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.

Why China survived the financial crisis
Shalendra D. Sharma

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
Open Access (free)
Issues, debates and an overview of the crisis
Shalendra D. Sharma

self-fulfilling panic that led to market overreactions, which were not necessarily warranted by the economic fundamentals.31 The other related view, articulated by Furman and Stiglitz (1998), argues that although some macroeconomic and other fundamentals may have worsened in the Asian economies in the mid-1990s, the extent and depth of the crisis cannot be attributed to a deterioration in fundamentals, but rather to the panicky reaction of anxious domestic and foreign investors. In a similar vein, Radelet and Sachs (1998; 1998a) argue that in Asia the problem was one

in The Asian financial crisis
Open Access (free)
Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead
Shalendra D. Sharma

feelings of let-down and betrayal. At the same time it was widely believed that the United States (through the IMF) was not only dictating flawed policy responses to the crisis, but also that these self-serving policies had worsened the crisis by pushing Asian economies into a deeper economic recession. As Bergsten (2000, 24) notes: The single greatest catalyst for the new East Asian regionalism, and the reason it is moving most rapidly on the monetary side, is the financial crisis of 1997– 98. Most East Asians feel that they were both let down and put upon by the West. In

in The Asian financial crisis
Open Access (free)
Natural resources and development – which histories matter?
Mick Moore

South’ became a major source of point natural resource commodities. The business was mostly new, and mostly very profitable. Global demand has continued to expand, and grew especially fast since the turn of the century when the Chinese and other Asian economies became big importers. Time lags between identifying new reserves and bringing them on stream are long. Processes fuelled by oil, gas and their derivatives are so economically efficient that the incentive to use or develop substitute energy sources has been limited. The coordinated supply restrictions first

in History, historians and development policy
Jurgette Honculada and Rosalinda Pineda Ofreneo

and compliance simply on paper. 144 CASE STUDIES When coupled with macro-economic constraints that require severe fiscal cutbacks, the danger is potent, if not fatal (see Kwesiga and Sawer, chapters 10 and 12 of this volume). Gains, painstakingly built since the 1980s, could be reversed. The economic crisis that hit Southeast Asian economies in late 1997 has adversely affected many sectors of the economy. The government has had to reduce budgets drastically. Viewed as a fad or ‘flavour of the month’, the GAD budget is deemed expendable and among the first to go

in Mainstreaming gender, democratizing the state?
David P. Calleo

not be pleasant for the rest of the world, either. Asia’s trade surplus is the counterpart to America’s current-account deficit. At a time when Asia is suffering from many signs of overproduction, a drastic reduction of the American deficit spells deep trouble for many Asian economies, perhaps including China. Russia demoted If the end of the Cold War left America triumphant, Russia’s new geopolitical hand seemed a terrible demotion. America’s economic problems, real or hypothetical, seem minor by comparison with those of Russia. Indeed, the abrupt economic decline

in Limiting institutions?
Exception, not transformation
Malcolm Cook

negative economic consequences for Southeast Asian economies, via impacts on tightly interconnected regional production chains. The prospect of instability and even conflict in East Asia also became less unthinkable during Trump’s dramatic diplomatic clashes with Kim Jong-un and the North Korean regime over nuclear and missile technology development the same year. 32 Whether through economic or security fallout, then, or the possibility of neglect as other policy issues are seen to consume Trump’s attention, many in the region throughout the first two years of his

in The United States in the Indo-Pacific
Promises and perils
Prashanth Parameswaran

clearly deterred Beijing. ‘The net result’, concludes one regional observer, ‘is a sense of a shifting power balance in Southeast Asia and a feeling of a China on the march forward as the US has looked weak and was in disarray, whatever the objective economic and military facts of the region may be.’ 27 Second, and turning to the economic realm, the Obama administration ultimately failed to engage the region in a manner which accommodated the diversity of Southeast Asian economies. The elephant in the room here is the fact that the TPP, repeatedly framed by Obama

in The United States in the Indo-Pacific
Open Access (free)
The evolving international financial architecture
Shalendra D. Sharma

-up of unhedged foreign-currency positions. Thus, it is argued that regulating short-term capital inflows – on the basis of prudential requirements on financial institutions – and regaining maneuvering room for monetary policy is highly beneficial. Specifically, it is often pointed out that Asian economies that did not experience a severe crisis during the Asian crisis had controls on capital flows. For example, China had extensive capital controls. Singapore had not internationalized its currency, given the restrictions on the usage of the Singaporean dollar and on

in The Asian financial crisis