The politics of economic crisis in East Asia: some longer term implications

Abstract

The currency and market turmoils in East Asia since summer of 1997 are every bit as much political crises as they are economic ones. Indeed, the political manifestations of these events may linger long after the necessary economic reforms have been introduced to return at least a semblance of economic normalcy to the region. This paper assess some of the longer term political implications. It does so through 'Asian tinted lenses' rather than Anglo American ones and offers an alternative reading of the East Asian economic crisis to that which exists in the mainstream of western policy analysis. While accepting that particularist explanations apply on a country by country basis, the paper outlines: (i) those aspects of the crisis that appear common to those countries affected to-date: (ii) the importance of the silent but fundamental role of Japan as a factor in the crisis and (iii) notwithstanding the real/ material explanations of the crisis, it argues that the crisis is in large part an ideological one reflecting a western conceptual inability to deal with the Asian model of development's reluctance to converge to with an Anglo-American form of capitalism. While the policy remedies proffered by the IMF are accepted in Asia in the short run, they may well not be appreciated in the long run and a major implication of this interaction may well be an enhancement of the prospect of the continued development of an 'East Asian' as opposed to 'Asia Pacific' understanding of region. Some evidence of regional social learning from the crisis that may well consolidate the trend towards enhanced economic policy coordination that already exists. This could exaccerbate tensions between global and regional interests and severely test the 'APEC consensus' on a commitment to neo-liberalism in the early stages of the twenty-first century