the asian financial crisis - university of california ...bev.berkeley.edu/2009 peis 101/17 lecture...
TRANSCRIPT
![Page 1: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/1.jpg)
Neo-liberalism and the Asian Financial Crisis
![Page 2: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/2.jpg)
Today’s Agenda
• Review the “families” of Political Economy theories
• Back to Taiwan: Did Economic development lead to political changes?
• The Asian Financial Crisis– The story
– Explanations
– Lessons for today?
![Page 3: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/3.jpg)
“FAMILIES” OF MODERN THEORIES OF POLITICAL ECONOMY
![Page 4: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/4.jpg)
Liberalism
Neo Liberlaism
ComparativeAdvantage
Rational ChoiceTheory
Embedded Liberalism
Keynesianism
FREEDOM
Hegemonic StabilityTheory
Modernization Theory
DependentDevelopment
Property Rights
Competition
Indifidualismn
Collective action problems
Stag HuntPrisoners Dilemma
![Page 5: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/5.jpg)
Political Economy of Freedom: The Liberal Family
• Liberalism– Neo-liberalism
– Comparative Advantage
– Rational choice theory
• Repaired of modified Liberalism– Embedded liberalism
– Keynesianism
– Hegemonic Stability Theory
![Page 6: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/6.jpg)
More “relatives” in the Liberal Family
• Focused on Economic Development– Modernization theory
– Staples Theory
– Product-cycle theory
– Dependent development
![Page 7: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/7.jpg)
Liberal language: some terms
• Transaction costs
• Strategic interaction
• Stages of economic growth
• Property rights
• Laissez-faire
• Business cycle
![Page 8: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/8.jpg)
Some Liberal Policies to ensure freedom
• Minimal state intervention in markets
• Structural adjustment
• Multilateralism
• Gold Standard……
![Page 9: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/9.jpg)
EqualityDistributive Justice
Exploitation Surplus Value
Welfare State (diminishes salience of class)
EQUALITY
Imperialism
Core-Periphery Relation
Unequal Terms of Trade
Unequal Exchange
(production)
(exchange)
Class conflict
Social Democracy
NIEO
Market Socialism
Norm of equal citizenship
Redistribution of Wealth
![Page 10: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/10.jpg)
Political Economy of Equality : The Family
• Marxism
• Socialism
• Distributive Justice
• Keynesianism
• Dependency Theory
![Page 11: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/11.jpg)
Equality Language
• Language criticizing liberalism– Exploitation– Surplus value
• And with regard to development–Unequal exchange– Imperialism–Unequal terms of trade–Core–Periphery
![Page 12: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/12.jpg)
Policies to bring about equality
• The welfare state
• Keynesianism—deficit spending
• NIEO
![Page 13: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/13.jpg)
CommunityAnd Nation
CommunalSharing
Gift Economy
Equality as basis of Community
Capital Controls
Trade Protection
COMMUNITY
Currency Manipulation
Infant Industry protection
State-LedDevelopment
Mutual Obligation
Fairness
Cooperation
General Will
Communal OwnershipCollective action
Communal identityMarket Control
Retaliation
Strategic tradeExport-led growth
![Page 14: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/14.jpg)
The Political Economy of Community: The Family
• Communitarianism
• Communal Sharing
• Nationalism
• Economic Nationalism– For developing countries:
• ISI and Infant Industry protection
• State-Led Development
![Page 15: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/15.jpg)
Policies to preserve community
• Protectionism– Trade protection
• Tariffs
• Non-tariff barriers to trade
• Subsidies to domestic industry
• bilateralism
– Currency manipulation (example: competitive devaluation
– Capital controls
![Page 16: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/16.jpg)
Theories and the Business Cycle in 20th century History
19th Cent.Britain Provides “Hegemonic Stability”
Classical Liberalism
Great Depression: Keynes and the “Liberal” welfare state
Post WarEmbeddedLiberalism,HegemonicStability
Rise of“Neo-liberalism”And developmentalstates
Asian FinanciCrisis
1970s Recession
![Page 17: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/17.jpg)
STATE-LED DEVELOPMENT, THE OPENING OF MARKETS, AND DEMOCRACY
Have strong markets led to Democracy and have the NIEs reached the stage of a mass-consumption society?
![Page 18: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/18.jpg)
In East Asia, what has economic development done to repressive governments?
• Can new information technologies lead to more freedom?
• Will a growing middle class demand more political participation and competition?
![Page 19: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/19.jpg)
Political Liberalization in Taiwan
![Page 20: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/20.jpg)
![Page 21: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/21.jpg)
Interdependence
![Page 22: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/22.jpg)
Political Interdependence?
![Page 23: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/23.jpg)
From export-led growth to Domestic Demand and Mass-Consumption Society: Convenience-store
culture
![Page 24: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/24.jpg)
From Mass Consumption Society to relative decline?
![Page 25: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/25.jpg)
The Asian Financial Crisis
![Page 26: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/26.jpg)
Neo-liberalism and Global financial liberalization
• FDI is a small part part of financial flows• Cross border bank lending has grown 10%
annually in last two decades• Currency trading has grown even faster.• And so has cross border securities trading
![Page 27: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/27.jpg)
Hot Money
![Page 28: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/28.jpg)
The Asian “Tigers” and financial Liberalization
• 1990s US and IMF asked Asian countries to open their financial markets
• They began to be called “emerging markets”
• Short-term bank loans were main form of capital inflow leading to
• Domestic booms
![Page 29: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/29.jpg)
1985-1997 high growth countries used less foreign capital.
