Tigers in trouble : financial governance, liberalisation and crises in East Asia

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Title:

Publication Information:

London : Zed Books, 1998

ISBN:

9781856496612

Subject Term:

Capital market -- East Asia

Financial crises -- East Asia

Monetary policy -- East Asia

International Monetary Fund

International finance

Added Author:

Jomo K. S., (Jomo Kwame Sundaram)

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Library	Item Barcode	Call Number	Material Type	Item Category 1	Status
Searching... PSZ JB	30000004163717	HG5770.5.A3 T54 1998	Open Access Book	Great Book	Searching... Unknown
Searching... PSZ JB	-370104	HG5770.5.A3 T54 1998	Open Access Book	Book	Searching... Unknown

This important book provides a cogent critique of the nature of Southeast Asian capitalism. It argues powerfully that the crises in Thailand, Indonesia, Malaysia and the Philippines as well as South Korea are due not to excessive market regulation, but to too much financial liberalization and a consequent undermining of effective monetary and fiscal governance. While recognising some macro-economic problems and abuses of state intervention in the region, the authors also highlight the nature and implications of current IMF and domestic policy responses which are exacerbating the crises. They show how the herd behaviour of panicking stock markets and injudicious official responses transformed an inevitable correction of overvalued currencies into wholesale collapse.Part I introduces the crisis; highlights the inadequacies and failure of international financial governance; shows how different these crises are from the earlier Mexican collapse; and investigates the policies which the IMF is now insisting on. In Part II, the situation in each country is presented in terms of the historical background, the course of the crisis so far, and the reactions of the various governments.The analysis contained in this book raises profound questions which resonate way beyond the Asian region itself. They relate to the appropriate role of the state, the policies of the IMF and the viability of the deregulated free market capitalist model which these and other Third World countries have been encouraged, not to say bullied, into pursuing.

Author Notes

Muhammad Ali Abdusalamov, Tashkent State University of Economics; Visiting Fellow, Institute of Southeast Asian Studies (ISEAS), Singapore (until March 1998).
Yilmaz Akyuz, (PhD, East Anglia), Chief, Macroeconomic and Development Policies, UNCTAD, Geneva.
Walden Bello (PhD, Princeton), Professor, University of the Philippines, Diliman, Quezon City and Co-Director, Focus on the Global South, Bangkok, Thailand.
Nicola Bullard, Senior Associate, Focus on the Global South, Bangkok, Thailand.
C.P. Chandrasekhar (PhD, JNU), Associate Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India.
Chang Ha-Joon (PhD, Cambridge), Assistant Director of Development Studies, Faculty of Economics and Politics. University of Cambridge, England.
Jayati Ghosh (PhD, Cambridge), Associate Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India.
G.K. Helleiner (PhD, Yale), Professor, Economics Department, University of Toronto, Canada
Jomo K.S. (PhD, Harvard), Professor, Faculty of Economics and Administration, University of Malaya, Kuala Lumpur
J.A. Kregel (PhD, Cambridge), Professor, Economics Department, University of Bologna and Professor, Johns Hopkins University
Laurids S. Lauridsen (PhD, Roskilde), Associate Professor, Roskilde University Centre, Denmark.
Joseph Y. Lim (PhD, Pennsylvania), Associate Professor, School of Economics, University of the Philippines, Diliman, Quezon City
Kamal Malhotra, Co-Director, Focus on the Global South, Bangkok, Thailand.
Manuel F. Montes (PhD, Stanford), Senior Fellow, Institute of Southeast Asian Studies (ISEAS), Singapore and Senior Fellow (on leave), East-West Center, Honolulu, USA

Jomo K.S.Yilmaz AkyuzJ.A. KregelC.P. Chandrasekhar and Jayati GhoshNicola Bullard and Walden Bello and Kamal MalhotraLaurids S. LauridsenManuel F. Montes and Muhammad Ali AbdusalamovK.S. JomoJoseph Y. LimChang Ha-JoonG.K. Helleiner

