Political structures and financial liberalization in pre-crisis East Asia

East Asian economies differed dramatically in their vulnerability to the financial shocks of 1997–98. In the current literature on the Asian crisis, one key factor commonly adduced to explain the uneven crises is different national approaches to liberalizing the financial market. While extant analyses have yielded important insights into the correlation between divergent liberalization patterns and uneven crises, they have failed to deal with the crucial question of why East Asian economies diverged in their respective paths to financial market liberalization. To account for differences in liberalization approaches, this article develops an institutional explanation of financial policy choices. It posits that variations in liberalization patterns stem from fundamental differences in the organizational structures of the private sector, the bureaucracy, and the party system that shape the economic interests and political behavior of social groups and state agencies in the policy-making process. In making this argument, the article focuses on Korea, Singapore, Taiwan, and Thailand, the four major East Asian economies that pursued different liberalization strategies during the 1980s and 1990s and had contrasting performance in the recent financial crisis. It argues that cross-national differences in the above-mentioned domestic political structures within the four economies are the primary sources of their divergent liberalization approaches and outcomes, which, in turn, impacted financial stability to differing degrees and generated varying abilities to withstand external shocks. The author thanks Benjamin Cohen, Stephan Haggard, Otto Holman, Geoffrey Underhill, and anonymous SCID reviewers for their helpul comments on earlier drafts. Generous financial support from the Amsterdam School for Social Science Research and the Netherlands Fellowship Program is gratefully acknowledged. The usual disclaimers apply. Xiaoke Zhang is research fellow in the Amsterdam School for Social Science Research and the Department of Political Science at the University of Amsterdam. He is the author ofThe Changing Politics of Finance in Korea and Thailand (Routledge, 2002) and the co-editor ofInternational Financial Governance under Stress (Cambridge University Press 2003).     

APEC and its enemies: The failure of the new regionalism in the Asia-Pacific

This article looks at the rise of APEC as a vehicle for the promotion of free trade in the Asia-Pacific. It argues that, although the Japanese government was more interested in trade cooperation than free trade, it played a key role, along with the Australian government, in the establishment of APEC, while the main challenge to APEC came from the Malaysian Prime Minister, Mahathir Mohamed. During the 1990s, however, Mahathir's proposal for an East Asian Economic Bloc which excluded the USA, Australia, New Zealand and all other 'non-Asian' nation-states, was incorporated into APEC and took the name of the East Asian Economic Caucus. The accommodation of Mahathir's proposal to the APEC process, and his inability to get Japanese support for his pan-Asian initiative, symbolised the limits on any and all regional challenges to US hegemony in the Asia-Pacific. The article also emphasises that, with the coming of the East Asian crisis, the prospects of a successful regional challenge to US hegemony have become even more remote. In particular, the growing influence of the IMF in the region since the crisis has made APEC irrelevant, while the inability of regional elites to deal with the crisis in a unified fashion has thrown into sharp relief the serious obstacles which exist to any pan-Asian effort to challenge neoliberalism. At the same time, although the East Asian crisis has precipitated a reassertion of US hegemony and a consolidation of neoliberalism, the present juncture may also herald the start of a crisis of neoliberalism, with regional and international implications.     

Human Rights and the Renminbi

The solidarity of the G‐20 nations in staving off global financial crisis two years ago has deteriorated into a brawl over currency valuations, trade imbalances and sovereign debt, reflecting the great powershift from the West to the East and the emerging economies. In this section, we invited comments from historians, a former head of state who successfully navigated the Asian financial crisis and a prominent Chinese dissident.     

