The Political Economy of the Asian Financial Crisis

by Stephan Haggard

Overview

The Asian crisis has sparked a thoroughgoing reappraisal of current international financial norms, the policy prescriptions of the International Monetary Fund, and the adequacy of the existing financial architecture. To draw proper policy conclusions from the crisis, it is necessary to understand exactly what happened and why from both a political and an economic perspective.

In this study, renowned political scientist Stephan Haggard examines the political aspects of the crisis in the countries most affected—Korea, Thailand, Malaysia, and Indonesia. Haggard focuses on the political economy of the crisis, emphasizing the longer-run problems of moral hazard and corruption, as well as the politics of crisis management and the political fallout that ensued. He looks at the degree to which each government has rewoven the social safety net and discusses corporate and financial restructuring and greater transparency in business-government relations. Professor Haggard provides a counterpoint to the analysis by examining why Singapore, Taiwan, and the Philippines escaped financial calamity.
The volume... provides an excellent overview of both the theories and facts of the crisis. Strongly recommended for academic collections, lower-division undergraduate through research.

Product Details

ISBN-13:	9780881323085
Publisher:	Peterson Institute for International Economics
Publication date:	08/01/2000
Sold by:	Barnes & Noble
Format:	eBook
Pages:	304
File size:	2 MB

About the Author

Stephan Haggard, visiting fellow, is the Lawrence and Sallye Krause Distinguished Professor at the School of Global Policy and Strategy, University of California, San Diego. He has been a consultant to AID, the World Bank, the United Nations Conference on Trade and Development, and the OECD and is a member of the Council on Foreign Relations. He is the coauthor of Witness to Transformation: Refugee Insights into North Korea (2011) and Famine in North Korea: Markets, Aid, and Reform (Columbia University Press, 2007).

Table of Contents

	Preface	xi
	Acknowledgments	xvii
	Introduction: The Political Economy of the Asian Financial Crisis	1
	The Debate over Causes: A Brief Intellectual History	3
	Bringing Politics Back In	7
	The Arguments in More Detail	9
1	Business-Government Relations and Economic Vulnerability	15
	The Microeconomics of the Crisis	16
	Business-Government Relations: The Benefits	20
	The Concentration of Private Economic Power	21
	The Politics of Moral Hazard I: The Government and the Financial Sector	24
	The Politics of Moral Hazard II: Industrial Policy	30
	The "Capture" of Liberalization	32
	The Politics of Business-Government Relations	38
	Conclusion	45
2	Incumbent Governments and the Politics of Crisis Management	47
	Political Sources of Uncertainty	49
	Thailand	51
	South Korea	55
	Malaysia	59
	Indonesia	65
	Conclusion	71
Appendix 2.1	The Political Economy of Malaysia's Capital Controls	73
3	Crisis, Political Change, and Economic Reform	87
	Thailand	92
	South Korea	100
	Malaysia	107
	Indonesia	114
	Conclusion	124
Appendix 3.1	Two that Got Away--the Philippines and Taiwan Compared	126
4	The Politics of Financial and Corporate Restructuring	139
	The Political Economy of Financial Reform	141
	The Political Economy of Corporate Restructuring	146
	Liberalizing Foreign Investment	178
	Conclusion	180
5	The Social Fallout: Safety Nets and Recrafting the Social Contract	183
	The Economics and Politics of Growth with Equity	185
	The Limits of the Model in the 1990s	187
	Who Got Hit?	190
	The Policy Response: The Political Economy of Social Policy	198
	Conclusion	213
6	Conclusion: A New Asian Miracle	217
	The Political Economy of Financial Crises	218
	Crisis and Political Change	222
	Looking Forward I: The Reform of Business-Government Relations	224
	Looking Forward II: Toward a New Social Contract	230
	A New Asian Miracle	236
	References	239
	Index	255

What People are Saying About This

Charles Morrison

Charles Morrison, President, East-West Center:

. . . the first general examination of the crisis from a political economy perspective.

Robert L. Ayres

Robert L. Ayres, Senior Social Scientist, the World Bank:

Well-researched, carefully documented, and clearly written . . . It should prove of considerable interest to students of Asian political economy and . . . to a broader audience of economists, political scientists, and policymakers . . .

Editorial Reviews

Haggard's depth and breadth of understanding of both the domestic politics and economic policies of all these countries is unrivalled, as also of the issues at stake on the business-government side throughout the region.

Australia National University Bulletin of Indonesian Economic Studies