Impact of Political Power on Financial Crises

Abstract

Crises in Thailand, South Korea, Mexico or Marshall Plan are all examples of different forms of financial crises that the world has been exposed to over the decades. At the same time an extensive flow of financial aid is also evident. The problem posed in this paper is whether the financial crises are a result of structural imbalances and disproportions or are they situations strategically imposed by political actors whose interests are far from achieving global prosperity. This paper takes into focus three separate cases: the Marshall Plan, 1997 crisis in Thailand and 1998 Russian crisis. The research that follows is twofold: firstly, the crises will each be explained through positivist approach, i.e. the set of macroeconomic indicators crisis will be presented and analyzed in search of common ground. Secondly, the research shifts from causal explanation to cui bono (who benefits?) question. The analysis should incorporate the widely accepted reasons why the events occurred, what preceded each event, how the crises culminated and the way they were resolved. But the main objective of the research is to explore the economic and political climate of the place and time in question in search of different political motives different actors could have had in the event of crisis. Events will be placed in global context which should lead to the detection of different actors involved, other than domestic, whose interests might have prevailed. The results of the research will show that political decisions of the time have had direct and significant impact on the resulting macroeconomic position of the country affected by crisis.