuring mechanism (SDRM) (modeled on corporate bankruptcy law) would allow countries to seek legal protection from creditors that stand in the way of restructuring, and in exchange debtors would have to negotiate with their creditors in good faith.

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The evolving international financial architecture

The Asian financial crisis 6 Beyond the Asian crisis: the evolving international financial architecture We face a world of crisis. If Hong Kong, with its sound fundamentals and prudent financial management, can be brought to the brink of systemic breakdown by aggressive cross-border speculation, then something must be wrong with the world financial order (Joseph Yam, chief executive of the Hong Kong Monetary Authority, January 5, 1999).1 Shortly after the Mexican peso crisis, the G-7 countries launched an effort to strengthen the international financial system

in The Asian financial crisis
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216 AREAS 14 South Asia gurharpal singh In the theorization and general discussion of democratization South Asia occupies a distinctive space. The region, comprising India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, and the Maldives, is home to 1.4 billion people (almost 22 per cent of the world’s population), of whom around 550 million live below the poverty line. As recent events have demonstrated, in the popular imagination South Asia is commonly characterized as suffering from chronic political instability, protracted ethnic conflicts and the

in Democratization through the looking-glass
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11 East Asia shaun breslin The task of writing about democratization in East Asia as a whole is a hugely problematic one. It is a region that contains massive diversity in political and economic systems and one that remains in a state of considerable flux and transition. A key element in this transition is the end of the Cold War, and the resulting reduction in US tolerance of authoritarianism so long as that authoritarianism was overtly anti-communist. It is also a region where, as in East and Central Europe, communist party states are struggling with the

in Democratization through the looking-glass
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Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead

The Asian financial crisis 7 Conclusion: post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead To the extent that Asia is recovering, no one can claim the credit. The amazing thing to me – if you leave Indonesia out – is how similar the performances are, regardless of the policies. Korea took the IMF’s advice and it’s bouncing back. Thailand took the IMF’s advice and it’s starting to come back. Malaysia defied the IMF and did everything the IMF told it not to – it’s coming back fast. Everybody’s contemplating success for their

in The Asian financial crisis
Why China survived the financial crisis

The Asian financial crisis 5 The domino that did not fall: why China survived the financial crisis When the financial crisis unexpectedly hit the high-performing East and Southeast Asian economies in mid-1997, it was widely believed that the People’s Republic of China (PRC) would be the next domino to fall. China’s extensive intra-regional trade and investment linkages with the rest of Asia, and the fact that the Chinese economy suffers from many of the same debilitating structural problems that long plagued (and ultimately did incalculable damage) to the

in The Asian financial crisis
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Issues, debates and an overview of the crisis

sudden collapse of the Mexican peso in December 1994, and more recently, the Asian financial crisis that was set off when the Bank of Thailand devalued the baht on July 2, 1997.1 The unexpected meltdown of the Thai economy and the contagion (the so-called Asian flu) spread with unprecedented ferocity, and, by the end of August 1997, the currencies of three of Thailand’s neighbors, Malaysia, Indonesia and the Philippines, had all been devalued substantially (see Table 1.1), despite vigorous efforts by these governments to stop their currencies from falling.2 During

in The Asian financial crisis

2504Chap6 7/4/03 12:40 pm Page 105 6 The geopolitics of Central Asian energy Jaewoo Choo This chapter assesses the rising geostrategic and geoeconomic importance of Central Asian oil and natural gas for China and the United States – the most transparent source of Sino-American conflict in this region. The initial rationale for Chinese engagement in Central Asia, despite the emergence of China as a net oil-importing nation in 1993, was not driven by the search for an alternative and secure source of oil and natural gas.1 Rather, Chinese policy reflected a

in Limiting institutions?

2504Chap5 7/4/03 12:40 pm Page 86 5 Transboundary water management and security in Central Asia1 Stuart Horsman Central Asia is subject to a number of major environmental concerns, including the desiccation of the Aral Sea, the depletion and degradation of river and irrigation waters, and the consequences of Soviet and Chinese nuclear weapons testing at Semipalatinsk and Lop Nor, respectively. Riverine water, particularly when linked with irrigated land, is perhaps the only one of these environmental issues that demonstrates a ‘probable linkage between

in Limiting institutions?
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Crisis, reform and recovery

in Indonesia’s fall from grace. Long hailed as a model of successful economic development, it was widely expected to escape the fate of Thailand.1 Between June and August 1997, as Thailand’s economy unraveled and the virulent Asian flu sent shock waves through the region, the Indonesian economy remained relatively stable – seemingly a veritable rock in the stormy sea. Even the World Bank (1997) remained upbeat about the short-term outlook, believing that a modest widening of the intervention band (from 8 per cent to 12 per cent) within which the rupiah was allowed

in The Asian financial crisis