The neoliberal discourse on corruption as a means of consent building: reflections from post-crisis Turkey

This article draws attention to the ideological role that the neoliberal discourse on corruption has fulfilled in the promotion of the second generation reforms in Southern countries since the 1997 East Asian financial crisis. This discourse is ahistoric insofar as it fails to recognise corruption as a problem of modernity; biased insofar as it associates corruption with Southern countries' historical and cultural specificities only; contradictory in terms of its counter-productive anti-corruption strategies; and politicised as it has redefined ‘corruption’ as ‘rent-seeking’. In the absence of alternative radical conceptualisations, this essentially competition-induced neoliberal orthodoxy on corruption has been easily articulated within morality-based popular concerns in domestic politics and hence acquired a hegemonic capability. The article substantiates these arguments by examining the trajectory of the neoliberal anti-corruption agenda in Turkey with a particular focus on the developments of the post-2001 financial crisis period.     

Capturing globalization: Prospects and projects

The Asian economic crisis of 1997 highlighted the inherent instability of the new worldwide economic order being created by highly mobile capital, and also its destabilizing social and political effects, especially in the transitional societies which had proved so hospitable to the champions of globalization and to proffered capital inputs. Whether these societies are destined to be subsumed and captured by globalization processes, or whether they and their citizens have any possibility of capturing some genuine benefits from advancing globalization, may rest on whether these transitional states and societies can assert, or at least influence, the terms of their engagement with those processes. This will not be possible, however, if people, societies and states capitulate in advance to the forces and processes of globalization as irresistible. This issue is explored through the grounded investigation of four key questions: do globalization processes serve any ends beyond themselves? How might one grasp the best, and make the most, of globalization? Is the logic of the market immutable and inflexible transculturally, or is it amenable to varying forms of cultural inflection and political supervision? Can what globalization delivers be drawn upon selectively, or is it instead a 'package-deal'?     

The Next 40 Years Will Be the Most Important in History

The solidarity of the G‐20 nations in staving off global financial crisis two years ago has deteriorated into a brawl over currency valuations, trade imbalances and sovereign debt, reflecting the great powershift from the West to the East and the emerging economies. In this section, we invited comments from historians, a former head of state who successfully navigated the Asian financial crisis and a prominent Chinese dissident.     

The Mother of All Solutions for the Global Crisis

The solidarity of the G‐20 nations in staving off global financial crisis two years ago has deteriorated into a brawl over currency valuations, trade imbalances and sovereign debt, reflecting the great powershift from the West to the East and the emerging economies. In this section, we invited comments from historians, a former head of state who successfully navigated the Asian financial crisis and a prominent Chinese dissident.     

The Long‐term Solution for Europe

The solidarity of the G‐20 nations in staving off global financial crisis two years ago has deteriorated into a brawl over currency valuations, trade imbalances and sovereign debt, reflecting the great powershift from the West to the East and the emerging economies. In this section, we invited comments from historians, a former head of state who successfully navigated the Asian financial crisis and a prominent Chinese dissident.     

The Splintering of the G‐20

The solidarity of the G‐20 nations in staving off global financial crisis two years ago has deteriorated into a brawl over currency valuations, trade imbalances and sovereign debt, reflecting the great powershift from the West to the East and the emerging economies. In this section, we invited comments from historians, a former head of state who successfully navigated the Asian financial crisis and a prominent Chinese dissident.     

Why East Asia overtook Latin America: Agrarian reform,industrialisation and development

Scholars and policy makers have long debated the causes of the spectacular economic success achieved by the East Asian newly industrialising countries ( NICs ) as well as the lessons that other developing countries can learn from this development experience. Latin America started to industrialise many decades before the East Asian NICs and yet was quickly overtaken by them in the last few decades. This article explores the agrarian roots that may explain the different development trajectory and performance of the East Asian NICs, particularly South Korea and Taiwan, and Latin America. The analysis focuses mainly on three interconnected factors in seeking to understand why the East Asian NICs outperformed Latin America: 1) state capacity and policy performance or 'statecraft'; 2) character of agrarian reform and its impact on equity and growth; 3) interactions between agriculture and industry in development strategies.     

