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

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

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

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

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?

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?
Open Access (free)
The evolving international financial architecture

-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
Class polarisation and neo-liberalism in the Irish Republic

strong pattern of agglomeration, whereby a cluster of rival US computer companies moved to Ireland to take advantage of its particular cost advantages of low tax rates, low wages and free access to EU markets.4 The Industrial Development Authority (IDA) has claimed that twenty-six per cent of all greenfield projects established by US firms in Europe were located in Ireland.5 These are mainly in computers and, to a lesser extent, in pharmaceuticals. The Celtic Tiger differed from the Asian economies with which it has often been compared in at least one important respect

in The end of Irish history?
An introduction

, 2009). In China, India and other parts of the rapidly emerging Asian economies, the focus is on growth. New public universities are said to be emerging at a pace of one per week. Private universities of dubious quality, perhaps even exploitative in nature, quite literally are growing like mushrooms. The demand for higher education in Asia, Latin America and Africa is well beyond the supply. But we also know that the virtual monopoly of the global market economic model produces periodic booms and busts as was predicted in the late nineteenth century by various

in Knowledge, democracy and action

has accelerated the search for new sources of oil. As a Brookings Institution study warned, the ‘growth in international oil demand will exert increasing pressure on global oil availability’, and the growth rate of Asian economies and populations – particularly in China and India – will be ‘major contributors’ to this increased demand.17 In a similar vein, the US Energy Information Administration projects that the demand for oil in developing Asian countries will increase by 129 percent over the next 20 years.18 Another study forecasts that China will need to import

in Limiting institutions?