A New Normal or Business-as-Usual? Lessons for COVID-19 from Financial Crises in East and Southeast Asia.

Abstract

Crises and dislocations home in on social, economic, and political weaknesses that are often sidestepped or pushed to the backburner in the interests of master plans of growth or development. Recovery from crises, then, provides the opportunity to address these underlying issues that preceded and, likely, contributed to the crises or dislocation; meanwhile, a return to the previous normalcy following such crises generally means exacerbation of these weaknesses that erode and threaten to fracture social, economic and political foundations. This paper documents social and economic policies across two financial crises, the Asian Financial Crisis and the Global Financial Crisis, for South Korea, the Philippines, and Indonesia, to reveal the problems from growth-centric recovery focus on economic fragilities, social cohesion, and political stability. Further, using evidence from the ground and survey data, we also show how recovery to a new normal with a reprioritization of social policies invigorates the social, political, and economic foundations. We round off the study with an examination of social policy changes under COVID-19 to assess how the efforts track against a recovery to business-as-usual economic normalcy or a new normal that reprioritizes social policies and the economy. The scope of change is high; as we show in the paper, it is also necessary.