![Page 30: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/30.jpg)
Booms turned to bubbles
• Booms busted and money flowed out• BoP surpluses turned to deficits• Speculative attacks on currency….• Leading to currency devaluation• Investors pulled out their money• Inability to roll over loans because foreign
banks demanded immediate repayment• So domestic banking sector froze up
![Page 31: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/31.jpg)
In sum: the causes of the crisis
• Evaporation of Asian economic “miracle”
• Asian “Tigers” became source of danger
• The problem was the strategy to attract foreign capital
• Perils of “fast track” capitalism…….
![Page 32: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/32.jpg)
Perils of “fast track” Capitalism
• Foreign capital entered in the form of short term loans to banks and firms
• But never found its way into the real economy• Used for “betting” not for economic growth• Everyone was overinvesten in high yield risk sector….• And banks had made bad loans• Debts could not be repaid…..so • Many investors and speculators jumped ship and took
their money out, leading to…..• devaluation
![Page 33: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/33.jpg)
Currency devaluation
![Page 34: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/34.jpg)
It began in Korea…..
Korea
![Page 35: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/35.jpg)
Spread to Thailand……
![Page 36: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/36.jpg)
Enter the IMF…..
• Provided huge loans
• For balance of payments
• But required conditions (structural adjustment, austerity programs)
• This was to calm markets
![Page 37: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/37.jpg)
IMF bailed out private banks
IMF
• States gave IMF funds to firms so that they could repay private loans
• Lenders did not have to face full consequences of their bad loans
![Page 38: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/38.jpg)
Example
• Speculator borrows 24 billion bhat from Thai bank
• At exchange rate of 24:1, • sells it for $1 billion• Value of bhat falls• Now it is 40:1• Now it only takes $600 to pay back the loan• He makes a $400 million profit• Sends it to a Swiss bank
![Page 39: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/39.jpg)
IMF Structural adjustment
• Developmental states had to step aside
• IMF demanded cutback in govt. spending, increases in taxes
• But the program failed to halt exchange rate fall
• Unemployment soared
• GDP plummeted
• Banks closed
• Poverty grew
![Page 40: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/40.jpg)
The Contagion
• Korea, Thailand, Malaysia, Indonesia to Phillippines……
• To Brazil to Argentina….
• And led to the rethinking of the global financial system
![Page 41: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/41.jpg)
Stopping the crisis….
• Korean government bought bad loans from private banks
• Banks were nationalized
• Thailand closed 42 banks
• Indonesia closed banks
• Separating the wheat from the chaff
![Page 42: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/42.jpg)
Recovery
![Page 43: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/43.jpg)
THE LIBERAL EXPLANATION
![Page 44: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/44.jpg)
Liberals blame “Traditional” society
• Non-transparency
• Personal ties govern economic advancement
• Family dominance
• Unhealthy relationship between government and business
• Lack of democracy
![Page 45: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/45.jpg)
Which was characterized by Relational banking and crony capitalism
![Page 46: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/46.jpg)
That led to Moral Hazard
![Page 47: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/47.jpg)
Liberals also blame Strategic Trade
• Supporting “national champions” in international trade
• Betting on the wrong export industries
• Big decisions can be big mistakes
![Page 48: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/48.jpg)
THE ABSENCE OF A HEGEMON AND THE RISE OF NEO-LIBERALISM?
•Can you have a stable global
economy without a hegemon?
•Are international financial institutions
like the IMF enough?
![Page 49: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/49.jpg)
A MARXIST INTERPRETATION•Capitalism is Marked by Crisis
![Page 50: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/50.jpg)
Dependency Theory explanations
Core (North) East Asia post-Crisis
CorePerCore
Periphery
Periphery
IMF FUNDS
Benefits go to Western investers
![Page 51: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/51.jpg)
IFIs aid private firms
![Page 52: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/52.jpg)
A “late or state-led development” perspective: Financial Liberalization was too fast
• Traditional society
• Wrong speed and wrong sequencing
• Those countries that did not open up too fast did not suffer much
![Page 53: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/53.jpg)
Are there lessons for the current crisis?
• Some Conditions were different– Real crisis was contained
– IMF and World bank organized bailout packages then; not now
– The US Federal Reserve is intervening internationally
– Now the “Tigers” have big reserves of currency
![Page 54: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/54.jpg)
And some conditions are similar
• Crony Capitalism?
• Is government a
Committee to
manage the affairs
of the ruling class?
• Lack of
transparency
![Page 55: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/55.jpg)
Unregulated Capital flows
![Page 56: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/56.jpg)
Most important lesson was not learned in the last 10 years: Hot money
![Page 57: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/57.jpg)
Need for a new Bretton Woods?
![Page 58: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/58.jpg)
![Page 59: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/59.jpg)
![Page 60: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/60.jpg)
![Page 61: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/61.jpg)
![Page 62: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/62.jpg)
![Page 63: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/63.jpg)
![Page 64: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/64.jpg)
![Page 65: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/65.jpg)
![Page 66: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/66.jpg)
![Page 67: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/67.jpg)
![Page 68: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/68.jpg)
![Page 69: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/69.jpg)
![Page 70: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/70.jpg)
![Page 71: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/71.jpg)
![Page 72: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/72.jpg)
![Page 73: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/73.jpg)
![Page 74: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/74.jpg)
![Page 75: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/75.jpg)
![Page 76: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/76.jpg)
Japan
![Page 77: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/77.jpg)
The Role of American hegemony
![Page 78: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/78.jpg)
Japanese participation in the Taiwanese economy
![Page 79: The Asian Financial Crisis - University of California ...bev.berkeley.edu/2009 PEIS 101/17 Lecture Asian Financial Crisis.pdf · • The Asian Financial Crisis – The story – Explanations](https://reader030.vdocuments.us/reader030/viewer/2022041003/5ea6c02b3b3f873ba73d9dcf/html5/thumbnails/79.jpg)
With the Fastest growth rate in the world……