Contributors	p. ii
Tables and Charts	p. viii
Glossary	p. ix
Foreword	p. xi
Acknowledgements	p. xii
In Lieu of a Preface	p. xiii
1 Introduction: Financial Governance, Liberalisation and Crises in East Asia	p. 1
Macroeconomic Concerns	p. 3
Collapse: The Bubble Bursts	p. 5
Lessons	p. 6
Policy Challenges	p. 8
Changed International Financial System	p. 9
Implications of Financial Liberalisation	p. 11
Analytical Catch-up	p. 13
Understanding the Southeast Asian Currency Crisis	p. 16
IMF Intervention	p. 18
This Volume in Brief	p. 21
Roots of the Crisis: Challenges of Governance	p. 23
2 The East Asian Financial Crisis: Back to the Future	p. 33
The Crisis: Surprising or Predictable?	p. 34
The Policy Response	p. 37
Global Implications	p. 38
Conclusions	p. 42
3 East Asia is not Mexico: The Difference between Balance of Payments Crises and Debt Deflation	p. 44
An Interpretation of the Asian Crisis	p. 45
A Financial Crisis of International Capital Market Failure	p. 51
Stage Two: The Cure is Worse than the Disease	p. 57
4 Hubris, Hysteria, Hope: The Political Economy of Crisis and Response in Southeast Asia	p. 63
Background to the Current Crisis	p. 63
The Financial Crisis	p. 68
The IMF Response	p. 74
Foreign Finance, Governments and People	p. 78
The Prognosis	p. 80
5 Taming the Tigers: The IMF and the Asian Crisis	p. 85
The IMF and Thailand: A Cosy Relationship	p. 85
The IMF and Indonesia: Under the Volcano	p. 92
The IMF and South Korea: Teaching the Tiger a Lesson	p. 100
Social Impact of the Crisis	p. 109
The Role of the IMF	p. 120
Conclusions and Recommendations	p. 132
6 Thailand: Causes, Conduct, Consequences	p. 137
Excessive Short-term Borrowings and Casino Capitalism	p. 138
Financial Institutions and the Financial Crisis in the 1980s	p. 140
Financial Liberalisation in the 1990s	p. 142
Economic Slowdown, Loss of Competitiveness and Currency Crisis	p. 143
The Politics of the Financial Crises	p. 145
Financial Crisis and Breakdown of Investor Confidence	p. 147
The IMF Medicine	p. 149
The Chuan Government: Financial Clean Up and Sticking by the Terms	p. 151
From Financial Crisis to Socioeconomic Crises	p. 153
Concluding Remarks	p. 157
7 Indonesia: Reaping the Market	p. 162
Setting the Stage	p. 163
Asian Crisis Erupts	p. 171
Conclusions: Understanding the Political Economy	p. 179
8 Malaysia: From Miracle to Debacle	p. 181
Policy Responses: Solution or Problem?	p. 184
Denial and Distraction	p. 185
Bail-outs for 'Cronies'	p. 186
The Changing Budget as a Reflection of Changing Stance	p. 189
Finally, the Tide Turns	p. 190
Confidence Restoration	p. 192
Political Fallout	p. 194
9 The Philippines and the East Asian Economic Turmoil	p. 199
Economic Phases in the Last Two Decades	p. 199
Analysis of the Causes of the Crisis	p. 213
Prospects for the Future	p. 219
10 South Korea: The Misunderstood Crisis	p. 222
Understanding the Crisis	p. 222
Immediate Causes	p. 223
Deeper Causes	p. 226
What Future for Korea?	p. 229
Afterword: The East Asian and Other Financial Crises--Causes, Responses and Prevention	p. 232
Causes	p. 232
Issues in Crisis Management	p. 233
Crisis Prevention and Damage Control	p. 236
Bibliography	p. 239
Index	p. 248

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Table of Contents