Financial Liberalization and the Asian Crisis PDF
Preview Financial Liberalization and the Asian Crisis
Financial Liberalization and the Asian Crisis Edited by Ha-Joon Chang, Gabriel Palma and D. Hugh Whittaker Financial Liberalization and the Asian Crisis Also by Ha-Joon Chang THE POLITICAL ECONOMY OF INDUSTRIAL POLICY Also by Gabriel Palma KALDOR’S CONTRIBUTION TO POLITICAL ECONOMY (co-editor) OF ECONOMIC THOUGHT (co-editor) MARKETS, UNEMPLOYMENT AND ECONOMIC POLICY: Essays in Honour of Geoff Harcourt (co-editor) Also by D. Hugh Whittaker MANAGING INNOVATION: A Study of British and Japanese Factories SMALL FIRMS IN THE JAPANESE ECONOMY Financial Liberalization and the Asian Crisis Edited by Ha-Joon Chang Assistant Director of Development Studies Faculty of Economics and Politics University of Cambridge Gabriel Palma Lecturer in Economics Faculty of Economics and Politics University of Cambridge and D. Hugh Whittaker Reader in Japanese and Comparative Economic Sociology Assistant Director of ESRC Centre for Business Research University of Cambridge Editorial matter,selection and Chapters 1–5,7–11,13 and 15 © Cambridge Political Economy Society 2001 Chapters 6,12 and 14 © Palgrave Publishers Ltd 2001 Softcover reprint of the hardcover 1st edition 2001 978-0-333-92158-6 All rights reserved.No reproduction,copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced,copied or transmitted save with written permission or in accordance with the provisions of the Copyright,Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency,90 Tottenham Court Road,London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright,Designs and Patents Act 1988. First published 2001 by PALGRAVE Houndmills,Basingstoke,Hampshire RG21 6XS and 175 Fifth Avenue,New York,N.Y.10010 Companies and representatives throughout the world PALGRAVEis the new global academic imprint of St.Martin’s Press LLC Scholarly and Reference Division and ISBN 978-1-349-42489-4 ISBN 978-0-230-51862-9 (eBook) DOI 10.1057/9780230518629 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Financial liberalization and the Asian crisis / edited by Ha-Joon Chang,Gabriel Palma,and D.Hugh Whittaker. p.cm. Includes bibliographical references and index. 1.Financial crises—Asia.2.Asia—Economic conditions– –1945– I.Chang,Ha-Joon.II.Palma,J.Gabriel.III.Whittaker, D.H.(D.Hugh) HB3808 .F56 2001 330.95’0429—dc21 2001021884 10 9 8 7 6 5 4 3 2 1 10 09 08 07 06 05 04 03 02 01 To James Briffitt, in memoriam This page intentionally left blank Contents List of Figures and Tables ix List of Contributors xi 1 Introduction 1 Ha-Joon Chang, Gabriel Palma and D. Hugh Whittaker 2 Economic Crisis in East Asia: The Clash of Capitalisms 8 Chalmers Johnson 3 Capital Market Crises: Liberalization, Fixed Exchange Rates and Market-driven Destabilization 21 Lance Taylor 4 Derivatives and Global Capital Flows: Applications to Asia 40 J. A. Kregel 5 From ‘Miracle’ to ‘Cronyism’: Explaining the Great Asian Slump 63 Robert Wade 6 Thailand’s Crisis: Neo-Liberal Agenda and Local Reaction 82 Pasuk Phongpaichit and Chris Baker 7 Malaysian Débâcle: Whose Fault? 102 Jomo K. S. 8 Indonesia: From Showcase to Basket Case 124 Jonathan Pincus and Rizal Ramli 9 Interpreting the Korean Crisis: Financial Liberalization, Industrial Policy and Corporate Governance 140 Ha-Joon Chang, Hong-Jae Park and Chul Gyue Yoo 10 Fashioning a New Korean Model out of the Crisis: The Rebuilding of Institutional Capabilities 156 John A. Mathews 11 Japan’s Crisis: Evolution and Implications 175 D. Hugh Whittaker and Yoshitaka Kurosawa vii viii Contents 12 Responses to the Crisis: Constraints to Rapid Trade Adjustment in East Asia’s Electronics Industry 190 Dieter Ernst 13 Asian Crisis and the Future of the Japanese Model 215 Ronald Dore 14 The Economic Impact of the Asian Crisis on India and China 237 A. S. Bhalla and D. M. Nachane 15 Three-and-a-half Cycles of ‘Mania, Panic, and [Asymmetric] Crash’: East Asia and Latin America Compared 254 Gabriel Palma Index 287 List of Figures and Tables Figures 8.1 Exchange rate indices, July 1997 to June 1998 128 8.2 One month SBI rate and dollar exchange rate 130 8.3 Net oil and gas exports and aid disbursements as share of GDP (1981–96) 133 Tables 3.1 Macroeconomic accounting relationships 22 4.1 Country exposure of US money-centre banks: loans and derivatives (31 December 1997) 55 5.1 Change in exchange rates and stocks prices in Asia (% between 2 June 1997 and 24 March 1998) 64 6.1 Macroeconomic framework for 1998 in the IMF letters of intent (LOI) 88 6.2 Thailand’s balance of payments, 1990–9 90 7.A1 Malaysia: key macroeconomic variables, 1989–96 119 7.A2 Malaysian ringgit exchange rates with US dollar and Japanese yen, 1984–98 120 7.A3 Malaysia: economic growth, inflation, unemployment and interest rates, 1984–97 121 9.1 Major financial liberalization measures in Korea during the 1990s 141 9.2 An international comparison of corporate profitability 149 9.3 Trends in facility investment in Korea (growth rates) 151 10.1 Debt–equity and debt–asset ratios and cross-group debt guarantees for the 30 largest chaebol, 1997 160 11.1 US, EU and Japanese involvement in East Asian international transactions 176 12.1 Share of components in electronics import and merchandise imports, 1996 195 12.2 An increasing share of intra-regional electronics exports, 1991–6 197 ix
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