The Asian Crisis: introduction

Abstract

The floating of the Thai baht on 2 July 1997 marked the onset of the 'Asian Crisis', which had serious repercussions for the 'miracle' economies of East Asia, for developing countries in general and for financial markets worldwide. The Asian Crisis has also generated a heated debate on fundamental issues of economics, finance, and economic policy-making in general. For this Special Issue we have assembled a collection of papers which contribute to these debates from informed, but 'non-mainstream' points of view. We were initially prompted to do so by concern about simplistic—and reductionist— attempts to pin the Asian Crisis on issues such as 'cronyism', which would foreclose rather than stimulate serious discussion, particularly on the role of market failures in this crisis. We were, we felt, witnessing a revival of Orientalism, in which all manner of fantasies and prejudices are projected onto Asia, with no real concern for their veracity. The above mentioned 'cronyism', for example, was becoming the modern substitute for 'Oriental despotism' or 'Asiatic absolutism'. To challenge such tendencies we invited contributions from researchers either with specialist knowledge of the countries in question, or of issues critical for the understanding of the Crisis. As we were aiming for early publication, and for a wide range of perspectives, we placed limitations on paper lengths. The objective was to produce focused arguments, some based on research still in progress, rather than exhaustive accounts. Although this edit orial policy was intended to encourage early submission, some contributors clearly felt uneasy about not being able to develop their arguments or introduce full supporting evi dence. The responsibility lies with us. Tight deadlines also meant that there are some gaps, notably Thailand and China. We are able, however, to present a set of articles which provides an overview, country-specific analyses, thematic analyses and theoretical elabo ration. As there are many articles, we shall not attempt to summarise them here, but rather we shall amplify some of the underlying themes and main findings. The most contentious issue is whether the Crisis resulted primarily from institutional and structural weaknesses of the Asian economies such as 'cronyistic' political economic structures, non-transparent corporate governance or misguided government policies, or from market failures which are characteristic of (or endogenous to) under-regulated and over-liquid international financial markets. Almost all the articles address this issue, and by and large they come down on the side of the latter type of explanation. This is particu larly significant because it has major implications for policy prescriptions. Wade suggests that the debate about causes is less a debate than a case of paradigms ('parrot-times') talking past each other, reflecting basic beliefs about rationality and