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The evolving international financial architecture
Shalendra D. Sharma

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
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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Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead
Shalendra D. Sharma

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
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

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

The well-being of Europe’s citizens depends less on individual consumption and more on their social consumption of essential goods and services – from water and retail banking to schools and care homes – in what we call the foundational economy. Individual consumption depends on market income, while foundational consumption depends on social infrastructure and delivery systems of networks and branches, which are neither created nor renewed automatically, even as incomes increase. This historically created foundational economy has been wrecked in the last generation by privatisation, outsourcing, franchising and the widespread penetration of opportunistic and predatory business models. The distinctive, primary role of public policy should therefore be to secure the supply of basic services for all citizens (not a quantum of economic growth and jobs). Reconstructing the foundational has to start with a vision of citizenship that identifies foundational entitlements as the conditions for dignified human development, and likewise has to depend on treating the business enterprises central to the foundational economy as juridical persons with claims to entitlements but also with responsibilities and duties. If the aim is citizen well-being and flourishing for the many not the few, then European politics at regional, national and EU level needs to be refocused on foundational consumption and securing universal minimum access and quality. If/when government is unresponsive, the impetus for change has to come from engaging citizens locally and regionally in actions which break with the top down politics of ‘vote for us and we will do this for you’.

Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

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
Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

The Asian financial crisis 2 Thailand: crisis, reform and recovery During the period of economic growth, we were too complacent. In good times we forgot many important truths and neglected many important tasks; we opened up our economy, but our stated plans to pursue discipline were not followed up; we attracted massive flows of cheap foreign capital, which we did not always spend or invest with enough prudence . . . we did not examine the fundamentals of our politics and governance or tackle issues such as bureaucratic inefficiency, lack of transparency and lack

in The Asian financial crisis
Open Access (free)
Crisis, reform and recovery
Shalendra D. Sharma

The Asian financial crisis 4 Korea: crisis, reform and recovery We don’t know whether we would go bankrupt tomorrow or the day after tomorrow. I can’t sleep since I was briefed. I am totally flabbergasted . . . This is the bottom. It’s a matter of one month, no, even one day. I just can’t understand how the situation came to this (President-elect Kim Dae-Jung, December 23, 1997).1 In the 1950s, Korea was among the poorest countries in the world, with a per capita income of under US$100. In per capita terms, this placed the country below Haiti, Ethiopia, Peru

in The Asian financial crisis
Abstract only
Ariane Agunsoye, Michelle Groenewald, and Danielle Guizzo

effectively gives one a licence to be an economist anywhere in the world. This is a significant reason why in 2000, more foreign students received a PhD in economics in US universities than native-born students, with the largest contingents coming from Asia (South and East), Western Europe and Latin America. 31 In England, at the same time, an Economic and Social Research Council report

in Reclaiming economics for future generations