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.
This chapter traces key aspects of the governance mix for the constitution of a cultural economy. An emergent cultural economy is also of critical interest for institutional analysis, and for a number of reasons. Firstly, such an analysis addresses the need to take culture seriously within the study of economic organisation, in terms of seeing culture as a kind of 'padding' for economic activity and as a sector of production, distribution and consumption involving distinctive organisational forms, market relations and competitive logics. Secondly, within the cultural field market actors, market segments and market commodities are constituted in innovative and often unstable ways. Thirdly, contemporary cultural industries are subject to a highly variable mix of markets, firms and networks as means of shaping economic processes and exchanges.
This chapter discusses some of the core areas of debate, consensus and disagreements on the new International financial architecture. To critics, the International Monetary Fund (IMF) is a Bretton Woods relic incapable of playing a constructive role in the building of the new International financial architecture. While its harshest critics want the IMF altogether abolished, others are prepared to live with a severely restricted institution with limited powers and resources. Despite the fact that the IMF made mistakes in dealing with the Asian crisis, this should not invalidate the rationale for having a universally representative institution to oversee the implementation of collectively agreed rules. The Asian countries hardest hit by the crisis had all pursued dive. During the height of the Asian crisis, the Malaysian government dramatically challenged the prevailing wisdom and imposed capital controls by bringing the issue to the forefront of economic policy debates.
This chapter provides some emphasis to the influence of markets on the growth and use of individual knowledge and explains how knowledge within firms may benefit from market relationships. It identifies some basic elements of human cognition to provide a credible psychological basis for economic reasoning. The chapter also explains the effectiveness of marketing institutions which match cognitive needs. Market institutions are an important part of consumers' external organisation: the rules and conventions form part of their interpretative system and their framework for decision making. New products may require the creation of new market institutions, and the possibility of creating new market institutions may suggest product redesign. Business customers may have stronger incentives than do their suppliers to simplify the process of transacting, and this may not merely be a matter for the purchasing department, for production is closely linked with purchasing as well as marketing.
A challenge to the new economic sociology is that central economic processes should become the focus of theoretical and empirical sociological analysis. This chapter argues that competition processes are co-instituted with markets, and that market processes are in turn co-instituted with industrial divisions of labour. It begins with an examination of some of the few empirically based studies of competition, suggesting that they often are developed for overtly normative or prescriptive purposes. The chapter then returns to analyse some of the early Weberian conceptions of competition, upon which to build an economic sociology of competitive processes. It provides an exemplification of the analytical framework through a schematic analysis of changing forms of competition in the historical development of UK food supermarkets. The conclusion drawn from this analysis is that competitive processes are a result of processes of transformation wider than intra-market dynamics.
Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead
Shalendra D. Sharma
In the aftermath of East Asia's spectacular economic collapse in mid-1997, even the most optimistic predictions gave at least a decade before Asia could fully recover. Although it was expected that the growing intra-Asian trade and demand from the European Union would help to fill the void, there was little doubt that Japan's recovery was crucial to the region's recovery. Most Asian countries experienced a sharp economic slowdown beginning in the last quarter of 2000. The problems of a deteriorating external environment due in large part to the downturn in the US economy were exacerbated by the September 11 terrorist attacks. The single greatest push for East Asian regionalism had been the Asian financial crisis. It was clear that the Asian governments agreed that they must reduce their dependence on the G-7 countries and multilateral financial institutions like the International Monetary Fund (IMF) and the World Bank.
This conclusion presents some closing thoughts on concepts discussed in preceding chapters of this book. The book resides within a now-flourishing broader stream of ideas at the interface between economics and sociology. It contributes more to a sophisticated understanding of particular markets than they do to the theory of the general market system. Market activity implies that buyers and sellers are 'brought together' across time and space and that transactions are consummated and recorded. During the 1990s, sociological investigation of markets has tended to abandon earlier concerns with the social effects of the operation of markets and to concentrate instead on the social processes by which markets are made. As with the new economic sociology, evolutionary economists are wedded to a more sophisticated notion of individual behaviour than that embedded in the idea of Olympian rationality.
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. This chapter argues that China's handling of the crisis, and in particular, the country's ability to withstand the crisis, must be understood within the context of its domestic political economy. An important lesson of Mexico's peso crisis of 1994 and the Asian financial crisis was that a sound banking sector is the single most essential element of a healthy financial system. The State Administration for Foreign Exchange (SAFE) approval requirements and the related limitations on foreign participation in PRC equity markets had translated into low levels of portfolio investment. The Chinese authorities significantly intensified the enforcement of exchange and capital controls and moved to reduce circumvention.
This chapter studies the evolution of the software industry in the UK. It describes the role of demand factors in the process of vertical disintegration and distinguishes between the product and service segments of the software market. The chapter reviews the changing need for software in the growth of the global software industry. It highlights the role of a narrow demand base in the emergence of a market for traded software in the UK. The chapter examines the supply side of the software market. It also examines the impact of the demand- and supply-side factors on the nature of competition, competitive advantage and barriers to growth for firms in the UK software sector. The absence of a large commodity software market has meant a less radical impact of the software industry upon industrial growth in the UK economy.
This chapter argues that a more nuanced understanding of Indonesia's economic crisis can be gained by differentiating between the sources of 'vulnerability' and the 'precipitating' factors. The roots of the crisis can be traced back to the mid-1980s, when Indonesia embarked on an ambitious economic reform program. On January 27, 1998, with their backs against the wall, both the International Monetary Fund (IMF) and the Indonesian government took steps to deal with the banking sector problems. In the ensuing weeks, as the embattled Suharto vacillated and stalled, the economic downturn deepened and the Indonesian economy was brought to the brink of total collapse. Liquidity support to the banking sector continued to increase in large part to meet the continuing deposit withdrawals. Moreover, as part of Indonesia's commitments to the IMF, the government took steps to review and strengthen the prudential and regulatory framework of the banking system.