sharma - the asian financial crisis; crisis, reform and recovery (2003)

[...]... One major effect of this was the appreciation of the Japanese yen and the depreciation of the US dollar Hence, the Plaza Accord is known for bringing down the value of the US dollar and ushering in a new era of the appreciating yen Between 1985 and 1988, the yen almost doubled in value vis-à-vis the dollar and other Asian currencies tied to the dollar More broadly, by 1988, the yen was almost 30 per cent... reserves, and the exchange value of the Hong Kong dollar vis-à-vis the US dollar was fixed at the intervention/official rate.5 The 100 per cent back-up requirement meant that one could not use the existing Hong Kong dollar currency to exhaust the official reserve Thus not only was the money supply disciplined and demand-determined, but the monetary and exchange-rate system in 2 Introduction: issues, debates and. .. been the sharp appreciation of the dollar that began in 1995, especially its appreciation vis-à-vis the yen As the dollar rose relative to the yen in the months before the crisis, the currencies of the crisis countries rose in comparison with the yen also In some cases the crisis countries followed the dollar very closely; in others the link was looser, because they used a basket peg but still gave the. .. the IMF, respond to the crisis? What was the content of the IMF policies, and how did it affect the economies under the IMF programs? What has been the nature of the economic recovery in the crisis countries, and what explains the relatively quick recovery? How valid is the claim that the IMF policies are largely responsible for the 8 Introduction: issues, debates and overview recovery? What explains... political-economic perspective on the Asian financial crisis and its aftermath Chapters 2, 3, 4 and 5 are detailed case studies of individual countries, Thailand, Indonesia, South Korea and the PRC in turn The chapters on Thailand, Indonesia and South Korea not only examine the factors behind the crisis, but also highlight the underlying similarities and the fundamental differences between the individual... proposal on how to reform the existing economic regime and construct a new international financial architecture Indeed, collaborative initiatives have already been unveiled to reduce susceptibility to financial crisis, and to deal with it more effectively when and where they occur While there is broad consensus on the motherhood and apple-pie issues such as the need to strengthen the 7 The Asian financial... were there, why did no one predict the crisis? What has been the socioeconomic and political impact of the crisis? How effectively did the governments of Thailand, Indonesia and Korea respond to the crisis prior to the conclusion of agreements with the IMF? What were the deficiencies in domestic policies that contributed to the onset of the crisis? How did the international community, especially the. .. necessarily warranted by the economic fundamentals.31 The other related view, articulated by Furman and Stiglitz (1998), argues that although some macroeconomic and other fundamentals may have worsened in the Asian economies in the mid-1990s, the extent and depth of the crisis cannot be attributed to a deterioration in fundamentals, but rather to the panicky reaction of anxious domestic and foreign investors... Malaysia and Thailand) grew more rapidly than any other group of economies in the world, averaging 7 per cent per year growth rates in real terms since the mid-1970s, and over 9 per cent per year since the late 1980s.54 This meant that the fast-growing Asian economies were doubling their real GDP approximately every 7 years during the 1960s and 1970s, and roughly every 7 to 10 years during the 1980s... academic tomes, projected the inexorable shift in power towards the 23 The Asian financial crisis Asia-Pacific economies – besides showering laudatory praises on the virtues of the so-called East Asian- style state-guided capitalism The region’s selfstyled gurus, such as the Malaysian strongman, Mahathir Mohamad, and Singapore’s patriarch, Lee Kuan Yew, found the semiotic imagery of Asianstyle capitalism . tables and figures page vi Acknowledgements vii 1 Introduction: issues, debates and an overview of the crisis 1 2 Thailand: crisis, reform and recovery 66 3 Indonesia: crisis, reform and recovery. with it more effectively when and where they occur. While there is broad consensus on the motherhood and apple-pie issues such as the need to strengthen the The Asian financial crisis 8 global. 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