Post-crisis Asia – economic recovery, September 11, 2001 and the challenges ahead
Shalendra D. Sharma
policies: Mahathir said he
did it, the IMF said they did it. The truth is the natural resilience of economies
did it (Paul Krugman, August 25, 1999).1
In the aftermath of EastAsia’s spectacular economic collapse in mid-1997
even the most optimistic predictions gave at least a decade before Asia
could fully recover.2 Yet, in early 2000, an IMF study triumphantly noted
that “the ﬁnancial crises that erupted in Asia beginning in mid-1997 are now
behind us and the economies are recovering strongly” (IMF 2000a). Indeed,
the economic recovery between the second quarter of
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’.
the fall of the won resulted in further competitive devaluation throughout
The Asian ﬁnancial crisis
Hong Kong (SAR)
Changes in real GDP (%)
Source: World Bank (2000).
EastAsia. Faced with such mounting problems, the Korean government
initially approached Japan for ﬁnancial aid, but the request was turned
quickly took on a
life of its own. Soon thereafter, Paul Krugman would argue that crony
capitalism lay at the root of Indonesia’s, indeed, EastAsia’s, ﬁnancial woes.
Krugman’s emphasis on crony capitalism, while not without merit, is too
simplistic. After all korupsi, kolusi dan nepotisme (corruption, collusion and
nepotism), has long been pervasive in Indonesia. It was hardly an obstacle
when Indonesia notched up impressive economic growth-rates for some three
decades prior to the crisis. Back then, crony capitalism was politely referred
to as the “government
currency and a widening of
current-account imbalances. As the Asian crisis vividly illustrated, a pegged
rate can encourage excessive foreign-currency borrowing, as the perceived
exchange-rate risk is deceptively small. As was noted earlier, the US dollar
pegs resulted in massive competitive losses in many EastAsian countries after
1995, when the dollar began to appreciate against other major currencies.
The choice of the US dollar as the anchor for a pegged exchange-rate regime
could be appropriate for a small open economy when at least the following
instead glean only
Economics as indoctrination 55
a superficial understanding of the world while devoting most of their
time to abstract models.
Here are some things you might expect an economics graduate
to know but which are not typically required to pass an economics
• what international institutions like the IMF and World Bank do
and how they are run
• what happened during key events in twentieth-century economic
history, like the Great Depression, Bretton Woods, the EastAsian
financial crisis and end of the Gold Standard
• how multinational firms like
’ (Habermas, 1987). A strongly embedded capitalist economy may involve more negotiation and collaboration than a minimally embedded one, but the former is not immune to market forces. When
a system crisis strikes – like that experienced recently in EastAsia – the local
forms of embedding may provide some resistance, but they also form some
of the conduits along which market pressures – such as those that follow
from a collapse of the currency – flow. Sometimes the pressures can sweep
the networks away.
Furthermore, stable forms of embedding, including networks and
countries forced into severe austerity experienced very severe downturns and
the downturns were more or less proportional to the degree of austerity’ (p. 72).
27 See for example: Le Monde, 2 March 2013, p. 7; IHT, 2/3 March 2013, p. 1; Jacques
de Saint Victor, Le Monde, 5 March 2013, p. 17.
28 See P. Krugman, ‘Austerity all’Italiana’, IHT, 26 February 2013; M. Wolf, ‘The sad
record of fiscal austerity’, Financial Times, ft.com, 26 February 2013.
29 Wolf, ‘The sad record of fiscal austerity’.
30 Paul De Grauwe, ‘Lessons from the Eurocrisis for EastAsian monetary
Ariane Agunsoye, Michelle Groenewald, Danielle Guizzo, and Bruno Roberts- Dear
situations. It will be nicer if
our attention span could be spent
elsewhere than simply thinking: ‘Oh, am I being too
Kim, a South EastAsian
student also studying in the US, noticed that as a person with her
ethnic background she felt more accepted
colour and often women in
Latin America, Africa, the Middle East, Asia and the Caribbean.
Ingrid Kvangraven cites research highlighting how
few economic RCTs ask for or even consider the issue of informed
consent to participating in economic RCTs, what should be an
absolutely basic ethical principle of all research involving people.
It found that only one in three participants in