Historical Blocs and Democratic Impasse in the Philippines: 20 years after ‘people power’

One noteworthy feature of the political crisis in Indonesia, which followed the Asian financial crisis of 1997 was the speed with which the collapse of the Suharto government was subsumed by a wider crisis of the Indonesian nation-state. One aspect of this crisis is the strengthening of secessionist movements in several regions of Indonesia, calling into question the country's national boundaries, themselves a legacy of the Dutch colonial era. This article examines the tensions in the nation-building efforts of the Indonesian state by focusing on the three territories where secessionist movements have been strongest: East Timor, which has already successfully broken away from Indonesia, and Irian Jaya and Aceh, where long-standing secessionist movements experienced significant growth in the aftermath of the resignation of President Suharto on 21 May 1998. Our analysis emphasises that these secessionist movements arose in direct response to the ways in which the Indonesian state, especially during the Suharto period, went about the tasks of nation-building. In particular, each movement was to a large degree fuelled by brutal and indiscriminate state violence. At the same time, each has been greatly affected by global trends of decolonisation, the Cold War and its aftermath. The distinct timing and manner of each territory's incorporation into the Indonesian nation-state has had a profound influence on the character of, and appeals made by, each movement, as well as on their prospects for gaining support from the wider international system.     

Watching from the sidelines? The decline of the IMF's crisis management role

This article compares the International Monetary Fund (IMF)'s crisis management role during the Asian financial crisis in 1997–98 with the role it has played during the ‘credit crunch’ which emerged in the wake of the subprime crisis in the United States. With prominent calls for the construction of new forms of global financial governance to prevent a recurrence of the subprime crisis in the future, we explore how the designated guardian of the international financial system has responded to the credit crunch in order to evaluate the strengths and weaknesses of the existing system. Our comparison of the US subprime crisis and the Asian financial crisis of the late 1990s indicates that the IMF has lost credibility with its members, and particularly with its principal sponsor, the United States, which has curbed its capacity to develop multilateral solutions to major financial crises.     

Financial crises as catalysts for regional cooperation? Chances and obstacles for financial integration in ASEAN+3, MERCOSUR and the eurozone

This article compares and analyses the different answers from the Association of Southeast Asian Nations+3 (ASEAN+3), Mercado Común del Dur (MERCOSUR) and the eurozone on financial crises in their respective regions. All three regions were hit by economic turmoil between 1997 and 2012, but whereas ASEAN+3 and the eurozone answered with establishing regional liquidity arrangements (RLAs) in order to fight future crises, financial cooperation did not take off in MERCOSUR. Thus, the paper asks why some regions establish RLAs in cases of crisis and others do not. It argues that the variance of regional financial integration in different world regions is due to different interests of regional powers in their respective regions. The regional powers of ASEAN+3 and the eurozone are institutionally and/or economically highly embedded within their respective regions, but this is not the case for Brazil in MERCOSUR. China and Japan suffered from negative externalities of the Asian crisis, and, consequently, have had an interest to stabilize their neighbours’ economies after the crisis. In contrast, Brazil was able to follow a beggar-thy-neighbour strategy at the turn of the millennium, which externalized some of the costs of Brazil's own economic crisis towards Argentina. As a result, Brazil has had no interest in providing liquidity for its regional neighbours after the crisis. France and Germany are not only economically but also institutionally highly embedded in the eurozone because they share a common currency with their regional neighbours. Thus, the stability of the eurozone is a vital interest for Europe's regional powers, and they devote significant resources to stabilize the economies of the eurozone's periphery.     

