Causes and Cures of the Asian Economic Crisis in Thailand and Malaysia
|Author:||Tomáš Bulena, PhD.|
|Year:||2002 - winter|
|Work type:|| Dissertations
|Awards and prizes:|
|Abstract:||The Asian economic crisis of 1997 -- 1998 was one of the most dramatic economic events of recent times. In my dissertation thesis I was engaged in diagnosing the causes of the Asian crisis and assessing how appropriate have been the responses. Thailand and Malaysia served for me as contradictory examples as Thailand sought to deal with the crisis in the context of the IMF-supported programs while Malaysia, which faced similar market pressures, went its own way without IMF support and later introduced controversial capital controls.
The Asian financial crisis surprised most observers at least by its severity, if not by its timing. Sometimes it is called "The crisis of success" because unlike typical currency crises, it had little to do with mismanagement of monetary and fiscal policies. Instead, as I have found and investigated during my research, the following four competing explanations could be defined:
1) Undisciplined expansion in the banking sector
2) Common macroeconomic weakness reflected in current account deficits
3) External shocks - Low cost competitors (China, India) and economic slowdown in Japan
4) Contagion effect disseminated from Thailand
Even though the combination of these four explanations is the most accurate in general, in particular the size of their influence in each country was different due to the uniqueness of each country's economic situation.
Today we could say, that all affected countries have successfully recovered from the crisis. It could be documented not only by the revived rates of GDP growth but above all by the healthier basis of this growth for the sustainable development in the future.
From the wider, or geopolitical, point of view the Asian crisis was a single greatest catalyst for the new East Asian regionalism. East Asian countries are now looking for some kind of collective arrangement in order to promote their economic interests and to prevent reoccurrence of the crisis. Prospective union of Japanese technology with Chinese adaptability and labor sources in Asian economic integration would create not only a formidable competitor, but also a huge stimulus to global growth, trade and investment.
|Downloadable:|| Dissertation Thesis -Bulena