After the Storm: Crisis, Recovery and Sustaining Development in Four Asian Economies

Abstract

After the Storm: Crisis, Recovery and Sustaining Development in Four Asian Economies. Edited by K. S. Jomo. Singapore: Singapore University Press, 2004. Pp. 318. This volume brings together a set of papers written on selected themes of the 1997-98 Asian financial crisis, with emphasis on the four countries most adversely affected by the crisis - Indonesia, Malaysia, Thailand, and South Korea. Although much has been written about the Asian crisis, this book is unique in its attempt to analyse post-crisis policy-making in political and societal terms, going beyond the narrow confines of pure economic analysis. It also provides considerable new insights into the debate on the role in the recovery process of the standard Keynesian expansionary policies as against the structural adjustment policies advocated by the IMF. The volume opens with a comprehensive editorial introduction which traces the key policy trends during the pre-crisis era and economic adjustment following the onset of the crisis, followed by a preview of the ensuing chapters. Chapter 2 by Joseph Lim examines the role of premature financial sector liberalization and capital account opening in the making of the crisis against the backdrop of the conventional wisdom on sequencing of liberalization reform. It also takes a critical look at the policies recommended by the IMF in the aftermaths of the crisis and highlights the virtues of the Keynesian reflationary policies in the subsequent recovery. In Chapter 3, C.P. Chandrasekekhar, Jayati Ghosh, and Smitha Francis dwell on the silent features of the rapidly evolving global financial system and the need for an international framework for debt workouts with view to cushioning emerging market economies against the danger posed by unregulated capital flows. Andrew Rosser (Chapter 4) probes the political economy of financial sector liberalization in Indonesia in the 1980s and how the haphazard and partial nature of the reform process contributed to the vulnerability to the crisis. Jonathan R. Pincus and Rizal Ramli (Chapter 5) provide an analytical narrative of how capital flights, in combination with domestic financial fragility, set in train the corporate collapse in Indonesia, ultimately paving the way for state control over a larger share of the industrial and financial sectors. Pasuk Phongpaichit and Chris Baker (Chapter 6) examine crisis management and recovery in the Thai economy. Chapter 7 by K. S. Jomo is a synthesis of his previous work on the role of capital controls in crisis management in Malaysia. Chin Kok Fay (Chapter 8) studies Malaysia's bank restructuring and its role in the recovery process. Jang-Sup Shin (Chapter 9) analyses the role of Keynesian policies in the recovery process in South Korea against the backdrop of a critical assessment of the IMF-led structural adjustment reforms implemented in the aftermaths of the crisis. The final chapter by M. Mustafa Erdogdu examines the role of the capacity of the state, evolved over four decades during the pre-crisis era as part of the state-led industrialization strategy, in crisis management in South Korea. As is the case with most edited volumes, a major structural limitation of the book is its lack of cohesion. The introductory chapter raises the reader's expectation that the book, as a whole, would provide a careful examination of a number of important issues relating to the choice and formulation of crisis management policies, the recovery process and future growth trajectory of the economies under study. Unfortunately, the ensuing chapters do not live up to this expectation. The volume reads more like an ad hoc collection of papers written by the contributing authors at their own choice, rather than a systematic compilation of chapters of individual contributions commissioned with a central theme. Some of the key issues listed in the introductory chapter with a view to guiding the reader, in particular, the prospect for regaining pre-crisis growth dynamism by the crisis-affected countries and the implications of the crisis for the mainstream advocacy of the East Asian Miracle as a preferred model for emulation by other countries, are not mentioned even in passing, let alone analysing it systematically, in the ensuing chapters. …