The financial crisis in East Asia

The East Asian financial crisis has proved far more contagious than anyone imagined likely when devaluation of the Thai baht in July 1997 gave the first indication that something was wrong, and the implications it could have for the entire world financial system mean that any response must involve more than just the nations affected directly. Nobuyuki Ichikawa says Japan, as the locomotive for the Asia‐Pacific region, must move quickly to achieve an early economic recovery by increasing domestic demand and reforming its financial system, in order to increase imports from East Asia and shore up the weak yen. He suggests that one effective measure might be for the yen to become the key currency for Asia in lieu of the dollar. Ichikawa works for the Bank of Japan and was seconded to IIPS in 1995.     

Structural aspects of the Asian financial crisis

The “Asian Miracle” has been attributed to a number of factors, including macro‐economic stability, high levels of saving and investment, and the accumulation of skilled human resources, but the strategy of rapid economic development that has been pursued in these countries has left some structural vulnerabilities. Kazuyuki Motohashi, currently Assistant Director, Small and Medium Enterprise Agency, Ministry of International Trade and Industry (MITI), analyzes the structural factors behind the current account deficits of the respective countries, and the lack of market discipline in the governance system in both the public and private sectors. The views expressed in this paper are those of the author, and do not represent the views of either MITI or the OECD.     

Japan's fiscal policy and the East Asian financial crisis

Japanese economic policy has been identified as one possible cause of the East Asian financial crisis that began in July 1997. In this article, Yoichi Okita, Professor of Economics at the National Graduate Institute for Policy Studies, Tokyo, discusses Japan's role in the recovery of East Asian economies. Can and should Japan contribute to that recovery? To what extent is the recession in Japan an important cause of slow recovery in the region? Okita explores and develops the concept of economic policy coordination. Although changes in the Japanese economy were not the origin of the East Asian crisis, he says, prolonged stagnation in Japan is, nevertheless, a drag on the economies that are in trouble. However, one country's fiscal actions alone cannot solve the crisis; rather, all countries in the region should work together to redress the problem.     

APEC labour markets: Structural change and the Asian financial crisis

This study examines the impacts of longer-term structural changes on the labour markets of Asia Pacific Economic Cooperation (APEC) member economies, as well as the short-run labour market consequences of the Asian financial crisis. All APEC economies have experienced significant structural change in the process of development. A major factor in this structural change has been increased trade intensity (increase in exports and imports as a share of GDP) that has occurred over the last 20 years. Because these structural changes have been extensively induced by trade liberalisation, this study provides insights into the likely consequences of the implementation of APEC's agenda on trade and investment liberalisation and facilitation. The impact of structural change is examined using a range of data, such as disaggregated changes in output and employment by industry and occupation over the period 1980 to 1997, and data on changes in trade intensity for each of the APEC nations. Other data, such as changes in rates of urbanization, are also used to indicate the other important concomitant effects of economic transformation. For several Asian economies, the linear path of growth and structural change was severely disrupted by the Asian financial crisis. This article examines the impact of this crisis on Asian labour markets, in general, and those most affected by the crisis, in particular. In many countries within the region, a failure of education and training systems to respond to often rapid shifts in the skill composition of labour demand is leading to industry and occupation specific labour shortages. International labour migration within the APEC region is viewed as a product of these structural changes and a mechanism that assists in filling gaps in the labour markets of the region's economies.     

Asia's deepening financial crisis: Japan as a critical uncertainty

Japan's response to the economic crisis in East Asia is critical, not only for Japan itself but also for the Asia‐Pacific region and for the world. Kent Calder, Special Advisor to the US Ambassador to Japan, argues that the massive Japanese economy can potentially serve as a locomotive for the region, and as a sturdy fire wall to prevent the crisis from spreading. To do this, Japan must stimulate its economy, open markets further to Asian imports, and strengthen its financial system. If it fails, Japan could become part of the problem, instead of part of the solution.     

The Asian scholar and the American crisis

Abstract

National development strategies in many Third-World countries in recent years have tended to emphasize a number of Japanese-pioneered patterns, among them management methods and export-oriented industrialization. Both have been seen as crucial to Japan's rise as an industrial power; and, during the past decade, export-oriented industrialization has been behind the rise of the Asian “Gang of Four”—South Korea, Hong Kong, Taiwan, and Singapore.     

The Indonesian crisis and beyond

The crisis in Indonesia is first and foremost a political crisis that has been exposed and complicated by the financial crisis, says Jusuf Wanandi, Chairman of the Centre for Strategic and International Studies, Jakarta. The riots of 14 and 15 May 1998 forced President Soeharto to transfer power to his vice‐president, B. J. Habibie. However, because Habibie lacks credibility and legitimacy as a leader, he has been considered from the outset a transition figure. There is great hope that the general elections in June 1999 will solve the questions about the legitimacy of the government, and restore stability, security, and economic development throughout Indonesia, but there are still many obstacles to overcome if the elections are to be held on schedule. Furthermore, if the election results are not deemed fair, a political upheaval will likely occur. Indonesia, Wanandi says, cannot afford any further mistakes.     

The financial autonomy of the municipalities and the Valencian Parliament

SUMMARY

In the first half of the fourteenth century and on countless occasions, the Crown granted the leaders of the City of Valencia authorization to collect indirect taxes as a means of collecting the subsidies allocated to its military needs. The ratification of fiscal autonomy can be related to the Crown's interest in gaining control of municipal resources as a way of demanding donations in order to accomplish its policies.

The main reason for the royal privilege to raise taxes in favour of the cities was the extensive expenses caused by the conquest of Corsica and Sardinia during the reign of James II. The Kingdom and the city of Valencia came to the aid of the monarch because they were interested in trading with Sicily and these two islands were impeding trade routes. To make things easier, Alfonso IV granted them a privilege to levy taxes on the grain and meat trades and on merchant shipping within the municipal territory of the city of Valencia. The municipal tax on meat and grain was used as a model for the tax approved in the Cortes of 1329, extending it to exports everywhere in the Kingdom of Valencia. The tax approved by these Cortes, agreed in order to collect the subsidy offered to the monarch, was the first general tax validated in the Cortes following the model of the exisiting municipal tax. To mark the occasion of the war against Castile, Peter IV took a decisive step in 1363 and extended the capacity to levy taxes to all royal towns and cities. The municipalities turned indirect taxation into one of the basic pillars of their economy.     

The ambivalence of the SPD and the end of its Ostpolitik

The Social Democratic Party of Germany (SPD) has been struggling over the last few years to regain its unity and electoral support. However, since reunification, the party has been declining and splintering as never before. The oldest party in Germany is becoming painfully aware that its present trials and tribulations can be directly linked to its ambivalent position immediately prior to and following the dramatic events of 1989 and 1990. This article addresses the SPD‐SED relationship, one of the most heated topics amongst academics and politicians both within and outside the SPD. It also attempts to account for the Social Democratic ambivalence surrounding the fall of the GDR and the reunification of Germany. Above all, this work highlights the struggle of the SPD coming to terms with the end of its Ostpolitik.