Rethinking Development in East Asia: From Illusory Miracle to Economic Crisis

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Rethinking Development in East Asia: From Illusory Miracle to Economic Crisis. Edited by Pietro P. Masina. Surrey: Curzon Press, 2002. Pp. 326.

This edited volume, consisting of fifteen chapters, is the product of a conference at Roskilde University in October 1998. While the conference was timely, with much of East Asia in deep recession, the pace of events in the region and volume of timely research into the crisis gives this volume a dated appearance. The bibliographies at the back of the edited chapters largely trail off in 1999.

The authors adopt a "political economy" framework. The power relationships, both political and economic, between the developmental state, the transnational corporations (TNCs), and the multilateral institutions are examined. Institutionalist, Marxist, and Structuralist flavours pepper the content of the individual contributions. The conclusion is that the Asian crisis was systemic. Authors reject explanations of the crisis as the product of "crony capitalism" and attack World Bank explanations of the preceding period of growth as the product of limited government intervention.

This book is not about the Asian crisis per se. Rather, the crisis is viewed as an example of "inherent contradictions" in the system that it highlights. The crisis is seen as the product of two forces: regional economic development strategies, heavily reliant on international markets and capital flows; and an unstable international financial framework within which such institutions as the TNCs, International Monetary Fund (IMF), World Bank, and U.S. Treasury exercise an over-arching influence, all with the shared objectives of international integration and globalization.

This volume is strongest in elaborating the development of this system. The chapters by Ngai-Ling Sum (Chapter 3), and Chandrasekhar and Ghosh (Chapter 6), in particular relate the immediate circumstances of the crisis, that is, the reversal of historically high private capital flows, to the underlying vulnerabilities of the structure that constitutes the "East Asia Model". These two chapters, together with the contribution by Putzel (Chapter 8) are the strongest empirical contributions.

The deficiency of a structural analysis, and this volume is a good example, is that "the model" is applied to the region as a whole with little indepth consideration of country variations. Specific influences operating at the country level, in terms of economic structure or government policy responses, are often ignored or brushed over. Six chapter titles of the book are dedicated to four countries: Thailand, South Korea, Vietnam, and Mongolia. There is little on Indonesia and Malaysia.

Thailand is examined by a number of contributors. The result is unsatisfactory. For example, Bullard's Chapter 7, "Taming the IMF: How the Asian Crisis Cracked the Washington Consensus", produced this howler: "By early 1997, it was evident that Thailand's boom was about to bust, with a slowdown in export earnings" (p. 146). In fact, export growth was negative in 1996, resulting in a rising current account deficit and currency speculation. The seeds of the crisis lie in 1996, a fact Bullard misses.

There are important omissions. There is no mention of the Bangkok International Banking Facility (BIBF). The possible connection between the establishment of this institution and the observed accelerated increase in short-term capital inflows, particularly international interbank loans from 1993 is simply not noticed. In part, this oversight is due to the inadequate statistical treatment of the structure of short-term capital inflows. Also overlooked is the authoritative Nukul Commission Report (1999) into the Bank of Thailand's foreign exchange market policies and foreign exchange transactions in 1997. …