Lessons from the Asian financial crisis for the eurozone: a comparative analysis of the perilous politics of austerity in Asia and Europe

Abstract

This paper comparatively examines diverse responses from three major actors in the global political economy (the state, civil society, international financial institutions) to the Asian financial crisis of 1997 and the current eurozone crisis. First, it analyses conditional lending policies of international financial institutions (IFIs) such as the International Monetary Fund toward countries in fiscal distress. It then critically examines how the lending policies engendered social tensions and conflicts as austerity measures such as cuts to social welfare programmes hit hard on the populace. Examining how the state and civil society in Asia reacted to and, as a result of contentious state–civil society interactions, altered the policies of IFIs, the paper draws lessons from the Asian financial crisis for the European Union and puts forwards alternative policy suggestions.