Japan,Russia, and the Northern Territories: Continuities,changes, obstacles,opportunities

The so-called collapse of communism has reinforced powerful North American- and Western-European-centred visions which continue to see 'Western' models of development as the key to modernization world-wide. The end of the Cold War has also drawn renewed attention to the rise of an increasingly dynamic capitalist East Asia, which has brought with it triumphant East Asian-centred discourses which celebrate East Asianstyle development models distinct from and superior to 'Western' models of development. At the same time, challenges to the dominant discourses and the emergent post-Cold War capitalist order continue to emerge from numerous angles and at multiple sites. Two recent books represent important efforts at critically examining global inequality and articulating alternative perspectives to the dominant international narratives on development and social change. In After the Revolution , Arif Dirlik attempts to recast and recuperate Marxism so that it can play a role in progressive politics at the end of the twentieth century. Meanwhile, Arturo Escobar's new work seeks to engage critically with the dominant Western discourse on 'development' and sketch out alternative post-development trajectories from a position that synthesises post-structural analysis with the insights and concerns of grassroots activists-writers and the new social movements. Beginning with Escobar's book, I will examine some of the key themes and draw out what I see as some of the main analytical strengths and weaknesses of these two contributions to the post-Cold War development debate.     

Productivity growth of East Asia economies' manufacturing: A decomposition analysis

Applying a stochastic production frontier to sector-level data within manufacturing, this paper examines total factor productivity (TFP) growth for seven East Asian economies during 1963–98, using both single country and cross-country regressions. The analysis focuses on the trend in technological progress (TP) and technical efficiency change (TEC), and the role of productivity change in economic growth. The empirical results reveal that although input factor accumulation is still the main source for East Asian economies' growth, TFP growth is accounting for an increasing and important proportion of output growth, among which the improved TEC plays a crucial role in productivity growth.     

Interpretations of Eurasianism: Justifying Russia's role in East Asia

This article examines the concept of Eurasianism in relation to Russia's East Asian policy from Yeltsin to Putin. It argues that there are three main interpretations of Russia's Eurasianist identity in the foreign policy discourse regarding East Asia: Pragmatic Eurasianism, Neo-Eurasianism, and Intercivilisational Eurasianism. Each interpretation emphasises a different aspect of Eurasianism with different policy implications. However, they all share an instrumentalist nature, of being used to justify Russia's Great Power status and a greater role for it in East Asia. Moreover, it is the pragmatic and geoeconomic aspects of Russia's Eurasianist identity that are being stressed most by the Putin administration, especially on energy and transport links.     

The Politics of State Sector Reforms in Vietnam: Contested Agendas and Uncertain Trajectories

The 1997 Asian financial crisis and subsequent impact on Vietnam's economy reignited a decade-old internal debate over economic reforms (doi moi). Heralded by many as a success story, the pace of doi moi was the cause of sharp conflicts within the ruling party as the IMF prescribed speeding up the process. At first glance it seemed that neo-liberalism was triumphant. However, this article argues that we need to take a closer look at the content and meaning of 'reform' in the Vietnamese context. Neo-liberal reforms were modified to ensure they consolidated rather than unravelled the authority of the Vietnamese state and to accommodate the new hybrids of state-business alliances.     

The Baltic Republics and the Crisis of 2008–2011

This essay explores how the Baltic republics responded to the crisis of 2008–2011. We argue that while there are significant differences in how the Baltic economies responded to the crisis, these responses not only remain within the neo-liberal policy paradigm characteristic of the region from the early 1990s, but that the crisis radicalised Baltic economies and particularly their fiscal stance. We show that there are a number of unique features in all three Baltic republics' political economies that made such a radicalisation possible. However, these unique features make it almost impossible for the Baltic experience to be replicable anywhere else in Europe.     

The state of the 'state' in globalization: Social order and economic restructuring in Malaysia

This article asserts that, instead of anticipating or searching for indications of the 'end of the state' in an era of neoliberal globalization, it is more fruitful to examine the relationship between the state and social order, because of the potential to discern the conditions and consequences in which occur the ruling elite's and social forces' resistance to and/or alliance with, transnational capital. A case study of Malaysia is presented to demonstrate the complex and even contradictory ways in which social order is regulated that allows the state to manage demands emanating within and beyond the country. Specifically, the analysis focuses on the different historical junctures in which changing bases of state power, paths of development, and official manipulation of social identities converge in the regulation of social order that facilitates capital accumulation while maintaining state legitimacy in a multi-ethnic context.